How digitisation kept a company competitive on a global scale


Reliability and flexibility are two key ingredients for component manufacturer GPC Electronics as it tries to meet the requirements of its clients. Being in the highly competitive components space means that the company has to be smart when it comes to the processes it uses to manufacture its products. It has to produce high volumes on inventory that are quality made and come in at a cost that will be competitive with overseas manufacturers. This is why when it comes to the Internet of Things (IoT) and digitisation, the company is all about embracing the concepts and ideas.

“Australia is not a huge market so we are driven to look at how we can think globally,” said GPC’s managing director Christopher Janssen, who was presenting at the Industrial Internet 4.0 Summit. “The largest markets are outside of Australia and what we find is that we need to look at those markets because we need to drive volumes. Through volumes we can see what our cost structures are. We can look at how we drive our capabilities and invest in some of those processes.”

Another consideration the company had to look at was its China strategy, which until recently was something it didn’t know it needed to embrace.

“A lot of our customers in North America started asking us ‘what’s your China strategy?’” said Janssen. “I said, ‘Look we’re providing a product to you that is competitive, what is the problem?’ They said, ‘The board is asking because our shareholders will only invest in a company with a China strategy so that you have long-term sustainability that we can rely on’. The answer wasn’t the product is better, or the cost is better, it was that we needed a China strategy.”

As well as putting in place a strategy that satiated the worries – perceived or real – of important clients, GPC Electronics also knew the flexibility angle was necessary, too. Like a lot of manufacturers in Australia, the company had to put systems in place that covered a lot of bases.

“We found that we needed to have agility because we have both small batch sizes with some products, but also have high volume products of which we are making tens of thousand a month as well,” said Janssen. “Having that whole range means we have to look at how we drive our systems. And that doesn’t mean we have a set-and-forget line and say, ‘Let’s just set it up and keep turning it out’. Instead we have to say, ‘How do we make sure we have the systems to be able to manage the changeovers to get the documentation right every time?’”

He believes that Australia has a lot of advantages when it comes to manufacturing, they just need to be found. For example, he says that Australia is a cheaper place to manufacture than Europe and the United States and that is for two main reasons – workers in Australia get paid less than their United States and European counterparts, but, more importantly, Australia tends to work in a vertical rather than horizontal manner. By that he means Australia tends to deal with less people and work across functions whereas in the US, Europe and even Japan, workers are usually specialists in niche areas, which means they have huge work forces.

“Years ago we were making products for Toshiba and we had lots of questions about their product,” said Janssen. “Two of us went up to Japan and over two days we had eight meetings. Each time our hosts looked at us and said, ‘There is only two of you?’ And the reality was there were only two of us and we knew how to meet across different functions – we understood the purchasing function, we understood the planning function, the engineering, what happens in the factory and we were across the whole process. This is not the case in some of the larger industrialised markets.”

Janssen also said that traceability and supply lines are crucial in a factory that relies on such big numbers of componentry.

“Traceability is becoming increasingly important,” said Janssen. “This is where the IoT provides a great advantage. It helps us look at how we do things and how we need to model where the cost structures are. Supply and delivering on time is also very critical. The automotive industry charges millions of dollars a minute if you stop their production line, so luckily we don’t do that.”

The type of software being used to the run the plant was also important because it allowed processes to be completed at any location.

“We use SAP enterprise software, which we rolled out over all our organisation,” said Janssen. “That gave us a commonality of the systems and processes. By doing that we could do the finances in any location, purchasing in any location, engineering in any location, and our documentation was in a central documentation vault. Everything is common – in other words it is information that we use across our whole group. We try to avoid using Excel and other standard files that everybody uses.”

It is these kinds of systems that help the company become popular with many clients, said Janssen. Customers, even large multinationals, come to them and ask for their latest documentation because they know that GPC manage it a lot better than some of its competitors. It has workflows and engineering changes for purchase orders for changes in design – and an array of all sorts of things that go on in terms of those processes.

“We made sure that we could monitor all our different processes and equipment in real time,” said Janssen. “We have a pick-and-place machine and we place 70-80,000 parts an hour. These parts are small. What we have done is linked that with some of the test equipment with its throughput so we can get some meaningful data and understand what is going on inside our processes.”

And in line with its desire to instil best practices in everything it does, the company has installed an optical inspection system. Some of the circuit boards that are manufactured have 5000 parts on them. In the past, the company used to have a manual inspector at the end of the line to make sure the parts were in the right place.

“You can imagine how accurate an inspector was at doing that,” said Janssen, tongue firmly in cheek. “If something was wrong in a major way they could see that, but it was very hard – especially when parts don’t have labels. We moved the inspector off the line. Once the item got placed, it went into an oven then got cured so it stuck to the board and didn’t come off.

“But if we don’t do it, and it goes through the oven and its wrong, we think it better that we find the problem early. One thing is, the inspectors don’t see the errors and the other thing is they replaced them with machines that were much more accurate anyway.”

Finally, the new systems in place help the company run much more efficiently from many different aspects. Operators can know if they are running on time, but they also have the history to understand what causes the factory to run better or worse.

“So, components that we have scanned we can put in the right parts,” said Janssen. “If a board fails a test we can stop it from being used later on so we know it has to be fixed and retested later on before they are put in again. There is a whole bunch of stuff we can do now to make sure we not only have the information, but that what goes out at the end is right including configurations and all sorts of things like that.

“If you look at some of the outcomes, we process about a 1 million parts a day and what we do is get feedback loops on these defects. One such report shows that we have gone from a defect rate of about 60 defects parts per million to about 20. Industry standards are about 200.”

It is these kinds of numbers that make GPC Electronics see that digitisation is a key component of its lasting success in such a highly competitive market.