No company can do everything itself

Edited by the Engineeringtalk editorial team Mar 19, 2002

Southco's President and CEO Brian McNeill explains why suppliers have to provide total solutions, not just products.

Successful companies today are increasingly concentrating on their core competencies and outsourcing their non-core activities to suppliers.

Southco's President and CEO Brian McNeill explains why suppliers have to provide total solutions, not just products.

No company can do everything itself.

To maintain a competitive edge in the current economic climate companies are focusing on what they do best.

Especially in the automotive and high-tech sectors, design expertise is moving from the original equipment manufacturers (OEMs) to contract equipment manufacturers (CEMs).

Companies in the electronics industry such as Cisco, Compaq and Hewlett-Packard are increasingly moving their business focus from manufacturing towards design, marketing and final assembly.

Many companies are even outsourcing final assembly and contract equipment manufacturers are putting together models for cost-effective manufacturing.

Flextronics is one such contract manufacturer.

In six years, it has gone from being a company fighting for survival to its present position as a global powerhouse.

It achieved this growth through acquisitions, and by partnering with key customers, including taking over manufacturing and assembly operations.

Engineers have to keep up with the developments.

They have to get out of their office more and tune into the voice of the customer.

Segments of their design chain are now located all over the world.

Engineers also have to learn practical skills such as design for manufacturability.

They have to design products that allow CEMs to be competitive as they build their own products.

Southco is training its own engineers to be tuned into the needs of its target customers.

The company wants to be a virtual engineering centre for its target OEMs and CEMs for their engineered-access solutions.

Southco's OEMs make servers, routers, cars, boats and construction equipment, among other things.

They don't design and make latches.

People don't go to Cisco or HP for mechanical engineering design.

To accomplish this new customer focus, Southco has realigned its organisation by creating three business units: networking/ telecommunications/ computers, automotive and diversified markets.

Each is led by a general manager with the resources to create and seize business opportunities.

Southco emphasises a connection to customers and all Southco engineers get 'voice-of-the-customer' training.

Says McNeill: "It's great to watch engineers learn communication skills.

We have also found that bringing customers into our process energises the product".

He concludes: "Southco's passion is to rapidly respond to our customers' needs, to be connected through the web to their design teams, and to help them with rapid prototyping.

We have created several 'extranet' web sites to give key customers access to CAD files and other product information specific to that customer, so they can get solutions faster.

Southco doesn't limit the front end of its business units to designing in only own-brand products and will even find ways to supply an alliance product if it's the right solution for the customer.

In fact, several other component suppliers have asked us to be their front end.

This trend of outsourcing design expertise applies globally.

We have to be able to serve customers all over the world and have opened offices in Hong Kong and other foreign venues".