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Written by Mike Buetow
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Friday, 01 August 2008 |
Revenues from Jabil’s (jabil.com) industrial, instrumentation and medical businesses have risen 68% compounded annually over the past three years. Yet the vice president of Jabil’s global business units, Tony Allan, says there is still plenty of room to grow. He and business unit director Jeff Cavanaugh spoke with Circuits Assembly’s Mike Buetow in July. Excerpts:
CA: What’s the main factor in gaining traction in medical?
TA: Getting on the AVL is a big one. Customers tend to approach us with existing supply chain problems. It probably takes a year from the exchange of papers to production launch. For new technology, it could be 18 months. Hybrid could be longer. RoHS is a big driver.
CA: How does a volume producer like Jabil fit the smaller-volume medical profile? And how engaged are you on the design side?
TA: Actually, more than 50% of our products are built in lots of 50 or fewer. And we can take what we’ve learned, for example, building [higher volume] network products and transfer that into medical.
Our role in designing for medical and instrumentation is mixed. We’re not trying to replace their design teams. We focus on the value side. We perform upfront BoM analysis, trying to take parts off the BoM right away, so that customers don’t have to do a redesign in two years.
Over time, we develop our knowledge of the product and out view of what it can do. Medical is more confined because the roadmap is defined. We see trends of PCs, chips and packages and take that into the medical space.
CA: How do you internally address IP protection issues?
TA: There’s a “cooling off” period for our engineers. They can’t immediately go from one program to a competitor’s product.
CA: Explain how Jabil aligns its program managers with its customers.
TA: We spend a lot of time reviewing the organization, keeping the right person in front of the right customer. We’re customer-centric, not plant-centric. We load our workcells by customer. And our Fundamental Management Team manages any surpluses and gaps.
CA: If you’re not “plant-centric,” what drives Jabil’s global plant loading?
TA: We always try to sell the lowest possible cost for the customer. We spend a lot of time proposing the best place for a product. We focus on building in the region of consumption. Each factory is the outcome of that design process. A lot of our metrics are in terms of capabilities. Certain factories are good at volume. Some are good at high mix. Some are good at both. We don’t enter a customer meeting with preconceived notions about where to build the product.
CA: What happens when a customer asks for its products to be built in China?
TA: We still spend a lot of time working with customers on the concept of total cost of ownership versus unit price. We still spend a lot of time educating customers and have to do that at the highest level. Companies look at outsourcing as a high-volume business. It’s very different. The skill sets have moved significantly from what they know.
CA: The landscape of OEM outsourcing has been essentially tied to North America and Europe. How is your progress in Asia?
JC: We’ve been one of the few who have attracted Japan’s business. It’s coming, but it’s slow.
CA: What do you consider to be Jabil’s biggest near-term threat?
TA: Managing growth and not taking our eye off the ball. We spend a lot of time analyzing customer finances. We conduct robust due diligence of potential customers.
CA: What has been RoHS’s effect on the heretofore exempt segments?
TA: RoHS has changed the segment significantly in the past two years. Medical, industrial and instrumentation have realized the entire supply chain is switching over. Converting the entire process to lead-free has forced many customers to think about and embrace RoHS. Many customers are using it as an opportunity to update and redesign their product portfolios. It’s probably the most active it’s ever been.
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