BMK Group Israeli and German Synergy: The Best of Two Worlds
International cooperation offers many opportunities, but there are also risks involved. For the Augsburg-based EMS company BMK, its involvement in Israel paid off both interculturally and technologically.
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Decisive and competitive advantages for the collaborating companies and their customers are created through using synergies of international cooperation from both intercultural and technological perspectives. BMK is a medium-sized electronics service provider with its headquarters in Augsburg, Germany.
Based on good, existing business relationships, BMK founded a subsidiary in Israel in 2005 with the goal of producing locally for Israeli companies. Israel has many innovative high-tech companies that are expanding abroad and BMK wants to position itself as the right partner for these businesses.
In the following interview, Avi Cohen, CEO of BMK IL, and Simon Barth, Team Leader of the International Business Unit at BMK in Augsburg, provide insights into the cross-border cooperation and its synergies.
What is the human cooperation like? Are there intercultural differences?
S. Barth: Human cooperation is great, but of course there are differences in mentality. Generally speaking, the Israeli mindset is uncomplicated and characterized by a persistent approach. By working together, we got to learn a mixture of goal-oriented and intelligent approaches.
A. Cohen: I think the teamwork is terrific and collaborative. I do not see any interculture differences that could negatively influence the cooperation.
We see these differences rather as an advantage while working together. Each side brings something unique to the way we think and manage things, which helps to improve the final results.
What distinguishes the Israeli market?
A. Cohen: I would say that delivery time and flexibility are very important factors in all areas of electronic products from the pre-production phase to series production. Especially in the Israeli market, everything is expected to be much faster and more flexible. For example, our average standard production cycle at BMK IL is only a few days and we still believe that we need to shorten it further in order to align with customer expectations.
S. Barth: From a German point of view, a market peculiarity in Israel is the pronounced start-up scene. In addition, many companies are technological pioneers in the field of electronics and software. BMK IL has exciting customers, for example, in the medical and semiconductor sectors where ongoing innovation is standard.
Israel is known for creative high-tech and specialized companies in electronics and IT. However, the companies themselves are not so well-known in Germany. Why is that?
A. Cohen: There is a mixture of companies in Israel. A large part are high-tech companies that were founded in Israel and are expanding into the U.S.A as part of the company’s development. Some well-known examples are Check Point, Mobily, Mellanox, SolarEdge, Waze, Wix, Fivver and many more. This could be due to the political proximity of both countries and the close integration of the U.S. and Israeli economies. Therefore, these companies are not so well known in Germany, but they are gaining importance in Europe.
Germany is strong in industry, automotive and medical electronics and also in embedded software due to market conditions. Which disciplines are the Israelis particularly good in?
A. Cohen: Israel is strong in high-tech areas: telecommunications, energy, water desalination, medical electronics, agriculture and of course software from web applications to cyber security. In addition, the defence segment is very important. We see that the high-tech segment is generally evolving and driving all other sectors from a technological perspective. Israel's per capita investment in research and development is considered the highest in the world.
In which areas do you work closely together? Where do synergies arise?
S. Barth: We primarily work together in the areas of production and technology, test support / development, the supply chain, and other general processes. We exchange experiences in production on a project basis in order to use synergies. We also increase internal value in production technology by being a faster internal service provider. For example, BMK IL has access to the German tool and plant construction and test development.
BMK's strategic purchasing department combines synergies from its locations in Europe, Israel, and China. The global network and the high volumes create advantages for customers in terms of price and delivery time.
We benefit from one another through regular exchange of experiences on digitization topics such as traceability or MES. The synergies between the BMK companies support overall growth and help to provide excellent support to strategic customers.
A. Cohen: BMK IL and BMK D work together in all areas. Starting with R&D support, DF'x reporting, test design, strategic sourcing, and manufacturing. It all depends on customer needs and what we can contribute with our synergies. Usually the basis for synergy is an added value for the customer. This can be expertise in a specific field, competitiveness due to global sourcing, or lead time improvement as part of the supply chain.
What opportunities does cross-national cooperation offer? Where is the greatest potential for customers?
A. Cohen: A synergy advantage is the one-stop store solution that we share internally. Our customers can benefit from local and global supply under the same roof and from communication links, while taking advantage of supply chain solutions, services and competitiveness of the group based on the product and market requirements.
S. Barth: BMK IL can provide its customers with a competitive advantage as a large corporation with the right resources backing it up. Israeli customers can also access a European production network with manufacturing facilities in Germany and Eastern Europe (Czech Republic). A corresponding second source strategy and access to capacity increases security. Furthermore, local customers have no language barriers.
What are the benefits for the supply chain?
A. Cohen: BMK as a group represents a complete supply chain. Via a branch in China (BMK China), we directly procure customer-specific and critical items from the Far East, optimize the supply chain in this region and thus shorten the lead time. As a group, we have a centralized strategic procurement. Our network of global production sites offers a variety of possibilities to produce close to the sales location.
S. Barth: BMK's strategic purchasing department has a high volume and an amazing network. BMK IL uses this purchasing network to achieve exceptional prices through a variety of contacts and higher volumes, e.g. for sourcing batteries or printed circuit boards. On the other hand, Israel also has a shorter contact list with some suppliers. Overall, BMK has a globally grown network through worldwide sourcing at its locations in Europe, Israel, and China. Prices and delivery times can thus be optimized. By bringing together the best options from the individual BMK locations, BMK makes a difference.
In which specific customer project does this close cooperation come into play?
A. Cohen: One example of the collaboration is the joint support of a strategic customer who is a market leader in the field of medical technology. In the context of mutual support and sharing of know-how, we provided our customer in Israel with advanced solutions that support R&D activities in strategic product challenges. After the successful assembly at BMK D, the BMK IL customer emphasizes that the high quality is impressive due to the excellent partnership with BMK D under the management of BMK IL.
This strategic project, which is very important for the customer, has also become the focus of attention at BMK: from material planning to test design consulting. Samples were produced with very strict care and professional focus, including additional controls that guaranteed functionality from the first run. The customer greatly appreciates the global efforts of the BMK teams.
In which area do you see another customer benefit from the cooperation between D and Israel?
S. Barth: BMK IL customers have access to an efficient network of development, test development, tool and equipment design and prototype construction - and all this within linguistic and geographical proximities. In addition, BMK offers its customers easy market access to Europe.
How does the exchange take place? To what extent can digitization support collaboration?
A. Cohen: Most of the communication is digitalized. Currently, all communication is done via video conferencing, e-mail, and apps for collaboration. During the pandemic, the use of digital communication increased, and we learned to map all processes electronically. Two examples: We planned in detail an NPI production in Germany for an important Israeli customer - including team trips - and then the pandemic occurred. We decided to proceed as planned and meet the scheduled delivery date. With the help of digital communication, everything went smoothly.
Another example is the installation of a very complex test system which we designed together in Germany and which was to be installed by the test development team in Israel. Due to the pandemic, we had to break new ground. The engineers from Germany communicated online while we installed the system on site.
S. Barth: Before the pandemic we visited each other regularly. Currently, the exchange takes place exclusively via online meetings. Digitalized collaboration increases efficiency.
A look into the future: what is planned?
A. Cohen: We want to continue to evolve and deepen the services we offer around the world in order to add value and make a difference for our customers. Our customers benefit from our close cooperation and synergy. With the help of digital communication, which has been adapted by almost all industries, we want to drive forward more engineering and fulfilment services in addition to electronic manufacturing.
S. Barth: Intercultural cooperation has proven to be extremely enriching. We believe that we offer our customers unique added value. We want to make this better known, expand and deepen it.
Background: BMK was founded in 1994. The head office is in Augsburg. Further branches are located in Israel, the Czech Republic, China and Germany. The EMS company employs around 1,000 people in development, production and after-sales service.
BMK IL was founded in 2005. The location there is in Migdal Tefen Ind Zone, in the northern part of Israel, Galil - high-tech area around Haifa. Capacity: 5 SMT lines, 4 selective soldering machines and 1 wave soldering machine in N2 environment. Test: 2 ICT, Boundary Scan, Synergy Test System (Functional Test), 30 NPIs per month, 55,000 PCBAs per month.