In electronics manufacturing, the definition of intellectual property is shifting. It’s no longer just about design files or tightly held process knowledge. The real advantage now comes from how well manufacturers capture, share, and act on operational data. This blog is derived from a Fireside Chat between Anna Katrina Shedletsky, CEO of Instrumental and Andrew Scheuermann, Co-Founder & CEO of Arch Systems. It explores how forward-thinking brands and contract manufacturers are embracing data transparency, why old fears around cost exposure are limiting growth, and how AI-driven execution is becoming the new competitive edge.
In the high-stakes world of electronics manufacturing…
Intellectual property (IP) has long been treated as something to guard, silo, and protect. Whether it was detailed CAD files, proprietary assembly methods, or expert tribal knowledge, IP used to live behind closed doors, closely held by either the brand or the contract manufacturer (CM).
But that definition is changing. Fast.
In a data-driven era, the companies that win are no longer those with the most guarded processes, but those with the most intelligent systems for turning raw data into action. The modern IP is the capability to make better decisions faster, powered by real-time, AI-ready data.
As Andrew Scheuermann, CEO of Arch Systems, puts it:
“The IP of the manufacturer is becoming how well they use data itself.”
In this post, we explore how the meaning of IP in manufacturing has evolved and why the manufacturers who embrace this new mindset are building a competitive advantage.
A Brief History of IP in Manufacturing
When IP Meant Product Design
In the early days, IP in manufacturing was centered on product design. It was the domain of engineering teams and industrial designers, who created blueprints, schematics, and technical drawings. These files were treated as proprietary assets, heavily protected and kept out of reach of anyone not under a strict NDA.
For brands, control over design was the foundation of their market power. Contract manufacturers (CMs) were simply the builders, hired to execute that design as efficiently and quietly as possible.
This model worked when the biggest differentiator was the product itself. In consumer electronics, for example, success often hinged on unique form factors, specialized components, or performance specs that only the design team could optimize.
Then, It Became About the Execution
As global competition increased and margins thinned, especially through the 1990s and 2000s, manufacturing moved into a phase where operational execution became the real advantage.
Companies invested in Six Sigma, Total Quality Management, and lean manufacturing. CMs started to differentiate not just on price but on uptime, yield, and reliability.
This era brought the rise of “tribal knowledge.” The know-how of engineers and process leaders became critical, but it also became hard to scale.
Now, the Edge Comes from the Data
With experienced workers retiring and high turnover among new staff, tribal knowledge isn’t enough. What matters now is how fast a factory can learn from its operations and make improvements before problems scale.
Most factories already collect a lot of data. The advantage now lies in how well they use it.
As Deloitte notes:
“The ability to extract, analyze, and act on data in real-time is emerging as the most sustainable competitive differentiator in modern manufacturing.”
Why Transparency Doesn’t Mean Vulnerability
The Cost Exposure Myth
Margins are tight. If a brand sees that a production line is running more efficiently than estimated, contract manufacturers worry they’ll be pressured to cut prices. This concern is valid, especially in industries where profit margins can hover between 4 and 8 percent. But the mindset behind it—viewing transparency as a weakness—is increasingly outdated.
Anna-Katrina Shedletsky, CEO of Instrumental, articulated this dynamic well during the fireside chat:
“The factory [worried they] would be revealing information about their cost structure that would weaken their negotiation position.”
That mindset frames the relationship as zero-sum: if one side gains insight, the other loses leverage. But in today’s supply chains, performance, trust, and agility matter more than information hoarding. Leading manufacturers are finding that the real risk lies not in sharing data, but in hiding it.
Shared Data, Shared Goals
Despite commercial pressures, brands and CMs ultimately want the same things: high product quality, reliable delivery, faster ramp times, and fewer late-stage surprises. These outcomes become far more achievable when both sides have access to shared, real-time data.
This is especially true during ramp and early production phases, where visibility into test results, line efficiency, and yield trends can prevent costly mistakes and eliminate redundant steps.
Andrew Scheuermann noted that when knowledge about process optimization becomes widely accessible, the nature of competitive advantage begins to shift:
“If now other people have the expertise of how to optimize test time… this is the reality: the IP is shifting.”
That shift isn’t just technical—it’s cultural. Transparency builds credibility. It shows a manufacturer is confident enough in their operations to invite collaboration, not defensiveness. And it sets the tone for long-term alignment instead of transactional behavior.
The Cost of Holding Back
When data isn’t shared, decisions are made in the dark. That leads to duplicated testing, excessive validation steps, or overly cautious processes that waste time and resources. In some cases, it delays new product introduction by weeks or months, all because the stakeholders weren’t looking at the same information.
Scheuermann put it plainly:
“Sometimes CMs do things not because they’re required, but because they’re scared.”
That fear can be expensive. Some OEMs have walked away from suppliers, not due to performance issues, but because the refusal to share data signaled resistance to change. In a market where adaptability is just as important as capability, that hesitation becomes a liability.
Smart Execution Is the New Competitive Edge
From Expertise to Systems That Scale
Manufacturing used to rely heavily on the deep expertise of seasoned engineers and operators—people who had spent decades learning how to tune machines, spot process drift, or work around bottlenecks. While that knowledge remains valuable, it doesn’t scale, and it doesn’t stay. With experienced workers retiring and high turnover among newer staff, many manufacturers are finding themselves with growing knowledge gaps and fewer resources to fill them.
Rather than trying to solve this with more headcount or longer training cycles, leading manufacturers are shifting to systems that can capture and apply that knowledge in real time. These data-driven systems transform operational expertise into repeatable processes, enabling teams to respond faster and with greater consistency across lines, shifts, and locations.
The Role of AI in Execution
Artificial intelligence is becoming a core enabler of this shift. It is already being used to identify early signs of quality drift, reduce unnecessary testing steps, and optimize equipment maintenance based on usage data—not just time-based intervals.
What makes AI powerful in this context is not that it replaces workers, but that it amplifies their ability to make decisions. When integrated with factory data, AI can surface insights that human teams might miss and provide clear guidance on where to focus, what to adjust, or when to intervene. This leads to smarter, faster execution without overburdening the team.
Early Adopters Will Lead the Market
Some of the largest contract manufacturers in the world are already redefining how they describe their value. Rather than simply presenting themselves as production providers, they are positioning as end-to-end supply chain partners with digital capabilities at the center. Their competitive edge increasingly comes from how well they manage data and complexity, not just how many units they can ship.
This shift is strategic. It allows them to move faster, react to supply chain disruptions more effectively, and create stronger, more transparent relationships with their customers. The manufacturers who invest in this level of agility today are the ones shaping the next standard in operational excellence.
Smart execution is no longer about having the most experience or the biggest factory footprint. It is about how quickly you can turn data into action—and how well your systems support continuous learning at scale.
Turning Insight into Advantage
The definition of IP has changed. It’s no longer about keeping secrets, it’s about turning data into action.
When brands and manufacturers move past fear and toward collaboration, they unlock new opportunities for speed, quality, and growth. The manufacturers that embrace this mindset are already creating a competitive edge and it’s only getting wider.
Want a deeper look at how leading manufacturers are rethinking data transparency?
The insights in this post are drawn from a recorded fireside chat between Andrew Scheuermann and Anna Shedletsky, filmed live at APEX 2025. In the full video, they explore the operational, commercial, and cultural shifts that are redefining competitive advantage in electronics manufacturing.