Most industrial OEMs must contend with and overcome big challenges to survive and thrive. The major competition today comes not only from traditional factions in the U.S., Western Europe, and Japan, but also from China, India, Eastern Europe, and South America. This intensified competition has made understanding core competencies, speed to market, best practices, and best available technologies more critical than ever.
Our company has been a panel builder and system integrator for nearly 20 years. We encounter the concerns OEMs have about panel builders and integrators, some of which were expressed by Jeff Klinger in this column [“We Don’t Use System Integrators,” September, ’06]. Over the past 10 years, we’ve developed, refined, and implemented a strategic model for the OEM controls market that addresses these concerns and more. This model, known as Original Design Manufacturing (ODM), has been used extensively in the electronics and automotive industries.
The traditional panel builder typically is contracted to build based on a customer-defined bill of materials and set of drawings—with little or no design input. This often results in a design that is not optimized for cost and quality. It requires the machine builder to maintain, service, and warranty the panels and components. Over time, if controls capability is not maintained as a core competency of the machine builder, the designs can become outdated, negatively impacting competitiveness.
The traditional system integrator, in our view, focuses on design for functionality in a larger context, such as building automation or factory information systems, with less focus on design for manufacturability and automation of manufacturing systems. System integrators tend to have a good understanding of component technologies but a lesser understanding of the unique characteristics of an individual OEM market. As Klinger explained, the valuable time lost while the integrator comes up to speed on the specifics of the OEMÂ’s products and marketplace can delay time to market. We would add that the integratorÂ’s lack of market knowledge also can result in over or under-designed solutions.
The ODM business model focuses on design for functionality and manufacturability, and requires very specific tools—3-D modeling software, electrical design software, program languages, etc.—not typically found at panel builders and system integrators. To be truly effective, an ODM must make the educational investment in best available component technology, specific OEM market niches, the latest design tools, and best manufacturing processes. With this knowledge the ODM operates as a strategic partner--the controls design and manufacturing extension of the OEM.
The table summarizes our view of some of the differences between the three models: As the ODM, it is our responsibility to maintain, service, and warranty the control designs. As that strategic partner, we dedicate the design staff (usually stationed at the OEM design center), the engineering and manufacturing systems, the manufacturing facilities, and the aftermarket support demanded by the OEM. This lets the OEM focus on what it does best, namely to market, design, manufacture, and service the greater mechanical systems.
As competitive pressures rise, we experience first hand how the ODM model is gaining traction. Many of our new OEM customers and almost all of our existing ones are asking themselves tough questions about how they make or buy their control systems. Should they invest the time and money to hire and train engineering talent when they donÂ’t know how business will be in two years? Should they take the risk developing automated design systems that might not be relevant in two years because the market has changed or because they cost too much to maintain? Should they purchase, operate, and maintain automated manufacturing equipment necessary to be state of the art in an industry where new technology is introduced and made obsolete in five years?
The answer is that they increasingly choose to work with an ODM because we make those investments every day. That is our core competency.
Troy Schmidtke is president of Design Ready Controls, an ODM that offers engineering services and full-service control panel solutions to the industrial machine builder marketplace. You can reach him at [email protected].
