Behind every well-known brand name in consumer electronics, much of the high-tech manufacturing which forms the heart of the product is probably done by companies few of us heard of. Companies such as Ericsson and IBM are increasingly using Electronic Manufacturing Services (EMS) companies which specialize in providing the outsourced design, engineering, manufacturing and logistic operations for big brand names. Flextronics is one of the leading EMS providers in providing “operational services” to technology companies. With over 70000 employees spread throughout its facilities in 28 countries, it has a global presence that allows it the flexibility to serve customers in all the key markets throughout the world.
Flextronics manufacturing locations have to balance their customers’ need for low costs (electronic goods are often sold in a fiercely competitive market) with their need for responsive and flexible service ( electronics market can also be volatile). Flextronics could have set up manufacturing plant close to its main customers in North America and Eastern Europe. This will certainly facilitate fast response and great service to customers; unfortunately these markets also tend to have high manufacturing costs. Flextronics’ operation strategy must therefore achieve a balance between low costs and high level of service. One way, Flextronics achieves it through its strategic location and supply network decisions , adopting what it calls its “Industrial Park Strategy”. This involves finding locations that have relatively low manufacturing costs but are close to its major markets. It has established Industrial Parks in places such as Hungary, Poland, Brazil and Mexico. Flextronics’ own suppliers also are encouraged to locate within the Park to provide stability and further reduce response times.
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