Supplier support and surveys
14 April 2009
The UK has a problem. Not an insurmountable problem but a problem none-the-less.
Electronics design in the UK could, broadly speaking, be split into two camps. One market ties in with products that can be manufactured on home turf - products that are niche, low to medium volume, highly complex or of a strategically sensitive nature. The other camp is occupied by those that design for the high volume markets with a global manufacturing footprint.
Both groups of designers, you would have thought, are important targets for the vendors of electronic components and services, but a trend appears to be emerging that this is not always recognised.
A salesman is generally judged by what they sell, which superficially seems obvious. It is important, particularly for the salesmen in question, that they are recognised for the sales they are responsible for, including indirect sales. So if our salesman is selling to our two camps of designers, as outlined above, he or she will take direct orders for everything sold to the indigenous designer/manufacturer. However, the chances are that sales to the design consultancies in the second camp are likely to be restricted to prototype, or at best pre-production, quantities – production volume requirements being credited to and met by distributors in Eastern Europe or the Far East.
Does this matter?
There is the argument that if the company gets its sales it doesn’t matter who did the selling and in what part of the globe. But there are consequences. If a supplier only has limited potential sales in the UK it is likely that it will employ a distributor rather than go to the market with its own salesforce. Distributors serve a very useful purpose, and in some cases provide a valuable technical resource in their own right, but they are never going to be able to replicate the knowledge and expertise of every one of its principals. The result is an erosion of the technical knowledge base of the entire electronics design community, as equipment and component suppliers have always contributed greatly to this pool of knowledge.
Interestingly a report due out today (15th April) from Cambridge University indicates that the design capability of the UK may be suffering, while new design ‘powerhouses’ are emerging in such countries as Singapore and South Korea, countries in the past associated with low-cost production. These two countries are ranked one and two in the list of twelve countries for design ‘output’ (using factors like numbers of graduates, design firms, patents etc.) relative to the size of each country’s economy. The interesting thing about this, if we are to pursue the argument above, is that with their history in high-volume, low-cost production, these countries have a more complete industry than we do in the UK if they continue to attract the support from the suppliers.
The UK is sixth in this list in relative terms, but fourth in absolute terms (i.e. not dependent on country size) – a measure that has the USA leading the way. According to the report: “The UK retains its leading capabilities in design education, but the report raises concerns about a decline in both turnover and employment in the consultancy sector. Data suggests that the UK design services sector was adversely affected by the dot-com crash in 2001 and it may be that the sector will be further affected by the current economic climate. However, overall design employment appears to be rising, according to official DCMS figures.”
The “International Design Scoreboard” has been produced by a consortium of UK universities led by the University of Cambridge and supported by the UK Design Council. It marks the first ever attempt to compare national design capabilities. The project has been funded by a research grant over £300,000 from the joint Arts and Humanities Research Council (AHRC)/Engineering and Physical Sciences Research Council (EPSRC) research programme ‘Designing for the 21st Century’.
The ‘Scoreboard’ features 12 countries, as comparable data was not available from other notable countries – like Germany and China. “The study is an imperfect first attempt to rank countries’ design performance, but its overall results, which show that the design sector is growing in the Far East in a manner which outstrips many Western countries, are consistent with anecdotal evidence,” Dr James Moultrie, from the University of Cambridge’s Institute for Manufacturing, said.
I must admit that £300,000 of public funding seems a fairly generous sum to do an incomplete piece of work that reaches the same conclusion that anyone in the UK electronics industry could have ventured for no more than hot lunch and a pint, but such a first attempt at least makes the future trends quantifiable.
In terms of helping the UK industry, I could only suggest that the report would have the negative effect of encouraging suppliers to decrease its support for the UK in favour of the new ‘powerhouses’ – but maybe the report needs to become a bit more comprehensive and established before companies start making business decisions based on it!
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