Manufacturing: Lessons Learned From CS Arena

In the current economy, businesses nationwide are looking for cost-reduction strategies, and computer and electronics (C&E) companies outsourcing their manufacturing are exceptionally focused on reducing production costs and increasing product quality to gain a competitive advantage in the market.

As a channel source for built-to-order desktops, notebooks and servers, Seneca Data's OEM services business that supports C&E and other technology companies evolved as a result of our investment in engineering and manufacturing processes for our traditional customer base. Facing business pressures of their own, OEMs have long sought out reliable sources for low-cost production, extended product life cycles and well-defined assembly processes, which are the hallmark of the custom system builder.'These factors, along with the effects of rising overseas wages and a sliding U.S. dollar, have helped make OEM manufacturing here in Syracuse, N.Y., the fastest-growing segment of our business.

Like many computer manufacturers, our customer base represents a broad spectrum. We've worked for many years with VARs who typically require a high-quality, cost-effective platform that they can deliver to their customers and then service and support locally. ISVs that design and distribute proprietary software products for a variety of vertical markets make use of services to integrate their software onto computing platforms and optimally manage product life cycles. OEM customers, in rapidly growing markets like digital signage and security and surveillance, work with us to design application-specific computing appliances and then utilize our production and logistical services to bring those products to market.

Even though contract manufacturing customers have different challenges across sectors, the value proposition remains essentially the same.'The customer needs specific volumes of goods manufactured according to stringent standards, using standardized processes to leverage economies of scale. That way, they can produce a lower-cost build than they could achieve on their own by investing in a plant, equipment, processes and workforce.'Right about here is where the similarities between customers end and the "custom" in custom computing begins to really stand out.

Competing with multinational contract manufacturers requires a differentiation strategy that goes beyond the lowest price and a "one-size-fits-all" services mentality. At a base level, obtaining certifications such as ISO 9001:2000 and expertise in lean manufacturing are crucial to ensuring accurate repeatable processes are in place, and cost and waste are eliminated from those processes.

Relationships with vendors like Intel and Microsoft also play a critical role in our OEM manufacturing business. 'We have had enormous success with Intel's Stable Image Platform Program (SIPP). SIPP helps custom computer manufacturers deliver stable and consistent builds to the customer, even as the broad industry road map changes and evolves.'With Intel's SIPP, no changes to critical components will happen for at least 15 months from introduction. For ISV and OEM customers, this is vital because a change in a motherboard or driver can render a build unusable. The custom system builder's ability to manage numerous vendor road maps and proactively advise a customer of coming component changes is a definite added value and aids the product refresh cycle, helping avoid unpleasant and often costly surprises.

Though there are certainly challenges in every business cycle, midsize domestic system builders will find that the opportunities for OEM manufacturing are broad, and those who can leverage proven manufacturing processes and offer unique services have strong opportunities to win business in this space.

Greg Masingill is President of Seneca Data Distributors Inc. in Syracuse, N.Y.