From ownership issues to parts availability, EMS firms describe their new world.

Talk to most EMS providers and you’ll find they have a strategy for supporting RoHS compliance. In some instances, that strategy is to understand the requirements, develop an implementation plan and wait for customer need. But in most cases, some level of production capability is already in place. The real challenge is that RoHS compliance adds one more layer of complexity in the EMS value-add equation. Some of the areas of concern include:

•    Product liability.
•    Capturing added engineering cost.
•    Inventory issues.
•    Transition challenges.
•    Product quality issues.

While none of these issues is beyond the scope of a good EMS provider’s management capabilities, all deserve to be considered in developing strategies that address this added complexity.

The key issue with product liability centers on concerns related to product redesign. If a contractor recommends RoHS-compliant components that subsequently prove unreliable, has it opened up a door for shared costs on product recall if significant field failures occur over time? Jeffrey Roth, an attorney and shareholder with Fees & Burgess, P.C. (feesburgess.com) points out the potential complexity of the issue. “One of the key issues between EMS providers and their customers in this area is the ownership of issues flowing from the use of process technology without a track record of proven reliability. EMS providers may hesitate to warrant workmanship associated with process technology that is unproven and may resist any attempt by a customer to allocate the risk associated with the use of this technology to the EMS provider, especially given the industry’s traditionally low margins.”

He adds that when allocating risk between parties on this issue in contract negotiation and in related warranty, epidemic failure, remedy and indemnity contract clauses, the question often becomes, Is the EMS provider simply following a specification required by its customer for use of this process technology, as in the concept of “We are but humble board stuffers,” or is it the customer who is relying on the expertise of its EMS partner to manage and accept such risks, as in “We are your expert one-stop virtual factory?”

“In most contract situations, you would expect the party with the most control over the risk to accept and minimize the risk. However, if the risk associated with this process technology is unknown, it might be difficult to equitably allocate the risk and associated costs,” Roth said.

In addressing this, some companies only offer distributor or component manufacturer recommendations, not because they don’t have the engineering resources, but because of concerns about the potential liability. Others see value in staying a robust part of the redesign process.

Product engineering costs. For companies offering RoHS conversion support, the engineering cost supported with redesign is not always insignificant and may represent a separate charge.

“Most distributors provide component cross-recommendations that are readily available and we do not charge. However, if a customer wants us to scrub their bill of materials and certify all parts are lead-free, there is a charge,” said Renee Rocca, program manager director, Hunter Technology (hunterpcb.com).

“We offer conversion services and typically charge for those services. Charges are based on the length and complexity of the BoM, and the number of parts or alternatives requiring engineering research. Free distributor provided crosses are taken into consideration,” said Art Rutledge, president, Fawn Electronics (fawn-ind.com).

“This falls more at the component manufacturing level and distribution level. Distributors will advise if they have one or the other or both and which part you want. Or the manufacturer may only make or offer one version. The customer’s engineers need to do the reliability test and advise if we can use it,” said Henry Protzel, project support manager, WKK America (Holdings) Inc. (wkka.com).

Inventory availability. Another challenge is timing redesign to support smooth manufacturing flow. Poorly timed transitions can create excess leaded inventory. Early adopters have also faced material availability issues on some component types.

Protzel says the majority of WKK’s customers planned for this in advance, doing what he calls a “balance out.” This, he says, “is the exact point in work-in-process that is leaded when we switch to non-leaded. Having to adhere to industry requirements on RoHS compliance dates, many of our customers planned in advance. At the component level, the transition is a bit more complicated. Some component manufacturers use the same or similar part numbers and no longer make leaded versions. Distributors/brokers were slow to ramp to differentiating between what we needed and what they had. The biggest struggle was the component manufacturers switching over, to meet the demand in the market. As customers were switching, the component manufacturers had to keep up. For the most part, it was only an issue at the beginning.”

While many EMS providers have a robust methodology for ensuring product segregation, there can be transition challenges driven by supply-base issues or a customer’s internal processes.

“Most manufacturers change their part numbers slightly to indicate RoHs,” said Rocca. “If the customer does not change its internal part numbers, we do it internally. Manufacturers are making it harder to get leaded parts. They have long lead times and large minimums. Our finished goods inventory is not affected. The boards are packaged and placed on a shelf awaiting shipment. Any repair work in which we would need to replace a component would have a BoM with the RoHS part number to be pulled and issued to the kit.”

Fawn’s Rutledge adds, “In discussing transition challenges, I would emphasize excess inventory and management of finished goods during the transition period when both leaded and lead-free assemblies exist. Inventory obsolescence is a major issue in conversion timing and costs. Thoroughness of the lead-free BoM is also a concern. It must be more than adding the note that all parts are to be RoHS-compliant. There must also be verification of component critical dimensions because footprints and pinouts for crossover parts may have variances.”

“In terms of managing segregated production processes, use of visual indicators such as specifically colored solder mask for RoHS-compliant assemblies, color-coded work stations for RoHS-compliant assembly stations (can be as simple as a different color of ESD mat) and color-coded labels for stocked materials can be helpful. It is also important to work closely with the customer in the conversion process to mitigate obsolete excess inventory and provide alternate sources for RoHS-compliant parts,” Rutledge said.

Product quality. In terms of production, many product quality issues are tied to component integrity and segregation of leaded and RoHS-compliant product.

“About the only real issues we see are at the component level,” said Protzel. “We have four SMT lines devoted to leaded and the balance is RoHS. Many component manufacturers no longer offer leaded versions. While our customers’ engineers will do a reliability test on the new part, from an SMT view we can run RoHS-compliant parts on a non-RoHS line. But we can’t do the reverse of running non-RoHS parts on a RoHS-compliant line due to contamination.”

“Some customers are unaware if the part they are calling out is RoHs,” said Rocca. “Most lead-free parts can be run through the leaded process, but that is not true of BGAs. We pull data sheets on all BGAs because the solder balls on lead-free BGAs will not solder at the lower leaded temperature.”

“There is really no reliable, cost-effective means to monitor the compliance of purchased parts after they are received,” Rutledge said.

To Convert or Not Convert

Most EMS companies supporting RoHS-compliant production are also supporting leaded production. In many cases, they have customers not required to convert. Dual production environments carry added costs and the potential for contamination. Long-term failure to convert may result in component availability issues as component manufacturers opt for discontinuing their leaded products. On the flip side, many of the products not yet required to convert have been given exemptions because of concerns about product reliability. The challenge for EMS providers is to adequately educate their customer base on the pros and cons of the decision.

“WKK started the RoHS preparation process in 2002. More than 80% of our customers are converted. Most of our customers want to convert to RoHS,” said Protzel. For WKK’s customers, he added, a driver appears to be end-market trends and market share, with high-volume consumer product OEMs tending to be fastest to convert.

Rocca said 10 to 15% of Hunter’s customers are RoHS compliant, but indicated that they were proactive in discussing pros and cons of conversion. “We caution our customers on the challenges of part issues to come, obsolescence, long lead times and large minimums. We have done many seminars on RoHS compliance at customer sites. Fab material, temperature requirements and BGA requirements are some of the issues the customers need to be aware of. Eighty-five percent of our customers are military and medical. They do not have to be compliant at this time, and in most cases, do not want to go lead-free due to the reliability of the parts. Their concern is the tin whiskers that grow from lead-free parts that eventually can cause shorts,” Rocca said.

Rutledge said Fawn also encourages conversion with mixed results. “Most that do convert have the feeling they are going to have to comply eventually and choose to bite the bullet and convert now.”

EMS RoHS challenges won’t disappear any time soon. However, as with every major technology change, EMS providers appear to be identifying critical issues and risks and developing appropriate systems and processes to support customer needs.

Susan Mucha is president of Powell-Mucha Consulting Inc. (powell-muchaconsulting.com), a consulting firm focused on optimizing EMS account acquisition processes, and developer of the EMS Integrated Marketing™ and EMS Concentric Selling™ training programs; smucha@powell-muchaconsulting.com.

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