Emselex

Case Study

This Case Study describes a fictious company named Emselex and is written in the form of an application for the European Quality Award. It has been used in training Award Assessors. Readers should note that the case study is not representative of a perfect application or perfection in practice. They should note also that there is no connection between Emselex and any other company named or otherwise.

EFQM 2003 It is the EFQMs intent to encourage the widespread use of this material within companies and organisations. However, no part of this publication may be reproduced, stored in a retrieval system, or communicated in any form or by any means (be this electronically, mechanically, through photocopy or recording, or otherwise) without the prior written permission from the copyright owner.

Table of contents
page Overview 1. 2. 3. 4. 5. 6. 7. 8. 9. Leadership Policy and Strategy People Partnerships and Resources Processes Customer Results People Results Society Results Key Performance Results 2 4 14 21 29 41 52 60 66 70 77

Glossary

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Overview
Emselex is an electronics manufacturing services provider. Our aim is to be a key partner in the provision of printed circuit assembly, final assembly, and test to European Original Equipment Manufacturing (OEM) and Original Design Manufacturing (ODM) companies. Our customers include some of the major electronics equipment providers and designers in Europe and the USA. 2002 revenues were in excess of 350 million and we currently employ 1450 people on our three sites. Emselex has grown from a single site in Germany, with revenues of 80m and 250 employees in 1990. Our 2006 goal is to have 600 million in revenue. We have three facilities with the acquisition of a facility in the Czech Republic in late 1998, and a further facility in France in 2000. The outsourcing of electronic manufacture is a relatively new strategy to be adopted by OEMs in Europe. Though it became a strategy for major US companies through the 1990s, it is less common in Europe, and requires the development of a strong relationship of trust. However, as outsourcing their manufacturing processes allows OEM/ODMs to release their own resources to concentrate on their core competencies of product design, marketing and managing channels to market, the potential cost benefits are encouraging more European companies to partner with us. For a number of companies, the cost barrier of further investing in their own manufacturing facilities is prohibitive. This trend became most apparent in the highly competitive telecommunications area.

Sites
Emselex started as a management buy-out of the electronics manufacturing facility of a high-technology engineering company in 1988. The management team saw the opportunity for developing electronics manufacturing services with German and US OEM/ODM companies, a number of which were already significant customers. Growth and development were extremely difficult in the years between 1988 and 1990, and it was during this time we started our focus on customer relationships and customer service. Our plant in the Czech Republic was acquired from another German company in 1998, and our plant in France was acquired from a large US telecommunications company. In the Czech Republic, we had seen the opportunity for lower manufacturing costs, and the existing skilled work force encouraged us to make this potentially high risk, but now very rewarding, investment. The French site was acquired as an opportunity that arose from our long-term relationship with the previous owner, and has provided us with access to technology developments, new and different skills, and some revenue challenges.

Customers and Partners

Our customers are a range of computer systems and telecommunications companies, 90% of our revenue is derived from five customers. Our German factory manufactures high technology printed circuit assemblies for three customers, including a control system and hardware for our original parent company, supported by their design facility. We have developed our own design capability with their assistance. Our Czech Republic site manufactures primarily mobile phones, and a number of relatively high volume printed circuit assemblies, for three main customers. We are developing the processes for producing sub-systems for automotive applications with a major European customer. We manufacture small specialist network systems in our French site, mostly for the original owner, but we are successfully developing this facility for other customers. Our component suppliers (representing 60% of our purchasing) are mainly based in Asia and the US, though we use local partners in Eastern Europe for higher volume materials such as plastic mouldings, metal casings and packaging. We are working closely with our partners to ensure we minimise the impact of import duties and other costs of manufacturing within the European Union. We will comply with the requirements of new legislation related to the removal of harmful materials such as lead from our products, and to recycle packaging and products that have come to the end of their useful life.

Market Growth
Until 2001, the market was growing at an estimated 20/25% CAGR (compared to growth in the manufacture of electronics at 8% CAGR) and was estimated to be worth 100 billion world-wide in 2000. However, the electronics industry, especially in computing and telecommunications, failed to grow at the same rate in 2001, and market conditions deteriorated considerably. Due to our strong customer relationships, and by focusing on our strengths in customer service, proximity to the European market place, and supply chain partnerships, we have sustained and even improved our market share. Overall revenues were sustained through our acquisitions, though clearly revenues have fallen on our German site. Our market is complex, due to the rate of change of electronics and manufacturing technology. This is fuelled by developments in wireless and optical networking products and Internet-based services driving the convergence of the IT, Telecommunications and consumer products sectors.

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Our People and Standards

Emselex now has a total of 1450 people, 400 of which are in our German plant, 750 in the Czech Republic, and 300 in France. In Germany, we have had IS09001 registration since 1995, in the Czech Republic since 1999 and since 1996 in France. All plants have achieved registration to ISO9001:2000 since 2001. Our Czech Republic facility will achieve registration to TS16949:2002 in early 2004. Continuous improvement has been reviewed and refined over the past 18 years and we adopted the EFQM Excellence Model in 1995. We have performed annual self-assessments since that time.
Operations Director J Schwartz Commercial Director

CEO S Langer

Technical Director

H R Director

Operations Director J Schwartz

Site Directors Mr Knopf Mr Petricek Mr Legrand

Customer Account Managers Mr Zaba Mr Svobada Mr Laurent Mr Riesle

Continual Improvement System Managers

Our Organisation
Our Headquarters is near Karlsruhe in Germany, where the Management Board is lead by CEO Mr Langer. We have a technical director, Mr Becker, commercial director, Mr Farber, financial director, Mr Schneider, operations director, Mr Schwartz, and human resources director, Mr Zimmermann all based at our Headquarters. The board is based on our German site, but occupies offices separate to the manufacturing plant. Our manufacturing plants are lead by Site Directors, Mr Knopf, Mr Petricek, and Mr Legrand, who report to the Operations Director. The organisation is a matrix, and as flat as possible to maximise communication and dialogue across and between the sites. Our Values provide the foundation that underpins the strategic priorities that will enable us to achieve competitive advantage and describe our business ethics. To ensure continued financial success, pride in our workplace and high morale, we are committed to achieving Emselexs goals through adherence to our Values. Our values cover our approach to our Customers, our People, Quality, Technology & Processes, and the Environment.
Commercial Director Mr Farber

Finance Director Mr Schneider

Sales Director Mr Schuhmacher

SCM Director Mr Byers

Technical Director Mr Becker

Site Engineering Managers

Knowledge Management Director Mr Taafe

Site Environmental Managers Mr Hamilton Mr Novak Mr Morel

Design and Development Director

HR Director Mr Zimmermann

Site HR Managers

Training and Development Manager

Teamwork and Employee Development Manager

Customer Teams
To fully support our customers' needs, and so we behave as their virtual manufacturing operation, over 70% of our employees are organised into Customer Teams (CTs) dedicated to serving one specific customer. Customer teams are fully empowered as mini companies, and the customer team manager is allowed to spend up to 5 million on his own authority to satisfy his customer. By working to a clear set of agreed targets measured at regular Business Reviews, we are dedicated to continuous improvement and learning. We strive to keep pace with leaders in technology, quality and supply chain management to offer optimum solutions to our customers and keep ahead of rapidly changing product and manufacturing technologies.

Future Challenges
Competition is very strong, and winning new business is extremely difficult due to the pricing pressure from companies with sites in Asia. We believe we are able to win business from customers who want to manufacture in Europe for logistical or technology reasons. To achieve the 600 million Euro goal we have set we must develop new customers and grow the business with existing customers.

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