Global Manufacturer Gets Lean, Streamlines Its Supply Chain with Move to the Cloud

Posted by Ranga Bodla, Industry Lead, Wholesale Distribution, NetSuite

Success in B2B electronics manufacturing is simple in concept: Meet and exceed customer expectations for quality, speed, and affordability. Partner with the right contract manufacturers. Excel at innovation and global supply chain efficiency across all channels and time zones.

Execution on those principles is far more difficult. Few people know that better than Ed McMahon, the CEO of Epec Engineered Technologies, a Massachusetts-based manufacturer of custom build-to-print electronics including battery packs, flex and rigid-flex circuits, high reliability user interfaces, energy efficient fans and motors, cable assemblies and printed circuit boards (PCBs).

Since 2002, McMahon has led Epec’s transformation into an agile global enterprise specializing in complex build-to-print electronics. The early days of McMahon’s tenure were inauspicious, as the PCB industry in the U.S. was undergoing rapid consolidation. The number of U.S. PCB makers has fallen from 1,200 in 1999 to just 200 today.

“We went from printed circuit boards being a $10 billion industry in the U.S. to $1 billion in 10 years,” McMahon said in a podcast interview with best-selling author Dirk Beveridge, founder of the UnleashWD community for distributors. Most of PCB manufacturing done in the U.S. moved to Asia.

For Epec and its competitors, doing business with Asian contract manufacturers became an imperative — but it also introduced dangerous new complications and risk.

Overcoming those challenges required high-caliber management, organizational discipline and exhaustive due diligence. Epec, for instance, visited with 120 contract manufacturers in Asia before settling on 20 as its key partners. It implemented a Six Sigma “5Y” root cause analysis program to identify and resolve issues across operational processes.

Epec’s top-down, process-centric modernization has paid remarkable dividends. Founded in 1952, Epec’s revenue has exploded and it has grown its customer base to 5,000, including GE, Philips, Siemens, Raytheon, Lockheed Martin and Northrop Grumman. At the same time, Epec has diversified its product line and resources by acquiring 16 distressed companies.

“The real difference is the processes, procedures and technology used to actually transmit data from start to finish, from the customer all the way through to manufacturing,” McMahon said. “One of the things we learned early on was to develop our supply chain so intensely that we could bring product from Asia faster than anyone else, while still doing all the engineering here in the U.S.”

Epec Moves to Cloud ERP

One key to Epec’s success is its deployment of NetSuite ERP in 2007 to replace inflexible on-premise systems. The cloud-based NetSuite platform has been instrumental in enabling Epec’s transformation into an agile, innovative manufacturer with a remarkable five-day turnaround from product design to customer delivery.

“You can’t have speed unless you do a lot of upfront work and have upfront processes that ensure you can move quickly,” McMahon said. “That’s one way that NetSuite helps us, because we’re able to communicate a lot quicker.”

McMahon unveils the secrets to Epec’s success in the 36-minute podcast with Beveridge, who notes that Epec has built on its long history of innovation and accomplishments, including producing printed circuit boards for the Apollo 11 mission in 1969, mankind’s first successful moon landing.

“What Ed has done to transform his business through a process of innovation at scale with speed, agility and quality is an amazing story with lessons we can all learn from,” Beveridge said. “They’ve created a hybrid business model that embraces innovation and efficiency and they have a maniacal focus on customer service.”

McMahon credited cloud ERP as giving Epec the flexibility it needs to innovate and scale.

“We use NetSuite for a competitive advantage over competitors who still do things to old way with spreadsheets and disparate applications,” McMahon said. “Cloud ERP has been a critical element in enabling us to become one of the fastest-growing companies in electronics.”

Click here to hear the UnleashWD podcast interview with McMahon.

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