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22 SMT Magazine • May 2016 cycle time of 120 seconds. An allowance must then be included for productivity and unavoid- able losses, so perhaps a line with a cycle time of about 100 seconds per product is specified. In peak-time scenarios, the line is then capable of building to the customer's order without signifi- cant risk of missed delivery. Built into this model is the reality that the line will never exactly meet the demand from the customer. Even at peak times, the line is expected to run with 20% overhead. These ex- ample numbers will vary, of course, as more or less risk is deemed acceptable. Throughout the life-time of a product, however, the production demand will fluctuate significantly. This condi- tion will be reflected in the contract between the EMS company and its customer, which also often specifies a minimum production quantity. However, if the delivery demand were to reduce by 30%, then unless it is acceptable to stockpile products, the line either has to slow down by 30% or stop working 30% of the time. Factoring in the original 20% overhead, the whole line operation is now only working at around half its expected capacity. The human element in the line operations can be easily re- allocated to other customers' production lines, so balancing of human resource requirements over the entire operation is possible. The SMT and related machines are stationary, however, and thus underutilized. Replacing the human operations with fur- ther automation now seems like a bad idea be- cause the return on investment has to be calcu- lated on the basis of the average workload, not the rated workload. This can effectively double the expected time required for the return on in- vestment to be achieved, which can then extend toward or even beyond the agreed contract with the customer. The dedication of production au- tomation in the simple EMS environment is an effective barrier to innovation and performance improvements, handling, and quality. Flexibility with Industry 4.0 This inability to provide flexibility in manu- facturing, especially at the small and medium enterprise level, is exactly what Industry 4.0 is aimed at resolving. Flexibility can be achieved in different ways. Moving SMT machines from are brought into clear focus. There is a lot of waste in these lines, especially for major as- sets such as SMT machines, in-circuit test, re- flow ovens, because of variation in customer demand. The manual labor on such lines can be redeployed, but very rarely the machines. This situation gets worse as the level of automa- tion increases, resulting in a law of diminish- ing returns for investment in automation; even though, in principle, the use of automation should provide lower fixed costs. We need to understand the context of the costs on both sides of the equation to address this conundrum. The investment cost of auto- mation and the fixed labor costs that it replaces is relatively easy to calculate in a well-defined way. The more difficult element to calculate is the effect of introducing automation where the equipment will not be fully used. Consider a simple, dedicated, end-to-end production line that an EMS company may typ- ically operate. They will have negotiated with the customer the quantities of the product and schedule needed for delivery, process require- ments that match the product technology, as well as conformance and compliance, includ- ing testing, quality control, management, and traceability. The EMS company will have made calcu- lations to decide on the specific SMT and re- lated equipment for the line to ensure that it can satisfy the peak production requirement for the customer, given target yields and productiv- ity levels. For example, the customer requires 2,500 units per week of a certain product. Look- ing at the production calendar, they may decide that this requires an all-inclusive production EMS RulES oF autoMation & Roi " we need to understand the context of the costs on both sides of the equation to address this conundrum. "