Taiwanese OEM & ODM Suppliers Constantly Hone Technology to Beat the Global Competition

Manufacturers keep ahead of emerging rivals with assured precision and quality

Driven by a consistent dedication to improving production technology, Taiwan's OEM (original equipment manufacturing) and ODM (original design manufacturing) sector has built up a solid global reputation, particularly for unparalleled manufacturing flexibility and precision.

For the past decade, Taiwanese contract manufacturers have drawn on their well-honed technology to extend their reach into more fields, from motorcycles and automobiles to electronics, aerospace, machinery, and other products. This has helped them overcome increasingly intense competition from underselling competitors in emerging countries.

Following are brief profiles of three Taiwanese OEM and ODM suppliers that have strong technological prowess and have long cooperated with CENS in development of the global market.

Chuen Jaang

Chuen Jaang Precision Industry Co., Ltd. was founded in 1982 in Kaohsiung City, southern Taiwan. It started out supplying auto and motor parts on an OEM basis, and is today highly reputed for its precision manufacturing services and its ability to satisfy customers' needs for the miniature, sophisticated parts and components that are increasingly demanded by industry.

Like most of its Taiwanese counterparts. Chuen Jaang was forced to transform its business in the 1990s. In the first decade of its life the company prospered as a supplier to the domestic scooter industry, but then it had to decide whether or not to devote its limited resources into upgrading its output as the demand for low-end motor parts underwent a widespread decline.

To assure its sustainable development, Chuen Jaang decided to invest considerable funds in improving its production capabilities by bringing in advanced manufacturing equipment and reinforcing quality control. That decision perhaps looked risky at the time, especially for such a small manufacturer, but it proved a success in sustaining growth.

Much of the credit for that fateful decision goes to the company's farsighted founder and general manager, Hsieh Ming-sheng. “We were inspired by the demand from Japanese and German clients for high-precision parts,” Hsieh recalls, “and bought a number of computer numerical control (CNC) lathes, milling machines, and grinding machines to upgrade our production capabilities from the ground up.”

Unparalleled Precision

The investment has apparently paid off, as Hsieh claims his company has the most precise machining and grinding techniques in Asia, and can handle workpieces with diameters down to 0.03mm—half the diameter of a hair—and with tolerances reaching 0.001mm and surface finish as fine as 0.1um.

The firm is also able to mill items up to 2,500 mm long and 1,000mm wide, and is capable of the bar-feed lathing of bars with a diameter of 0.3 mm to 51mm and other products under 450mm with non-bar-feed production. This superior manufacturing technology sets Hsieh's company apart from emerging rivals in the global competition, and makes it a world-class supplier of high-precision parts.

Its enhanced technology has also helped Chuen Jaang to expand its customer base away from the motor parts segment, and today over 60% of the company's shipments go to overseas customers in the watch, semiconductor equipment, vehicle, electronic components, aeronautical parts, and specialized tool industries. By application, 40% of the company's output is sold to the electronic parts and accessories industry, 30% to the molds and dies industry, 20% to the automobile and machinery industry, and the remaining 10% to others.

After years of hard work on vertical manufacturing integration and cooperation with upstream and downstream suppliers, Chuen Jaang has developed an ODM capability as strong as its OEM prowess. Hsieh noted that his company began its ODM business several years ago by working out an entire set of motorcycle engine parts with the help of some big domestic makers of scooters and automobiles, and that this business has won high accolades from end-users for the high quality, dimensional precision, and excellent functionality of its products.

Kuen Tong

The experience of Kuen Tong Industrial Co., Ltd., a top-end OEM and ODM supplier of 3C parts, bicycle parts and accessories, automobile and motor parts, heat sinks, lighting parts, and other products in the central Taiwan county of Changhua, shows that insistence on technological upgrading is a vital ingredient of success for small-sized contract manufacturers.

Established in 1992, Kuen Tong has developed from a family-sized subcontractor into an ISO-9001-certficated enterprise with a modern, well integrated factory equipped with over 135 CNC machines, each of which spins an average of 22 hours a day, and over 200 workers. The firm's annual revenues top US$16 million.

Kuen Tong's founder and general manager, Lin Zhi-zhong, reported that he started the company in a small workroom of only around 16.5 square meters, with two workers and two tapping machines. Thanks to unstinting hard work, he said, the company was able to grow steadily until 1999, when it found its business being eroded away by underselling rivals. To compete, Lin once considered moving the company abroad to reduce operating costs.

“We assessed the feasibility of moving the factory to China,” the general manager explained, “but we eventually gave up that plan, for it would have left over 80 workers unemployed and affected the livelihoods of more than 80 families.”

Plan B, Lin said, was to acquire new forging technology for heat sinks that, at the time, only Japanese manufacturers could make. Despite the difficulties involved, the company dedicated itself conscientiously to the development of the needed technology; and finally, after more than four years, succeeded in applying it to mass production. This started a new chapter in the company's history, as it emerged on the global landscape as a reliable OEM and ODM supplier.

Despite the challenges that have continued to loom ahead, the company has constantly introduced new machines and sharpened its manufacturing capability, for Lin realizes that only a commitment to technology upgrading, quality improvement, and integrity can enable his company to consolidate long-term relationships with its customers. To that end, the company has been engaged not just in developing a top-caliber R&D and management team and consistently introducing industry-leading technologies, but also in setting up electronics systems for logistics and production process management.

Also, the company works on optimizing production processes, not only to satisfy customers with speedy prototyping but also to overcome problems of abrasive wear and high materials consumption during production. This helps the company stand out technologically in the processing of aluminum alloy, carbon fiber, and titanium alloy.

Attention to Detail

Learning from its decades-long experience of dealing with large Japanese enterprises, Kuen Tong pays strong attention to every production detail and makes use of its professionalism to optimize its customers' products.

To guarantee high quality and rapid delivery, the company has boosted its self-manufacturing ratio to over 85% and assigns the job of quality management to every worker. Each operator on the production line, Lin said, has his or her own caliper and other inspection devices, and is required to conduct on-site checking every two hours.

E-management is another prime source of Kuen Tong's competitiveness. In its factory, an SPC (statistical process control) workstation is set up for every 20 to 25 machines, enabling more precise quality control. Once a variation beyond the standard tolerance is detected during production, Lin said, the workstations can help operators to accurately measure the deviation and record it, and then automatically send e-mails to all directors and managers to report the problem.

As soon as a production process is completed, employees use a barcode system to report their work done. Process flow diagrams make all operations transparent, allowing more effective control and easier traceability of problems. The data created can be applied to the ERP system to output related production information that facilitates decision-making.

Lin noted that his fully electronic management system can detect and expose all latent problems during production, helping to improve and optimize Kuen Tong's in-house production to prevent problems from occurring at the front end and assure that all products completely measure up to customers' requirements.

Inter-tech Metalworks

Inaugurated in 2003 in Taichung City, central Taiwan, Inter-tech Metalworks Inc. is a growing contract manufacturer engaged in metal forming and processing, with a TUV-approved ISO 9001 certification.

This technology-driven manufacturer is well versed at water-jet cutting, laser cutting, hole punching, shearing, bending, and machining, and is recognized as a trustworthy, competent OEM supplier by customers in the machinery, electronics, furniture, sports equipment, construction, and metal product sectors.

Religiously believing that sound production capability and ample capacity are the bread and butter of subcontractors, Inter-tech has established a complete production line of advanced machinery including four laser cutters, two water-jet cutters, an NCT (numeric control turret) automatic puncher, six CNC electric benders, a sheet-metal shear, three drillers, three tapping machines, and a CO2 welder. This enables the company to fill large orders on time while achieving consistent quality.

Holding firmly to its quality assurance policy of “Service, Professionalism, Reciprocity and Enthusiasm,” the firm provides all-around on-the-job- training for its workers and carries out by-the-book quality measures in-house so that customers can be assured of getting what they order. Not merely a subcontractor, Inter-tech also designs and develops innovative products such as tool roller cabinets, metal furniture, magazine displays and racks, exhibition stands, metal fittings and decorations for tourist facilities, and landscaping materials.

Water-jet Cutting Expertise

Water-jet cutting provides Inter-tech with a particular competitive edge. The company claims that this technology has advantages that wire-cut EDM (electrical discharge machining) and plasma cutting cannot match, including the wide range of materials and workpiece thicknesses with which it can be used, the generation of relatively little heat so that materials do not deform or develop heat-affected zones, and the saving costs on the cutting of laminated layers. Besides, it can be faster than wire-cut EDM and outperform plasma cutting by requiring fewer processes and leaving no chips on the back of cut items.

Thanks mainly to years of dedication to the relevant technology, the company is able to handle the water-jet cutting of various materials, including marble, composite materials, glass, silicone rubber sheets, stainless steel and aluminum alloys, brass, acrylic, engineering plastics and Bakelite up 150mm in thickness.

The company claims that its well-developed know-how and advanced water-jet cutting machines, all built with dynamic cutting modes for effective tolerance control, enable it to finish materials and products with a linear positioning tolerance of plus or minus 0.1 mm and with almost no bevels, assuring customers of added value and reliable dimensional accuracy.