Flextronics set to touch new heights in EMS market

By diversifying its product portfolio and strengthening its workforce, Flextronics India is all set to improve its market share and conquer the industry leadership position

By Kartiki Negi

Monday, January 06, 2014: A global major in electronics manufacturing services and a leading supply chain solutions provider, Flextronics has been present in India for over a decade. Working across four business groups and several business units, Flextronics offers its services to world’s most of the valuable brands and new ventures. It is focused on delivering complete design, engineering, logistics and manufacturing services, and has managed to carve a niche for itself with a whopping $24 billion in sales (globally), generated from helping its customers to design, build, ship and service their products through a network of facilities in more than 30 countries across four continents.

In India, Flextronics has grown immensely in terms of its revenue and workforce since it commenced its operations here. “This has been possible by following our principles of being persistent, unyielding and tireless,” says Ashok Dhawan, vice president and managing director, Global Business Services (GBS), Flextronics. “We have a never-ending focus on winning and do not accept the second place. We have a clear vision of what it takes to win, and work relentlessly to become an even stronger team and company,” he adds.

The company looks forward to aggressively building up its market share and industry leadership position in India. “India is a crucial investment destination for Flextronics, as the market has grown by 22 per cent, while manufacturing has grown by 15 per cent. Flextronics is capitalising on this opportunity to serve the burgeoning electronics sector in India,” says Sekaran Letchumanan, vice president, operations, Flextronics. “Our manufacturing facility is located in a special economic zone where it receives highly favourable benefits. Another attraction is that Chennai alone has 120,000 engineering graduates and 60,000 technical diploma holders. Labour costs are also competitive. Logistics support, infrastructure and the supply chain are also rapidly developing,” adds Sekaran Letchumanan.

The journey so far

When Flextronics first arrived in India back in 2001, its strategies were more aligned towards manufacturing. However, gradually, the company expanded its range of offerings and started the Global Business Services (GBS) and Flextronics Global Services and Software (FGSS) units. “Today, the company has grown nearly ten-fold since its inception in India, and currently engages over 6000 employees across all its facilities and units,” says Dhawan.

Flextronics GBS was set up in 2005 and its units are located in Chennai and Pune, providing end-to-end support services. These units have 3500 employees, who serve 320 global Flextronics entities at 130 locations.

Established in 2002, the FGSS units are located in Bengaluru, Mumbai and Gurgaon, and are capable of fixing highly complex BGA equipment. They provide the full range of after market services, which include warranty management, repairs, inbound and outbound logistics management, field and channel returns, vendor management, materials planning, etc.

Its Chennai Industrial Park (CIP), which was set up in November 2006, offers engineering, manufacturing and logistics services.

Ashok Dhawan, who has been associated with the firm for the last seven years, strongly feels that the biggest limitation Flextronics faces in India is the lack of a domestic electronics ecosystem, an issue that Flextronics had faced even 12 years ago when it started operations in the country. “We want the government to create a more conducive ecosystem that encourages further investments and business growth. The government understands the industry’s issues and we remain optimistic about a positive outcome,” says Dhawan.

In 2012, Flextronics begun extricating itself from the RIM business as it did not generate consistent sustainable profit. Though the company is still serving Blackberry in India, Flextronics’ relationship with RIM is going to downsize as their business changes and modifies.

What it offers

According to Dhawan, Flextronics creates value. It not only increases the speed to market and drives competitive positioning for its customers, it also has the ability to solve its customers’ most challenging problems better, faster and more cost-effectively. Due to its large global presence, Flextronics customers are supported with speed in product ramp-up, delivery, and the ability to manage volumes, regardless of the complexity or product mix.

Flextronics India provides end-to-end supply chain solutions that deliver design, engineering, manufacturing and logistics services to a range of industries and end-markets, including data networking, telecom, industrial, capital equipment, automation, medical electronics, automotive, aerospace and defence, energy, mobile telephony, computing and other electronic product categories.

“Some of the products that are currently manufactured at Flextronics’ CIP include cellphone chargers, routers, optical networking products, food testing equipment, printer cartridges, etc,” says Sekaran Letchumanan.

The CIP provides end-to-end manufacturing services ranging from PCBA to box build, BTO, CTO, and Level 10 system integration services. “Our service offerings and vertically integrated component technologies optimise customer supply chains by lowering costs, increasing flexibility and reducing time-to-market,” says Letchumanan.

Strengths and limitations

Telecom, optical products, power supplies, lighting, computing and LTE devices are some of the manufacturing strengths of Flextronics. However, Sekaran feels that the core strength of the company is its footprint across the globe and its workforce.

“We have core manufacturing operations around the world. We operate in 30 different countries, and have roughly 200,000 employees globally. All these are very powerful platforms that allow us to spring forward and drive business growth. To top it all, we offer our customers real-time information about visibility, risk and execution,” says Sekaran.

Leveraging its manufacturing best practices, key investments in infrastructure and FlexQ, a propriety quality programme, Flextronics is one of the market leaders in every space it operates—be it high mix/low volume or low mix/high volume manufacturing. Optimisation is what Flextronics does best. “We follow several manufacturing best practices such as lean, Six Sigma, single piece flow, take time manufacturing, zero defect line, component level traceability, etc,” says Sekaran Letchumanan. Apart from these, the company has also adopted cost savings measures such as Kaizen and lean tools which includes 7QC, the 5WHY approach, value stream mapping, ETE productivity improvements, etc. The company also leverages its global supply chain strengths.

“We religiously follow the strategy of providing exceptional quality and speedy delivery. We always strive to exceed customer expectations to retain our top slot among the top EMS companies in India,” adds Sekaran Letchumanan.

Flextronics’culture is its strength, which is built on commitment to customers, employees and society. Corporate social and environmental responsibility (CSER) is a vital part of Flextronics’ culture—one that it proudly identifies as a sustainable competitive advantage. “Our culture and business model work hand-in-hand to ensure simplicity, flexibility, competitiveness and, above all, sustainability. We are a leading employer of specially-abled people in the electronics industry (5 per cent of our employees are specially-abled),” explains Ashok Dhawan.

Infrastructure

Flextronics has very wisely established its facilities at technologically strategic locations across the country, such as Chennai, Bengaluru, Mumbai, Gurgaon and Pune. The total area of the company’s facilities accounts for more than 92,903 sq m (1 million sq ft) across India. All the plants are well equipped with modern facilities and the latest machinery.

Flextronics’CIP is spread over a 59,985 sq m (645,663 sq ft) manufacturing floor space and 200 acres of land has been left for further expansion. The GBS facilities in Chennai and Pune have a combined manufacturing floor space of around 27,357 sq m (294,472 sq ft), while the FGSS plants situated at Bengaluru, Mumbai and Gurgaon are spread over 9179 sq m (98,800 sq ft).

Some of the best technologies have been adopted at the CIP, including 0201 component placements, BGA placement, IC placement up to 0.5 mm, ultrasonic welding, a state-of-the-art QRE lab, single layer to 24 layer placement, thermal reliability chambers, ALT (accelerated life test), backplane assembly, etc. The park offers some modern facilities such as SMT for PCBA and systems level assembly—BTO, CTO configuration and direct fulfilment. The CIP houses some of the best and latest equipment that include turrets, press brakes and power presses. It uses machines from various companies such as Panasonic, Amada and Fuji.

Future outlook

Flextronics aims to double its workforce in the next four to five years coupled with expansion plans. The company is banking heavily on its GBS division for growth, and has recently inaugurated GBS facilities in Pune and Chennai.

India continues to be the crucial investment destination for the company, as the country offers huge opportunities for the electronics industry that are still untapped to a large extent.

Flextronics is laying more emphasis on providing after-sales services to its OEMs and its customers, as the after-market services industry alone is worth about US$ 600 million and is growing rapidly.

With the government coming up with new pro-industry policies, and since there is a huge gap between demand and supply of electronic goods, Flextronics is trying its best to capitalise on the opportunity to serve the burgeoning electronics sector in India.

Electronics Bazaar, South Asia’s No.1 Electronics B2B magazine