Manufacturing / Production Technology, Hardware & Services


Omnigo contract manufacturing - past, present amd future

28 October 2009 Manufacturing / Production Technology, Hardware & Services

Omnigo celebrates the 10th year of its existence in 2009, and the company was around as two different entities for at least another 10 years before that. Sadly, while the company had planned to have a huge celebration with festive happenings throughout the year, these plans were tempered somewhat by the global and, indeed, South African financial outlook after the catastrophic collapse of the banking industry overseas. Although South Africa has remained relatively unscathed by the shenanigans abroad, it has started to have an impact here as well; an impact which is felt by contract manufacturing companies like Omnigo.

In electronic contract manufacturing there are many factors that are used to distinguish between competitors, some of which are quality, size of the organisation and years in existence. Omnigo believes that it is unique in many ways, and that one of the company’s strategic strong points is the fact that it does not have its own product that it manufactures; because of this, it focuses all its energy on customers and their needs. Omnigo has the capability – and willingness – to manufacture small (10 units and less) to large (30 000 units and more) volumes, and is capable of rapidly adjusting to its customers’ needs.

These strong points, however, depend on Omnigo’s customers refreshing existing orders and placing new orders. In the past this was generally not a critical factor, but because Omnigo’s customers have been affected by the global financial downturn, these customers struggle to sell their current products and where they already have stock, their customers in turn ask for deliveries to be held back – sometimes for up to six months. In some instances Omnigo has been approached by its customers to do likewise and, although it tries wherever possible to accommodate them, this of course places a financial burden upon Omnigo’s shoulders. Managing director Rieël Schönfeldt says that he does, however, see the sun beginning to break through the clouds and expects that Omnigo’s dedication to its customers, through thick and thin, will mean that its customers do not take their business to other contract manufacturers during difficult times.

According to Schönfeldt, one of the things that is hurting South Africa’s economy is the fact that such a lot of contract work (electronic and otherwise) is being contracted out to overseas organisations. This hurts South Africa on many levels, not least of all economically and socially. Some of Omnigo’s customers and potential customers are at the moment seriously considering taking their electronic manufacturing overseas and comparing South Africa’s manufacturing costs with those offshore.

Because of South Africa’s high labour input costs, which have been escalating since the early 1990s, it is becoming increasingly challenging for local companies to compete with homogenous, well organised overseas countries. Schönfeldt feels that most companies in South Africa are not willing to consider these factors and are primarily concerned with their own bottom line. Although this is as it should be, it does not address the fact that important revenue is leaving South Africa. He believes, as many do, that it would be fantastic if the cost of living could be curbed in some way by the government, but that cannot be taken into account in business.

Owing to the immense pressure from business and commerce, Omnigo has been forced to reconsider its organisational structure. By doing this, as well as a few other actions, the company is positive that it will be able to remain competitive in the current price-sensitive marketplace, while not forfeiting quality, schedule and service levels. Omnigo did not take this route lightly and analysed numerous models to determine how to reduce overheads without compromising anything else. The company says it does not take any decision like this lightly, and careful consideration was given in order to have the least impact on personnel.

Omnigo is now becoming a leaner organisation which is going after customers in a positive and aggressive manner. Because it has no products of its own, the marketing side of the company cannot rely on traditional forms of disseminating itself and has to rely heavily on personal contact with its customers. Omnigo believes in creating long-term business relationships with its customers and has learned valuable lessons over the past six years regarding the value of a professional business relationship with customers.

Omnigo has also restructured itself in such a way that more depth is provided along the front end of service delivery, where it is in constant communication with its customers. The company expects that the increased focus on its customers will begin to show during mid 2010 when production volumes are expected to start ramping up again. Being customer orientated, of course, means that customer service must be flawless and in the mind of Omnigo’s personnel, the only way to achieve that is to deliver what the customer wants at the time that it is wanted and in the format it was asked for.

According to Schönfeldt this is always problematic, mainly because of the component suppliers that sometimes slide in their deliveries, but also sometimes because of the customer and the parts that are specified in their document packs – sometimes the parts are outdated, sometimes a component is used that was readily available at the time of development but which is now on consignment for a large OEM, amongst other factors. Notwithstanding any of these issues, Omnigo is striving to provide customer service the way it believes it should be done, the company’s motto being: 'A customer that has his/her product in hand, on time and in working condition is a happy customer'.

Schönfeldt concludes, “So while our past has been a bit smoother, albeit challenging, presently it is extremely challenging with ups and downs every month. Omnigo is using this time to market its capabilities and win new customers. We are also focusing on our existing customers – they are very important to us and we appreciate their business and loyalty. The future looks challenging with a lot of our current marketing actions developing into new business relationships and our existing business relationships strengthening as we pull through these challenging times together.”



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