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Strategies for the 21st Century_ Telecommunications _ PlasticsToday
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Strategies for the 21st Century: Telecommunications
By admin
Published: December 29th, 1999
Telecom is a booming industry, but competition is fierce. Success comes with specialization.
Telecom is a booming industry, but competition is fierce. Success comes with specialization.
Intense competition, parts shortages, and industry consolidations are shrinking the profit margins in the consumer
products division of some of the major wireless phone manufacturers. Some are disconnecting. For example,
Qualcomm has announced its intention to sell its mobile phone business to concentrate on other more profitable
ventures. And earlier in 1999 Sony announced that it was discontinuing its North American wireless phone business.
Still, the mobile phone marketplace itself is booming and competitive. Analysts expect there will be at least one billion
mobile phone users by 2003, accounting for nearly $514 billion in revenue. The infrastructure that supports this
wireless (and wired) service is booming as well.
Where does the molding industry fit in with all this growth? The fight among molders for a slice of the telecom pie is
intense, but those who get the business will likely be rewarded with a partnership or a strong business alliance that
could prove profitable. The telecom wish list follows.
Suppliers Must Add Value
The term valueadded is often used, but has many definitions. To the OEM valueadded means you can do
something your competitors can’t. Jack Dispenza, design supervisor at Lucent Technologies’ Design and
Engineering Center of Excellence (Bell Labs), says many molders knock on his door, but not all can be suppliers to
Lucent.
“When a moldmaker or molder comes to Lucent and says he wants to be our supplier, the question I ask is, ‘What can
you as a supplier of plastic parts offer that is an improvement over your competitors?’” says Dispenza. “The first thing I
look for is something that would set that supplier apart from the rest. This may include CAD/CAM expertise, online
SPC, highprecision moldmaking, or specialized material knowledge. It may include gas assist for large outdoor
parts, structural foam molding for loadbearing parts, insert molding for boardmounted components, or twoshot
overmolding of conductive elastomers.”
Evencio Fernandez, global commodity manager for plastics at Motorola, says the ideal supplier is one that can add
value by giving Motorola’s products a competitive advantage. Whether it be through faster cycle times or through
helping give a product an attractive new look, a supplier’s ability to use technology to help Motorola distinguish its
products is of vital importance.
“We do not want a supplier that we have to bring along,” says Fernandez. “What I want from a supplier is something
that I cannot get anywhere else, some sort of whiz bang, something that will help Motorola compete. Or, we want a
onestop shop that provides us with a variety of different ideas that can help us to improve our products.”
Dispenza says that a molder who provides a total package of services frees up Lucent to do what it does best. “What
Lucent wants to concentrate on are its core competencies—the technology, the packaging, the software, the
operations,” he says. “We look to outside molders, as well as our own factories, for advances in processing, tooling,
and materials.”
The final piece of the value puzzle is a global presence. “Overseas business has increased phenomenally over the
last several years,” says Dispenza of the company’s 59 percent increase in nonU.S. sales over the last year for
network and network wireless business. “Our goal is to design anywhere, build anywhere, and the purpose of having
a global vendor base is to serve these diverse and emerging markets.” Molders don’t necessarily need facilities
overseas, but at least the ability to manage projects with overseas partners.
Partnerships for Growth
Fernandez says stronger relationships with a smaller number of suppliers will be essential to Motorola’s future
growth. He says that all of Motorola’s competitors have realized the need to downsize their supply base, but says
Motorola is putting more emphasis on it than others. Motorola believes stronger strategic partnerships can be forged
when there are fewer allies.
“We are going to be putting a big chunk of business with our suppliers, and they have to make a substantial
commitment to us in terms of capacity and performance,” he says. As the stakes get higher, the need for mutual trust
becomes greater. “You need to develop strong relationships, but that takes time. With fewer suppliers we can put
more time into it.”
The same trend exists at Lucent, which, although it has captive molding operations, outsources half of its molding
volume and wants a small group of specialty molders with which to partner in the future.
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