The new SIPLACE SX: Groundbreaking capacity-on-demand business models for breathing electronics production

8th April 2010
Written by : ES Admin
The new SIPLACE SX: Groundbreaking capacity-on-demand business models for breathing electronics production
With its technical innovations, its gantries that can be exchanged within minutes and the SIPLACE Multistar CPP placement head with its very large component spectrum, the SIPLACE SX placement platform sets new standards in electronics production. Beyond these more technical aspects, the capacity-on-demand concept of the SX Series uses Rent-a-Gantry to open the door to groundbreaking new business models, which are becoming increasingly important for electronics manufacturers in today’s business environment. With the help of these models, short-term seasonal as well as medium-term utilization volatilities can be easily absorbed to achieve a production that breathes in line with demand. This makes them an exceptionally interesting alternative to traditional purchasing or rigid leasing.
The technical prerequisite are the newly developed interchangeable gantries of the SIPLACE SX, which make it possible to scale the placement performance of an existing line flexibly and in accordance with demand while protecting your liquidity. Some early examples show how these capacity-on-demand business models, which SIPLACE refers to as Rent-a-Gantry for Peak Demand and Rent-a- Gantry for Floating Demand, work in practice.

As part of SIPLACE’s capacity-on-demand concept, electronics manufacturers can choose from two flavors of Rent-a-Gantry to meet their production objectives in the most efficient manner: Peak Demand and Floating Demand.

Rent-a-Gantry for Peak Demand: the right choice for short-term requirements
The Peak Demand model was designed for short-term requirements like those caused by rush orders or seasonal fluctuations with durations of up to four months. For this classic scenario, SIPLACE offers short-term gantry rentals for up to four months which can be renewed if necessary..

The Peak Demand model fits perfectly into the flexible SIPLACE SX System architecture. Renters can install a complete gantry equipped with their choice of SIPLACE 20-nozzle Collect & Place head, the SIPLACE CPP head or the SIPLACE TwinHead easily into their existing, accordingly prepared SIPLACE SX1 and ramp up production immediately. The rental fee is based exclusively on the contract’s duration and not on the placement head.. Each rental contract also includes a full equipment warranty.

With the Peak Demand model, electronics manufacturers can for the first time adjust their invests in line with capacities and concepts on their average needs and not on their demand peaks. If necessary, they can ramp up their capacity within shortest time and scale it down again when business returns to normal. In many cases, a simple rental can thus eliminate the need for expensive extra shifts. If the demand fails to rise, they don’t incur any extra costs.

The lower initial invests improve cash flow and supply additional room for business operations. In addition to these basic financial benefits, the new model also makes the balance sheet look better as the rented capacity does not add to the company’s assets and hence helps to improve asset productivity significantly..

The Rent-a-Gantry for Floating Demand model, on the other hand, is a completely different approach to help manufacturers cope with business challenges. It provides an alternative to classical purchasing in particularly interesting for customers who consider risk minimization, long term asset productivity, and liquidity as key issues.

Rent-a-Gantry for Floating Demand: For long-term adjustment to fluctuating requirements
Demand fluctuations caused by economic factors create an increasingly challenging business environment, adding to the already existing issues from short term fluctuations. In the past, manufacturers had to invest when demand rose, but there was no certainty that the investment would actually pay off. If the economy declined, the capital was tied up and not available for short-term liquidity needs. As a result, the underutilized equipment represented primarily an inflexible cost pool.

With Rent-a-Gantry for Floating Demand, SIPLACE now offers electronics manufacturers a solution that opens up new degrees of freedom. The approach is very simple: The customer initially invests in the number of SIPLACE SX+ machines (frames with no gantries and no heads), feeders and accessories he thinks he needs to meet the anticipated placement performance and feeder capacity requirements. For each SIPLACE SX+, the customer also acquires 20 gantry vouchers, each of which entitles him to use a SIPLACE SX gantry with any type of head for a period of three months. The price for each voucher does not become due until a gantry is requested. The vouchers are good for a period of five years.

With its Rent-a-Gantry for Floating Demand model, SIPLACE thus takes on part of the business risk. The manufacturer saves on his gantry investment and instead purchases gantry vouchers, which don’t have to be paid until the gantries are needed. The gantries remain on SIPLACE’s balance sheet, in effect not burdening the customer’s books. The positive effects on asset productivity are apparently quite significant. Cost for gantries and heads only occur if they are actually utilized – hence making money. Being operational cost and no investment, they can be taken off tax at the same period.

At the same time, the model offers a level of flexibility that far exceeds traditional leasing models. Mixed models are conceivable, too. For example, a customer can purchase a small number of gantries the traditional way and rent additional gantries when needed by using vouchers.

Optimizing the balance sheets: Keep the initial investment low for a breathing production floor The impact of this innovative business model on the balance sheet and the budgets required for new investments is huge. In a concrete example, a customer was able to reduce his investment requirements for a line with three SIPLACE SX placement machines by roughly 50 percent.

The savings in the initial investment can be spread over time and used for ongoing operating costs and other budget items. The contract itself expires when the last voucher is used, there is no fixed duration. Additional vouchers can be purchased after that. During the entire contract term, the SIPLACE SX is covered by the regular warranty agreement, while gantries are covered by the business model and come with parts warranty for the full time they are used: This can be up to five years maximum! .

In summary: Flexible business models make capacity on demand a reality
Gantry vouchers enable the electronics manufacturer to respond flexibly to fluctuating demand over the medium term. If the order situation is positive, he can produce the required number of boards by installing the maximum number of gantries. When orders decline, he requests fewer gantries. In either scenario, he incurs the cost for his gantries only when he needs and uses them, thus optimizing his asset account by turning traditional fixed costs into variable costs.

For each of these requirements, the Rent-a-Gantry models for Peak Demand and Floating Demand are therefore exceptionally attractive offerings that provide electronics manufacturers with new options in an increasingly unpredictable and fluctuating market.

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