Vijay: Especially for digital transformation, I think you need that audacious goal, because that's how it's going to drive between what you know now versus what you don't know yet, that you need to go and figure out how to do it, right? Because if you, if you just focus on what everybody knows now, you're just going to take current solutions.

It's not going to give you the audacious performance of where you want to go to. 

Announcer: You're listening to Augmented Ops, where manufacturing meets innovation. We highlight the transformative ideas and technologies shaping the front lines of operations, helping you stay ahead of the curve in the rapidly evolving world of industrial tech.

Here's your host, Natan Linder, CEO and co founder of Tulip, the frontline operations platform. 

Natan: Welcome everybody. Today we have Vijay. Hi Vijay, how are you doing? Hi Nathan, glad to be here. So Vijay is a former, uh, UCT COO, who has been based in APAC in Singapore for how long now? For almost 15 years. 15 years.

This episode is really about global operations and what is going on in Asia Pacific from a different perspective of a platform like ourselves trying to set up there, staying close to customers. So we'll get into that pretty quickly. But first thing first, Vijay, it would be great for people who Don't know you, share your journey.

I mean, operations in 35 years. I know we can't hit all the points, but if you can cover where are you coming into discussing this topic? Yeah, sure. When 

Vijay: you mentioned 35 years sounds like a very, very long time. 

Natan: You're just like, is this me? 

Vijay: Yeah. So yeah, so just for clarification, even though I'm based in Singapore for the last, Almost 20 years I've been running a global operations worldwide, pretty much exposed to the different locations and cultures around the world.

My journey started from Malaysia, I'm a Malaysian, I got a mechanical degree out of an Australian university. A few high points in my career that's all from change or transformative from my perspective. I think the first one was when I worked for almost nine years with Sony, when Sony was Sony, when we were churning out all the innovative products.

I was in the middle of that journey. What's the coolest Sony product you were working on? Oh, at that time it was almost, uh, the Disman, the Walkman, the Disman. Yeah. And a lot of audio products. People were just getting into this mini compose that was available, you know, at, at home. Uh, so yeah. Very interesting time period.

Natan: Yeah. We'll get, we'll get back to Sony. I think it's a great blast from the past, especially in Asia Pacific, but yeah. So you, you spent time in Sony and 

Vijay: Yeah. And then the last 15 years with, with Flex Sonics. Running global operations. Again, you know, all of those things. When we talk about transformation, we talk about digitalization and the innovation that's happening in the world.

Right. And I was in the middle of the mobile phone revolution when the number one player in mobile phone was Nokia and Ericsson. So I was with Ericsson churning out the very first mobile phones, getting smaller and smaller, you know, being part of their journey. So that was another area where I think it was pretty informative in terms of digitalization.

When we were working with Ericsson, when we were trying to build millions of fraud. You know, today you have a couple of colors, everything is software. 15 years ago, it wasn't like that. It was, The physically the phone's at colors, right? ? Yeah. And different UI sometimes. So you have to configure. That's where the digital, my first exposure to the digitalization of how you manage mass distribution in, in that environment.

And then subsequently, I think Flex SOS jab. Big EMS company running global operations still. And then the last five years with UCT in the semiconductor space, you know, exposing to the semiconductor industry and learning how digitalization, getting a bit more, you know, deeper into when you used to be the, Main use of technology while now you're able to see how the technologies are made and, and being part of the semiconductor space.

So that gives you also a bigger, different perspective of stuff. 

Natan: Yeah, that's a pretty amazing journey. You know, I was thinking when you were talking about Sony. What was the last Sony product that I owned and actually used and I was like, this is my thing. And I think it was like a mini disc player, you know, this is like the post CD Discman thing.

And man, it was so much work. And then I remember actually going to Korea and like getting like in one of the electronic night markets, one of those USB 3, this is pre iPod. I also think it was like pretty big USB stick, that type of thing with MP3 player. MP3 player. That's correct. And then I've never touched that thing again.

But at the time, I was thinking like, where's the Sony version of that? And it took them a long time, but pretty interesting. It was cool technology. Probably was fun manufacturing this thing, this stuff, everything like moving parts, electronics, optics. 

Vijay: Yeah. Yeah. It was interesting. And they were pretty vertically integrated at that time.

So a lot of this stuff were built in house because it was innovation at the point of innovation. They were developing those innovations. I think they just. We lost our way a bit with the entertainment industry, I think we got a bit more into the entertainment industry. 

Natan: Yeah. Those 20 years, you know, 90s, early 2000, we've seen this shift and this is maybe where we invoke sort of our thinking about Asia Pacific, but you know, with your background between Fluxtronics and Jabil, what's your perspective?

What happened? As global EMS companies basically took over making all our electronics, but certainly our most important electronics, you mentioned Ericsson, you know, I used to work for Samsung. We all know what Foxconn did for Apple and continuing to do. What happened that companies like Sony became less vertically integrated?

Not all of them. You know, we know Samsung is still very much vertically integrated, but that contract manufacturing and EMS became so prominent as means to build standard consumer and prosumer electronics. Thanks. 

Vijay: I think in the beginning, everybody, when business is good, you don't see the issues, you know, you're churning out, you're building more factories.

Natan: You 

Vijay: can be also competitive. But I think when you are in one industry, you have seasonality, it's ups and downs, especially the consumers. A lot of industry has seasonality in one way or another. It's only a duration, whether it's a three year cycle, a five year cycle, or a six year cycle. 

Natan: Well, in mobile phone, it was like eight months between generations and it aligned to like more or less a year cycle, a bit less than a year.

Vijay: And I was in the early stages of Flexonics, where Flex was only a couple of billion dollars in revenue and making a pitch to Ericsson at that time, you know, one example to try to explain to you why these EMS companies are doing well is Ericsson was number two mobile phone maker at that point of time, 2000, the telecom.

Downturn hit, suddenly you have a factory underutilized, you started to bleed money, and then, you know, Flex comes along and says, hey, I can buy up all your assets, make you asset light. You know, the part of the reason why the EMS has been successful, they make the OEM guys asset light. You don't have to invest in factories.

You don't have to invest in inventory. Somebody is going to manage this for you. And they see the benefit. So the OEM sees the benefit. They take away the seasonality for them from a manufacturing perspective. Right. So, so that's number one. And for the EMS companies, they have now, if you can have multiple customers, multiple industry, I can offset the seasonality.

If a consumer goes down, but I have another industry will not have the same cycle, I can offset it. So I can minimize my seasonality from a scale perspective. Now I buy material. So, the same components for multiple customers. Now I can leverage better pricing, I can leverage better agreement. So they see that benefit, the EMS companies now can have better management of the whole manufacturing ability, supply chain, basically the supply chain from end to end perspective.

So the OEM sees asset light, don't have to worry about inventory, don't have to worry about seasonality. They can negotiate better price. EMS, they see if I can have multiple customers like this, I can manage this better, make more profitable and be competitive. 

Natan: That's so interesting because I think there's obviously a flip side, you know, we just talked about Sony that, you know, vertically integrated in the innovation cycles.

So how important it is, like I can design a product, but can I actually bring it to market quickly? And, you know, there's also the ODM component or variant of this where you gain asset light, but lose your innovation cycles. your ability to organically build something quickly and respond to markets. So talk about that, because we're seeing like some tension between those things.

Obviously, CMODM is here to stay, and I don't know how you're going back from that, but on the other hand, you were seeing more and more, at least in the U. S., and that will be our segue to APAC as well. Like they're building their own factories. They want to be very independent and self sufficient. So how do you see this tension?

Yeah, I think there's 

Vijay: two parts of it. I think the first part is the CMs have evolved over time. They used to be called CM. Now they're called EMS. So they have evolved from just doing contract manufacturing. You buy the material, you give it to me, I put it together, I ship it to you, to now I can buy the material on your behalf.

I can assemble. And then from there it evolves to What they call ODM or CDM. And a lot of this was driven by the customer because now they figured out, okay, if you can give me more value proposition, it can minimize my cost. I can do more. So it's a lot of this was driven by the customer towards this ODM, CDM solutions.

And I'll give you one example when I was in Flexronics. We were wanting to get into flight panel TV. We went and spoke to Sony and said, okay, you know, let us design a flight panel TV for you. And they wanted to penetrate part of the European market because of the different systems. You have a different product at a different regions.

So they said, okay, if you could give me a product that I can penetrate this, I get advantage of able to penetrate this market. They also don't have to invest in continuous R& D, right? There's a limit to what they can do from an R& D perspective. So that worked out well. Sony's technology, which is the semiconductor components and their LCD panel, which is part of Sony.

We use a lot of the critical components, but the integration design and ODM was done by us and Sony benefits by penetrating a new market. So that's one perspective. The other one perspective is where probably you are alluding to is there's still a lot of technology. Space industry. Like for example, you know, when we talk about semiconductor, we talk about the wafer fabrication part.

Like what Intel, Samsung, those are not outsourced as much. TSMC is one big company that does a lot of this outsourcing. So even in that model TSMC show, you could outsource it, but it's not easy for any EMS to go and do another TSMC because, you know, it's, it's a technology. It takes time and yeah, it's, uh, costly to learn from.

Errors and so on, so the barrier to enter in that part of the semiconductor value stream is much more higher than if you talk about capital equipment, you know, where it's much easier to outsource. 

Natan: That's super interesting and pivoting slightly, Vijay, can you talk a bit about how you approach to change management within the company?

Vijay: Yeah, you know, any change is a challenge, unfortunately, depending on the culture of the company. Um, whether it was in UCT or JBL, one of the things I've done is create A platform for continuous improvement that creates a culture because culture is going to be important that every time people are always looking at ways to improve and not just be satisfied with what they have, with the status quo, right?

So you need that mindset change. And the only way to make this mindset change is, you know, you can talk about it, but ultimately you need to create a platform within the organization. To allow people to practice and create over time a culture of continuous improvement. And my platform always been Lean Six Sigma as a platform.

You know, we create audacious goals, but the audacious goal is mainly to try to get people to start thinking, right? Just think about always about improvement and you always got to find ways to improve it. So that's one, one piece of it. The second is depending on company to company, you, and the maturity of the organization, it's important to able to establish a goal that is.

One, there's audacious goal, especially for digital transformation. I think you need that audacious goal because that's how it's going to drive between what you know now versus what you don't know yet that you need to go and figure out how to do it. Right? Because if you, if you just focus on what everybody's knows now, you're just going to take current solutions.

It's not going to give you the audacious performance of where you want to go to. 

Natan: So what is an example of an audacious goal? Maybe it's interesting to compare an EMS audacious goal versus a semi audacious goal. I mean, in principle, I totally agree. It's a culture thing, first and foremost, but the industries are so different, yet the mechanism of change is so similar, right?

Right. So can you give an example of those two goals in different industries? And then let's get back to how it's done. 

Vijay: Yeah. Take the EMS, you know, EMS, Almost 80 to 90 percent of their cogs is material. If you can improve the velocity of the material, it's a big win, both from a cash flow, balance sheet, and, you know, it's just tremendous amount of improvement.

So the one audacious goal, which people freak out when I say it is, I want to have infinite inventory tons. So inventory turns basically is how fast you turn your material comes in, how fast you take it out versus the revenue you're getting. So the industry measures your inventory turns, it tells you how well you're managing the velocity of how the materials are churned.

And one example of Audacious goal is infinite goal and people just You cannot grasp what is infinite inventory goal is. But basically if you break it down to them and say all I want to make sure is that infinite goal is I want the material from the supplier coming into the factory. We have a very short lead time.

We turn around the product and get it out of the factory before I have to pay the supplier and I get paid for my customer first before I pay the supplier. I create a positive cash flow. 

Natan: Yeah. 

Vijay: And for you to be able to do that, I need much more streamlined manufacturing lines. I need to have much more streamlined my supply chain with my suppliers.

And this is the auditions goal. So it creates the organization to start thinking about it. I'm pretty sure we're never going to hit the infinite goal as a target, but what it does is it creates people to start thinking out of the box rather than saying, okay, I'm going Okay. My turns is four. I want to get six turns.

I just do what I'm doing now, maybe tweak it. But putting this in Audacious Go makes them start thinking, how do I do this now? Is that a way I can improve it? That's why I think part of the transformation is to think about what I already know now, what do I need to figure out and define and find a solution for something I don't know right now.

And that's what, that's an EMS. And for the semiconductor is again, the lights out. You're talking about Lights Out, it's another audacious goal. People just cannot process it. People think, oh, this is going to get rid of people. People are not going to have jobs. In reality, it doesn't. I mean, I, I've done so much automation in the last many years, and one of our biggest challenge in running operations worldwide is getting enough people, you know, the more automation, the more you introduce, whether in the manufacturing or in the processes, our challenge has always been not enough people to support the business.

So I think we're so far off. Before the conversation, whether we're going to be able to totally eliminate workforce is there or not, but setting up the auditious goal of saying, I want to lights out in the front end of semiconductor, like Intel, some, they are pretty much lights out to a great extent. If you go to NoFap, it's fully automated.

You have engineers, process technicians running around to make sure everything is working well. Otherwise it's pretty much, but as you get down to further stream into capital equipment, it's very manual still. And coming from UCT, establishing a lifestyle goal, it forces the organization to start thinking about, okay, how do I do this from automation, from MES, from SAP?

How do I link all this together to do it then individually, right? Individual solutions. Now, if I connect it together, can I create much more powerful? Can I have a step function improvement in my productivity? It just challenges people out of the box when they start setting up this kind of auditions goal.

But at the same time, it's a challenge to make sure you don't demoralize the organization, right? Sometimes people get easily demoralized, so you need to work through and talk to them what it's supposed to mean. It's supposed to mean to create a culture, supposed to mean to force people to start thinking out of the box.

I think people will start accepting it and more people will enjoy being part of that journey. 

Natan: Yeah, you know, it's really interesting because between those two industries of, you know, EMS and, um, Semi, I know some of it is real. It's not just perception to be clear, is that they're highly automated, you know, or can be largely automated.

So Semi for sure, that's how you make the product and EMS, you know, we all know SMT. lines and automated testing jigs of all sorts, but at the same time, humans are there. They're kind of all around. Maybe the factory's lights out, but the humans are kind of the caregivers of machines. What's the balance?

What have you really seen? And I think it'd be interesting to hear it like with a perspective of, is there a difference between those operations and how they run in APAC where labor is theoretically more accessible? in some countries versus what you've seen, you know, because UCT is global and Flex is global in other regions of the world.

How should leaders, you know, think about it? And what is the impact as you're bringing these kind of frontline technologies to people and support this kind of change that you've seen? 

Vijay: Yeah, you know, my advice is not to worry about whether it's going to reduce the number of people working in any part of the process, as I said.

Many instances that I found is even though, yes, we do improve productivity, reduce number of headcount. Take SMT line, for example, which is one example I can give you, you know, early stages we started with one line, you probably have 15 people working from the beginning to the end. by bringing optical inspection in, you bring MES in, and you're bringing, Autonomous screen printers, we can now figure out you don't need a technician to look at it.

He knows when it's going wrong. We actually took it down from 15 to 5 and we want to go to try to take it down to 1%, right? So it's continued to improve and efficiency of the life. But at the same time, it just frees up the resources to move into a control tower kind of environment. Now you're monitoring the performance of the sites, the performance of the lines, make sure nothing is going wrong.

It moves up the skill set of the people to be able to do other things. And as I say, if you look around many of our operations, the number one challenge has always been getting enough people with the right skillset, right talent and so on. So I don't think we need that kind of threshold where it potentially might be an issue.

And so I don't want to worry about it because it's always jobs. And it also drives some of the talent from just being manual to manually focused is assembling to a bit more high skillset. These people can now do either supervisory or control tower or increase their skillset in organization. The last couple of months I've been spending a bit more time in India and people in India and the companies in India.

1. 4 billion and they're actually telling you now they cannot get people for their factories. 

Natan: How do you explain that? Is it just the availability of technical education or what? Is the government not doing stuff? How do you explain that phenomena in an economy? 

Vijay: It's a host of things. The economy is good.

More demand is coming in. So you need to have the talent. Number two is also the factory locations. The factory locations are in locations where there's a limited pool. People don't want to move. But I think just generally the economy is doing well. More factories are coming up. More demand and that's a pool of resources that are required for those factory operations are getting limited.

Natan: Yeah, this transformation and the evolution of the industrial base in India, I think we're tracking similar phenomena we're seeing in central Europe and to some degree even in Mexico that large international companies want to manufacture closer to their customers, like minimize their supply chain, have redundancy because everybody learned a good lesson through COVID and worried about other single sourcing of whatever.

Geopolitic impact. And I think this would be probably the last topic we have time on this episode today is if we switch to your semiconductor background. And think about what's happening now from the lens of, you know, there's a shortage, there's a concern about dependencies on companies like TSMC, as you mentioned, and so on.

And so there's like all this greenfield in semiconductor and building fabs and the chipsack. How do you see that being affected or pronounced. I know the ChIPSAC is obviously U. S. centric type of legislation, but how is that translating globally? What are you seeing in India or in Asian countries from a semiconductor perspective?

Vijay: Yeah, I know I'm not an expert in this, but I tell you what I, what I know and what I read in the news. So chipset, everybody has a chipset now, uh, US of course started first. The Europeans have now, I think Germany has won, India has won, and all of the other countries too. So everybody's coming up with a chip deck semiconductor.

It seems to be now the industry that every country wants to be part of it. So it is expanding, obviously exposes the fact that the whole semiconductor industry, I think the last number I heard is 70 to 80 percent of all the chips made in Taiwan. So obviously from a risk mitigation wise, that's, it's really not acceptable.

So that's why everybody's looking at, okay, how do you make sure supply chain wise? The chips are made in many locations so you can minimize any kind of potential geopolitical risk. So that's driving a lot of this. I think that's how I started with it with the U. S. side. And now I think a lot of other countries started getting excited about it and they want to bring the industry to their shores.

They also started to bring out the CHIP Act from their perspective. And India, I know has launched a 10 billion as part of their CHIP Act to entice companies in a way. And is it working? So semiconductor is, the value stream is pretty long. When we talk about semiconductor, you have the front end, which is the wafer fabrication.

Then you have the back end, which is the packaging of the assembly. Then in front of the front end is a lot of chemical process, like polysilicon to make the wafer. And so a lot of this chip back conversation is, kind of like you said, it's more interactive. for having me. Enjoy the show. Appreciate it. Bye bye.

The infrastructure like electricity supply, water supply has to be top notch for you to able to sustain. You can't have your plant shutting down every few hours, so that will create a massive damage to it. I think that infrastructure piece is what everybody's concerned about, especially for India. And I think once you resolve that, probably you'll see a much more better uptick.

But right now it's not much from the front end perspective. I think the back end side is I'm seeing some activities, but also pretty preliminary engagement at this point of time. 

Natan: And I know the world has been like very focused on chips and AI on one end, or like there's a lot of investment going into life science that we're seeing through the revolution of, you know, biopharma.

What do you see in the less sexy bits and pieces of technology, but still like automotive or EVs are, I don't know, are medical devices, things that are getting pretty sophisticated type of operation manufacturing, maybe higher mix, low volume. But still require a lot of talent and skill and more discreet, less automated.

What do you see in that sort of department as Asia Pacific is emerging? And I'll tell you why I'm asking, because I feel there's been a pretty massive shift from the classic sort of manufacturing powerhouses of the US and Europe that went for the past couple of decades into APEC, but now APEC is kind of roaring.

Emergence of like really, you know, very large companies that are based in APAC, born in APAC, growing in APAC, and then going global. So reversing the trend. What are your thoughts on the future of manufacturing coming out of APAC? 

Vijay: You know, obviously the path has been to go and chase where the lowest cost solution is, right?

It's been China, then over time became Mexico, Southeast Asia. It's always been going after the lowest place where we can manufacture the products. I think the geopolitical thing put a bit of wrench into it. In the last 12 months to maybe 18 months, there's a lot of movement out of China. So China is losing out a lot of this manufacturing base.

And the beneficiary has been Southeast Asia, like Malaysia, Singapore, Vietnam, and Mexico. They've been the main beneficiary and some parts of Eastern Europe has also been beneficiary of this shift. So that's number one from a movement of where China used to be now, and everybody's moving to the other locations.

And the second thing is, yeah, there's some powerhouses like TSMC, only in Taiwan, right? Only in Taiwan now, they're actually going to open up a fab in Arizona in the U. S. They're looking at opening up a fab in Japan. They're also now looking global rather than trying to put everything in one location where it's easy to manage, obviously.

It's just not sustainable. So you can start seeing it. And I think the challenge here, and I've seen this from Asian companies go to Western world, even Eastern Europe, is really understanding the culture, how you operate in that environment and not use the standard approach, what you do in Asia to try to operate the same way.

If they can figure that out, they'll be very successful in terms of how they can go global. 

Natan: How would they figure it out? You being on the other end, what would be your recommendation to the people who are doing that right now? What would make them more successful? 

Vijay: Yeah, first thing is they cannot operate the same way.

For example, a simple basic thing like how you talk to an engineer in Asia, you talk to an engineer, you said, hey, if you're a leader, it's all hierarchical. If you say, hey, go and do A, the guy will do A. In other parts of the world, you have to explain why you should do A and why not B. Right? So understanding a bit of this kind of cultural differences and making sure you have localized as much as you can to have the right structure.

I think that's the first start to make sure that you don't start with my approach is how I want to do it. It's normally doesn't work. Normally it doesn't work. You, you get into a lot of kind of issue. For example, you know, if you read the articles, uh, on TSMC in Arizona, I think that's part of some of challenges when you start up a plant in the U S for example, you have a totally different culture.

Right. Right. So how do you capitalize on the strength of those culture and then offset it, where the weaknesses against what you think you need to bring it? Like, for example, the continuous improvement culture, right? This universe of people can understand it. So if that's a culture that in your company, you bring that on board and get people to embrace it.

It's not rocket science, but some thought has to go through exactly how you're going to do it. Just understanding there's a different culture. 

Natan: Yeah, this really tracks and really goes back to first principles. It's like those things don't change. Like if you focus on continuous improvement and, you know, put people in the center, then change management can happen.

I'm not going to say easier, faster. I think that's kind of misleading, but because it's always like slower and harder. That's the truth. But you know, we're in the spirit of continuous improvement. Like, well, We'll have to pick it up because we're kind of out of time. So Vijay, thank you so much for joining.

It's been really great and we should do it again soon. Thank you. 

Announcer: Thank you for listening to this episode of the Augmented Ops Podcast from Tulip Interfaces. We hope you found this week's episode informative and inspiring. You can find the show on LinkedIn and YouTube or at tulip. co slash podcast. If you enjoyed this episode, please leave us a rating or review on iTunes or wherever you listen to your podcasts.

Until next time!