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News from Siemens Corporation


"Rent-a-Gantry" SIPLACE SX makes new Capacity on Demand business models possible

Mar 24, 2010

The Rent-a-Gantry models for peak demand and floating demand are exceptionally attractive options that provide electronics manufacturers with new answers to the demands of an increasingly unpredictable and often highly volatile market.

The Rent-a-Gantry models for peak demand and floating demand are exceptionally attractive options that provide electronics manufacturers with new answers to the demands of an increasingly unpredictable and often highly volatile market.

Real capacity on demand requires that capacity can not only be added quickly, but also be reduced with a great deal of flexibility when it is no longer needed. That’s why SIPLACE’s new business models, which permit the short-term and intermediate-term renting of replaceable gantries, raise so much interest among electronics manufacturers. Under the general term "Rent-a-Gantry", SIPLACE offers two capacity-on-demand business models for meeting the customer’s specific needs.

For short-term needs:

"Rent-a-Gantry for Peak Demand"

The "Peak Demand" model focuses on managing short-term load peaks for periods of up to four months (special orders, seasonal fluctuations, etc.). For this classic scenario, SIPLACE offers short-term rental contracts for replaceable gantries. One significant benefit of the "Peak Demand" model is the simple structure of these contracts:

- Staggered terms from one to four months with extension options.

- The customer rents a complete set consisting of gantry and placement head.

- The rental fee is the same, no matter which placement head is chosen.

- The gantries will be installed and uninstalled by SIPLACE technicians – with a full warranty on rented gantries and heads.

- Rental periods are not based on calendar months; the rental term starts with the delivery.

- The standard lead time for rented gantries is two weeks after order placement; this time can be reduced to one week against payment of a special fee.

As a result, the customer can increase his capacity within one or two weeks and reduce it again when demand slows down. In many cases, simply renting a gantry can replace the high cost of special shifts. If the order peak does not materialize, no costs are incurred. Another advantage: the customer can significantly reduce his initial placement machine investment by basing it on the equipment’s average utilization. The model also has accounting benefits: since gantry rentals are considered variable operating costs, the customer can keep his fixed asset costs down. His liquidity and asset productivity rise.

For long-term capacity management that doesn’t hurt the balance sheet:

"Rent-a-Gantry for Floating Demand"

If the customer needs to adapt to demand fluctuations caused by economic factors, the situation looks completely different. In the past, manufacturers had to invest when demand rose, but there was no certainty that the investment would actually pay off. If the economy declines, the capital is tied up and not available for short-term liquidity needs. As a result, the underutilized equipment represents primarily an inflexible cost pool.

With its "Floating Demand" business model, SIPLACE now presents a mutually beneficial solution that opens up new degrees of freedom. The customer initially invests in the number of SIPLACE SX+ machines (frames with no gantries and no heads), feeders and accessories he thinks he needs to meet the anticipated placement performance and feeder capacity requirements. For each SIPLACE SX+, the customer also acquires 20 "gantry vouchers" for renting an SX gantry with any type of head for one quarter. The price for each voucher does not become due until a gantry is requested. If no gantry is needed for a quarter, no charge is incurred. The vouchers are good for a period of up to five years.

With the "Floating Demand" model SIPLACE thus carries part of the business risk in partnership with the electronics manufacturer. The manufacturer saves on his gantry investment and instead purchases gantry vouchers, which don’t have to be paid until the gantries are needed. The gantries are therefore on SIPLACE’s balance sheet, not on the customer’s. At the same time, the model offers a level of flexibility that far exceeds traditional leasing models.

The impact of this innovative business model on the balance sheet and the budgets required for new investments is huge. In a concrete example, a customer was able to reduce his investment requirements for a line with three SIPLACE SX placement machines by roughly 50 percent.

The savings in the initial investment can be spread over time and used for ongoing operating costs and other budget items.

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