How Quality Automation Drives Electronics Manufacturing Success and Supply Chain Resiliency

Chris Nahil
By Chris Nahil on May 23, 2024

Today’s electronics and semiconductor producers face fierce competition. And with compliance and supply chain issues at every turn, everyone is looking for that secret ingredient to manufacturing success. Here, we explore how quality automation, powered by ETQ Reliance®, is transforming the industry — helping electronics companies enhance efficiency, overcome global market challenges and deliver new products with velocity.

The Rising Demands and Shrinking Product Lifecycle in Electronics Manufacturing

It doesn’t matter if you produce consumer electronics, telecom equipment, semiconductors, or home appliances. Rising marketplace demand is in every corner of the electronics industry. Worse, heavy competition puts pressure on you to find nuanced ways to shorten the new product introduction (NPA) lifecycle.

Growing Consumer Expectations

Electronics manufacturers have never faced such rigorous customer demands regarding what they produce and how much.

The consumer electronics market alone is expected to grow at an annual rate of 2.99% over the next few years — hitting well over $1 trillion. And semiconductors, that’s estimated at 6.30% year-over-year market growth until 2027. Electronics manufacturers will have their hands full with production quotas over the next decade — but that’s not the only issue.

New buyer expectations change how you design and produce products. Maintain high product quality? It’s an absolute must. But it doesn’t end there. Customers are demanding more:

  • Smart devices: They crave the convenience and automation that smart features offer.
  • Sustainable materials: There’s a growing desire for electronics made with eco-friendly components.
  • Personalized products: People want devices that fit seamlessly into their individual needs and lifestyles.

These demands create new complexities for your manufacturing and quality management processes. You’ll need to adapt to meet these evolving customer expectations.

Challenges of Shrinking Product Lifecycles

To say the electronics industry is competitive is an understatement. As consumers want the latest technology fast, manufacturers are relentlessly pursuing ways to shorten new product lifecycles and be the first “on the shelves” — not an easy task when you have so many roadblocks:

  • Dynamic compliance requirements
  • Supply chain uncertainty
  • High quality and safety standards for new products
  • Heavy investment demands in R&D

It’s not just the consumers putting this pressure on, however. The 2022 Congressional CHIPS Act showed the U.S. government’s priority to quickly become semiconductor-independent, invest in a more stable supply chain, and find new ways to innovate production throughout the industry.

Quality Challenges and Global Supply Chain Dynamics

As a quality professional, ensuring your electronics meet compliance, safety, and customer standards is a top priority. But how do you maintain quality when so many supply chain roadblocks stand in your way?

Internal Quality Challenges

If you can’t find labor, you can’t fill your assembly lines. The manufacturing industry will see 2.1 million unfilled jobs by 2030. And electrical manufacturing, which relies so heavily on engineers and computer programmers, will be 70,000 short of skilled labor by the same year.

We also can’t overlook cost increases for the industry. Rising wages, experienced by 66% of electronics companies, make it tricky to fill production lines. At the same time, high material costs make it increasingly difficult to obtain new material types, such as sophisticated engineering plastics and rare earth materials.

Most companies simply can’t afford to waste them by scraping and reworking them. Why? Because manufacturing waste costs nearly 20% of every dollar spent in the industry — adding up to $8 trillion per year.

Global Supply Chain Complications

As political tensions grow with China, electronics manufacturers are looking to mitigate risk by finding new sources of materials and production. In 2022, for example, U.S. manufacturing orders in China dropped 40%. High tariffs and uncertain trade policies have forced the industry to explore alternatives for their assembly lines.

As manufacturers move to different countries, compliance becomes a new headache. Product safety regulations vary from country to country and can significantly impact how you manage quality and production across your global operations. Hence, electronics manufacturers need to harmonize to help achieve quality consistency across global operations.

Alternatively, many are looking to standardize electronics production. This standardization would lead to greater supply chain efficiency and ensure consistent product quality across all manufacturing locations. While great for domestic operations, global manufacturers will have roadblocks to overcome because of supply chain complications and compliance variance around the world.

The High Costs of Non-Compliance and Product Recalls

Non-compliance with regulatory and quality standards has always impeded the success of electronics manufacturing. And in 2024, it appears nothing has changed:

Compliance Risks

Non-compliant companies put themselves at risk: Penalties and fines, poor brand reputation with the public, and potential quality risks that could harm customers. And for electronics manufacturers, two major compliance standards stand front and center:

  • ISO 9001: The universally understood global standard for adopting quality management systems and the only ISO 9000 standard that offers a certification.
  • Restriction of Hazardous Substances (RoHS): Requirements set by the European Union (EU) that restrict specific materials from being used in electronics and similar products.

Maintaining these robust compliance standards is often tricky because they change so frequently. It can also be expensive to create an entire compliance program from scratch. Regardless, it’s not optional, and electronics companies are always looking to find ways to achieve compliance at scale.

Impact of Product Recalls

A quality manager’s worst nightmare: Product recalls. And electronics is one of the worst industries to get hit with a recall — averaging roughly $12 million in direct costs per incident. That doesn’t even include the other consequences:

  • The public won’t trust you, and it could damage your brand and customer trust
  • You’ll have to disrupt the operation to address immediate customer concerns and product returns
  • You could face legal action from customers or suppliers
  • It could delay new product lifecycles as you’re just trying to get back on track

Avoiding such catastrophic events all starts with sound quality management.

Strategic Imperative of Quality Automation

Whether you want to offset high labor costs, speed up NPI cycles, better navigate global supply chain issues, reduce the cost of poor quality (COPQ), streamline compliance, or all of the above, quality automation is the foundation of electronics manufacturing success.

Benefits of Digitizing Quality Management

Manual QM through spreadsheets, email, and posted notes is not how electronics manufacturers should handle compliance or ensure product quality. Going digital by investing in a quality management system (QMS) helps you power up production.

With core features for managing document control, employee training, ISO 9001 and RoHS audits, corrective and preventive actions (CAPA), and suppliers, a QMS is your one-stop shop for all things quality. Outpace your competition by:

  • Preventing electronic defects that could result in product recalls, lawsuits, or compliance issues
  • Enhancing customer satisfaction with quality, more reliable electronics and semiconductors
  • Achieving compliance at scale globally
  • Improving QM efficiency across all your manufacturing locations

Automation as a Strategic Priority

With a growing marketplace for electronics, the demand is already there. Customers want your products; you just need to produce them to quality standards. Automation can serve as your strategic priority moving forward.

The link between quality automation and profits is clear. When you can reduce the COPQ, avoid compliance fines and legal costs, spot new ways to optimize production with data insights, and scale production effectively to lower the cost of goods sold (COGS), your bottom line flourishes.

When you can maintain higher customer retention through quality and be the first electronics manufacturer to stock the shelves with new and exciting products, your top line grows.

The result: Higher revenue, lower costs, and increased profitability.