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Ann R. Thryft
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Medical yes, military no
Ann R. Thryft   6/25/2013 3:18:05 PM
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Thanks for this report, Rob. It sure makes sense that neither one of these industries wanted to outsource manufacturing, especially not to offshore it. I'd be very surprised if the defense industry ever went for that. But I'm not totally surprised about medical devices, given their growing electronics content: that makes a lot of sense.

Rob Spiegel
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Re: Medical yes, military no
Rob Spiegel   6/25/2013 7:56:42 PM
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Ann, I think there are regulations preventing outsourcing of military devices. As for medical, I also am not surprised, espeically knowing that that the U.S. has a very robust EMS industry.

Ann R. Thryft
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Re: Medical yes, military no
Ann R. Thryft   6/26/2013 12:36:13 PM
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You're right, Rob, there are such regulations. But there also used to be regulations, or just habits, against using open-platform software & hardware, and those got overturned when COTS was born.

Rob Spiegel
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Re: Medical yes, military no
Rob Spiegel   6/26/2013 1:25:47 PM
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I think the move to COTS was a good idea in most applications. It helped end -- or curtail -- the $700 hammer and the Golden Fleece awards.

Ann R. Thryft
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Re: Medical yes, military no
Ann R. Thryft   6/26/2013 1:53:10 PM
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COTS is definitely a two-edged sword. You're right about the cost savings. But it's also true that the idea of using Microsoft Windows for critical DoD platforms, let alone the Global Information Grid, left a lot of people scratching their heads. Some things should NOT be open platform.

Rob Spiegel
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Re: Medical yes, military no
Rob Spiegel   6/27/2013 11:26:52 PM
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With the shift to lead-free components, a couple industries -- medical and defense -- moved away from COTS (which are now lead-free) and started using components from smaller -- and more expensie -- runs of leaded parts. With many products needing to last 20 years or more, those industries were not ready to trust the new lead-free components.

Ann R. Thryft
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Re: Medical yes, military no
Ann R. Thryft   6/28/2013 12:03:23 PM
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I'm not sure which military hardware you're describing. The military was still using a lot of COTS stuff, at least for soldiers, five years ago when I covered that field. The lead-free issue had been a big deal but mil suppliers were making separate, lead-full mil product lines since mil products were exempted from the restrictions. Other mil suppliers that also sold to commercial customers ran two lines, one for each market, with the understanding that they'd try to move over to lead-free if/when the statute of limitations ran out on that exemption. It was also to give them time to deal with the performance issues of lead-free. But that was still all COTS, since COTS are necessary due to costs.

Rob Spiegel
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Re: Medical yes, military no
Rob Spiegel   7/2/2013 3:16:47 PM
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Ann, not sure we're using the same terms. Or maybe I'm mixed up. I thought that when suppliers started making a separate line of components with lead for the military, they were no longer considered COTS, since the commercial off the shelf components were now lead-free. Thus what used to be COTS was now something between mil spec and COTS. And didn't a lot of those suppliers simply quit making leaded versions of their components?

Ann R. Thryft
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Re: Medical yes, military no
Ann R. Thryft   7/3/2013 12:43:16 PM
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Rob, there does seem to be confusion on what happened and the terms involved. COTS generally refers to commercial OTS component hardware (defined by its functions, manufacturers, availability and pricing), and sometimes the board-level products made with them (in addition to open-platform software). It's not a very precise term, but it basically means "not custom" and "not proprietary," and usually "open platform." Of course, the extent of customization actually depends on what level of value-add has occurred at any given point and who's selling to whom along the supply chain.
To say that one of these boards, or even components, is no longer COTS because it's leaded vs lead-free, doesn't make much sense if it's still an Intel processor, for example. That terminology usage might be technically true but unnecessarily confusing and not useful. Only some types of components needed to retain lead solder for military performance reasons, and at this late date, I don't remember which ones. Some suppliers did, indeed, stop making leaded components. Again, all of my knowledge is about 5 years old.

Rob Spiegel
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Re: Medical yes, military no
Rob Spiegel   7/11/2013 10:29:20 AM
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This is new to me, Ann. Which shows holes in my knowledge. I was under the impression from distributors (my former area of coverage) that COTS stood for "commercial off the shelf." When the military used COTS, that meant they were not buying parts that were mil-spec. Since commercial off the shelf would cost less than mil-spec, there were savings to be had. 

When components that still had lead in them became effectively a specialized market, they were no longer "commercial off the shelf."

These terms will kill ya.

Ann R. Thryft
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Re: Medical yes, military no
Ann R. Thryft   7/11/2013 2:01:17 PM
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Rob, the products made to mil spec vs products made with COTS hardware and software were pretty easily distinguishable until ROHS. After that, things got pretty confusing, especially the terminology. But building a product with COTS components that still use lead solder doesn't make a product mil-spec. Mil-spec was a long, complicated, gnarly process. As to what terms are used now, I don't know. My knowledge--which came from OEMs and board-level suppliers who bought components and sold their boards as sub-systems to OEMs--is now about 5 years old, so I'm not up to date, either.

JimT@Future-Product-Innovations
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Re: Medical yes, military no
JimT@Future-Product-Innovations   6/26/2013 4:40:28 PM
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The US State Department, cooperating with the US Commerce Department regulates all Military classified projects as 'ITAR' – International Traffic in Arms Regulations.  If a company is developing a product internally (long before its commercial launch), their product is pre-classified either as ITAR or non ITAR, based on voluntary internal auditing and compliance.

If a program is deemed to be ITAR, the State Department strictly requires that all design, manufacturing, and any involvement on any component whatsoever, be completed by a US Citizen in a US facility on US soil.  Not even a Canadian in Iowa (for example), is allowable to work in any capacity under ITAR regulations.  Nor could any American design so much as a custom switch-cover in Hong-Kong.

Absolutely zero tolerance for any non-US-citizen to even see so much as a marketing brochure.

Ann R. Thryft
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Re: Medical yes, military no
Ann R. Thryft   6/26/2013 5:54:12 PM
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Thanks for that definition, Jim. I remembered it, but only vaguely and not the ITAR name. And you are right about the distinction between the terms "outsourcing" and "offshoring."

Charles Murray
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Outsourced to Europe and North America
Charles Murray   6/25/2013 8:00:14 PM
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It's intersting to note that the majority of the outsourcing goes to North America and Europe. My immediate reaction when I hear the word "oursourcing" is Asia, because so much of the PC industry's work is done in Asia.

Rob Spiegel
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Re: Outsourced to Europe and North America
Rob Spiegel   6/25/2013 11:21:56 PM
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Yes, Asia was certainly the largest wave. As well as PCs, it was everything electronic.

But, as Bob Dylan said, "Things have changed."

In the first quarter of 2013, after a number of years, North America again became the worlds laregest manufacturer, passing China.

 

JimT@Future-Product-Innovations
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Re: Outsourced to Europe and North America
JimT@Future-Product-Innovations   6/26/2013 4:46:08 PM
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After the outsourcing explosion that detonated in 2000, and after living thru the deteriorating US manufactures' gloomy dilemma's, I didn't realize that pendulum had swung back all the way, as of this year.  – It's very good news for American Jobs.  Outsourcing does not have to mean "Off-Shore".

Rob Spiegel
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Re: Outsourced to Europe and North America
Rob Spiegel   6/26/2013 7:12:11 PM
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Yes, it is good news, Jim. I don't think cell phone manufacturing will come back anytime soon, but some stuff is staying and some stuff is coming back.

It seems to be a confluence of changes. China's labor is increasing -- helped in part by the Chinese government encouraging the formation of labor unions is factories building U.S. and European goods (but not for goods aimed at the Chinese market). Logistics hurts -- thus there's a trend to build near your market. U.S. executives are getting tired of staying up all night talking with their Chinese manufacturer. They'd rather do their telephone ranting in a U.S. time zone. Quality is an issue, as is intellectual property.

Ann R. Thryft
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Re: Outsourced to Europe and North America
Ann R. Thryft   6/27/2013 4:16:06 PM
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Thanks for the specifics, Rob. I was about to post that question.

vimalkumarp
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outsourcing in medical manufactuiring
vimalkumarp   7/11/2013 1:26:33 AM
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Most EMS companies have better manufacturing and in-house resources and domain knowledge for low to mid-volume and high-mix manufacturing in comparison to medical OEMs is a great point. Being a medical device design consultant from India, i have  workd with many medical device giants and i have seen this shift towards outsourcing in medical manufacturing.

Rob Spiegel
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Re: outsourcing in medical manufactuiring
Rob Spiegel   7/11/2013 10:53:49 AM
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That makes a lot of sense, Vimalkumarp. It's also a good division in labor. Let the medical folks design the products their customers need and leave the manufacturing to manufacturing specialists.

vimalkumarp
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Re: outsourcing in medical manufactuiring
vimalkumarp   7/11/2013 11:36:56 AM
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i agree with your point that it is better that the medical folks design the products their customers need and leave the manufacturing to manufacturing specialists. It reduces time to market and also help them focus on the core areas.

 

Rob Spiegel
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Re: outsourcing in medical manufactuiring
Rob Spiegel   7/11/2013 8:33:35 PM
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Yes, Vimalkumarp, that was the original arguement that sent bilions of dollars in manufacturing to China. In many cases, that was a wise idea. Yet I remember at the height of the rush to China, a distribution executive noted that his customers were shifting to China without any thought or investigation as to whether it was the right decision. Their investors expected them to shift to China to save money, so they did so.

vimalkumarp
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Re: outsourcing in medical manufactuiring
vimalkumarp   7/12/2013 1:09:44 AM
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@Rob: Yes as you have rightly mentioned cost arbitrage was one of the most important reasons for the shift to China for manufacturing. Now other avenues like Costa Rica, Vietnam,Bangladesh are also in the arena. Quality issues were observed in China and cost is also rising which has forced  the device manufacturers to explore options other than China.

Rob Spiegel
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Re: outsourcing in medical manufactuiring
Rob Spiegel   7/12/2013 1:22:53 AM
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Yes, Vimalkumarp. What I'm hearing is that companies are seeking manufacturing closer to their markets. Eastern Europe for Europe. Mexico and Central America for the U.S.


vimalkumarp
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Re: outsourcing in medical manufactuiring
vimalkumarp   7/12/2013 1:35:43 AM
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your point is excellent that companies are seeking manufacturing closer to their markets as this saves lot of money is logistics. Ireland is an example for this kidn of choice. Almost all medical device giants have their manufacturing setup in Ireland.

Rob Spiegel
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Re: outsourcing in medical manufactuiring
Rob Spiegel   7/12/2013 10:39:11 AM
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Good point on Ireland. Eastern Europe is not the only European territory receiving the benefits of outsourced manufacturing. 

vimalkumarp
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Gold
Re: outsourcing in medical manufactuiring
vimalkumarp   7/12/2013 12:36:39 PM
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i have personally worked with 2-3 major companies with their setup in Ireland. India is slowly and sleadily becoming a design hub



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