The initial situation
The company is a leading global supplier of embedded computer technology (ECT), operating an attractive industrial motherboard business at its Bavarian site with a volume of over 300,000 motherboards per year. The customer base included established distributors and large direct customers from the automation/robotics and medical technology sectors, among others.
The goals
The company focuses these boards on intellectual property, sales, support and product maintenance, for various reasons: Among other things, the company sought to achieve a competitive cost structure by reducing purchase prices and streamlining its organizational structure. Another goal was to focus more on core competencies while benefiting from the manufacturing partner’s long-standing supply chain expertise. The transfer of inventory was also intended to reduce the amount of capital tied up, which would have a positive effect on cash flow. For this reason, manufacturing was outsourced to the company’s long-standing partner, KATEK in Mauerstetten. In practice, this required a relocation of production, which, however, was not allowed to result in an interruption of production and reduction of quantities under any circumstances.
Image: Electrical in-circuit test, guarantees the high reliability of the products over the entire life cycle
Challenge 1: Special requirements for the production of the boards
“The market demands high quality at attractive conditions,” says one of the responsible managers at the company. “Thus, already the design of the boards is optimally tailored to the existing equipment and cost-saving manufacturing steps.” Only a sophisticated test concept, consisting of 100 % AOI, function test, but above all also an electrical in-circuit test, guarantees the high reliability of the products over the entire life cycle and under the most diverse operating conditions. Assemblies assembled on both sides with surface-mounted devices (SMD) can thus be produced cost-effectively using the wave soldering process instead of a time-consuming partial soldering process.
The challenge 2: The move
The company focuses these boards on intellectual property, sales, support and product maintenance, for various reasons: Among other things, the company sought to achieve a competitive cost structure by reducing purchase prices and streamlining its organizational structure. Another goal was to focus more on core competencies while benefiting from the manufacturing partner’s long-standing supply chain expertise. The transfer of inventory was also intended to reduce the amount of capital tied up, which would have a positive effect on cash flow. For this reason, manufacturing was outsourced to the company’s long-standing partner, KATEK in Mauerstetten. In practice, this required a relocation of production, which, however, was not allowed to result in an interruption of production and reduction of quantities under any circumstances.
Image: Purchase of Panasonic THT placement machine
Image: Production line for double-sided assembly with surface-mounted devices (SMD)
A trusted partner in Germany
It was important to the company that the design and manufacture of the boards remain in Germany. In this respect, a German partner was sought who could meet the requirements. In addition to the quality requirements, relocating such a production facility is a Herculean task. The volume comprises a good 300,000 industrial mainboards per year, divided into 12 product families with a total of around 50 different models. Added to this were the aggravating general conditions. “In this situation, we looked around for a partner in Germany, where we were convinced it could be done,” says the manager, describing the considerations on the part of the company.
This is where KATEK in Mauerstetten came into play: The company and KATEK have already been working together excellently for many years. The resulting confidence in KATEK to be able to handle this enormous challenge was decisive for the company’s decision. “We were sure that KATEK would be able to continue such a large business smoothly even in such a short time,” explains the manager. “A relocation of material and equipment on this scale was also greatly helped by the local proximity to Mauerstetten of only 60 kilometers.”
Procedure of the move
The contract was concluded in June 2019. Starting in August, KATEK began transferring production lines, important production and test equipment, accessories and materials to its site in Mauerstetten. More specifically, KATEK took over three production lines, but also invested in new machinery. Employees in production and development from the company’s Bavarian location transferred to KATEK. Relationships with suppliers were transferred to KATEK. From December 2019, the first lines were at KATEK, and January 2020, the first products were already manufactured at KATEK. Since May 2020, the complete product portfolio of motherboards and add-on cards has been produced at KATEK in Mauerstetten. Of course, a certification of the new location according to TÜV NRTL took place.
Image: Newly integrated THT placement line
Smooth cooperation at the highest professional level
“Despite enormous stress levels and extensive challenges due to the situation, the cooperation between all parties involved was always cooperative and based on partnership,” the manager summarizes happily. “Our group of companies has already successfully implemented many complex relocations of production sites. Now, for the first time, we have carried out such a project in intensive cooperation with KATEK. We were all particularly impressed by KATEK’s performance: the relocation of the extensive equipment, the necessary rebuilding measures at KATEK, collecting the material and procuring missing parts ourselves in good time, the prompt ramp-up of production with the proven manufacturing and testing processes, the takeover of the complete material procurement with a large number of new suppliers – everything was perfectly orchestrated and convinced us that we had made a good choice in relying on KATEK.”
Conclusion
All of the company’s goals targeted with the outsourcing of manufacturing were achieved in cooperation with KATEK: In particular, a competitive cost structure was implemented by reducing purchasing prices and a leaner organizational structure. “The target was ambitious,” says the manager. “Previously, production had been optimized as best as possible in terms of manufacturing costs. That was a high bar, but KATEK met it.” Outsourcing manufacturing to KATEK also allows the company to focus more on core competencies, as planned. At the same time, the company benefits from many years of supply chain know-how of its manufacturing partner KATEK. A higher free cash flow has also been achieved. “Our entire management is very satisfied with the way the relocation went and we would definitely recommend KATEK as a partner for outsourcing projects,” summarizes the manager. Because at the end of the day, the result is what counts even in a long-term partnership: a successful relocation of production and purchasing to Mauerstetten and thus a secure continuation of the industrial mainboard business.
“Outsourcing is a complex process. You simply have to have it under control. We were able to prove that we have enough experience in this and that our customer can use the location advantages in the heart of Europe. It’s flexibility and quality that we guarantee here. As a result, the project has been a success through and through.”
Marc Lauter, Managing Director KATEK Mauerstetten GmbH
