When it comes to buying boards, is it more efficient to go direct or through a broker?
They say very few people ever truly leave the printed circuit board business. And that’s apparently true for me as well.
After leaving the industry behind for good (or so I thought), I threw myself wholeheartedly into a second career in the commercial light-emitting diode (LED) fixture market. As the “LED Sales Guy,” I assist local lighting distributors in creating a sustainable supply chain with offshore manufacturers. I also help those same manufacturers develop an effective marketing plan in the US, and I am closely involved in the development of proprietary software specific to the LED industry.
I am traveling about the globe just as I did before.
What I learned and practiced in PCBs, I have applied to the LED industry. The commonalities found in supply chain management, distribution and customer service in both fields are numerous. Because of my success in LEDs, I’ve moved rapidly up the supply chain to directly representing the manufacturer.
I’ve realized during the past year that as the manufacturing world becomes smaller, so too should its supply chains.
Years ago, PCB brokers were small-time operations, perhaps three- to five-person operations, providing better service to their customers utilizing domestic board houses. Brokers started as sellers of domestically made product, and then followed board manufacturing as it transitioned overseas. The allure of lower prices and having someone to handle all the details of dealing with a foreign manufacturer halfway around the world made PCB customers and brokers a natural fit. It was a symbiotic relationship that served the industry well for a long time.
Any business that survives is ultimately cyclical. Board distribution is not immune. Brokers capitalized on the inefficiencies in the PCB manufacturing supply chain two decades ago. Now, fabricators are returning the favor.
Today’s dedicated brokers are typically multimillion-dollar operations requiring large and costly staffs to maintain. They have become a business within a business, adding to the bottom line. What was value-added, with just a little PCB customer initiative, is now an unnecessary cost.
Why not go direct? Today, good offshore manufacturers have the industry-prerequisite certifications and registrations, communicate well, make quality product, warehouse inventory to meet changing production needs, and have service centers near customers.
For those who remember, I was a strong proponent of the PCB broker model. Offshore manufacture of high-mix, low-to-medium volume PCB orders was still in its infancy when I first started 20 years ago. I remember some in the industry treated me as a second-class citizen.
An untouchable. I was shunned at industry events, viewed as neither a manufacturer nor a supplier. I was that “B-word” (broker) and called “just a glorified rep.”
It took some time, and many customer awards and accolades, for my company, and PCB brokers in general, to become an accepted norm in the industry, whether as standalone operations or as the brokering arm of domestic board houses. Having an intermediary to ensure timely delivery of quality product eventually came to be seen as a necessity. And in some limited cases, it is still needed.
However, times are changing. I realized when I first started traveling overseas that offshore suppliers would eventually learn what their Western customers needed and be able to anticipate their future needs without the assistance of an intermediary. That time has come.
From the customer perspective, the closer to the manufacturer, the better. Now that it’s become much easier to do, what customer wouldn’t want to deal directly with overseas vendors?
Brokers today are still doing the same as before: receiving CAD files, sanitizing them and then sending them off to vendors. They get a quote, rebrand that quote to the customer, and have the product shipped to a centralized warehouse in the US, where they re-inspect the product before re-boxing or rebranding the shipment to the customer. An efficient chain will eliminate this costly duplication of efforts in which the broker is being paid to “relay,” in most cases, benign information.
Why can’t a customer send CAD files directly to a manufacturer? Today’s offshore manufacturers speak and write English better than they did 10 years ago.
Communication is easier and less expensive, if not free, with the use of apps like Skype, WhatsApp and WeChat. Overseas customer service understands time differences, and most will make themselves available for direct communication during at least part of the Western workday. A customer can send CAD files, request a quote and get a timely response, just like a broker.
Why must another entity be involved to ensure PCB quality? If there is need for a second “Western” inspection, then why is that broker’s particular vendor being used? The typical broker will tout their service, quality and years of experience, but next-to-nothing about the actual board vendor. Quality of goods shipped from the other side of the world is a genuine concern. But what are we talking about here? Class 3 or just standard fare? Ninety-five percent of the PCBs built are not going into missiles or airplanes. And it’s not offshore vendors’ first rodeo. They’ve built thousands of part numbers; their engineering and quality staffs have become much better. In fact, Chinese universities offer degrees in PCB manufacturing, as opposed to our inconsistent, learn-on-the-job system of PCB training.
Why can’t an offshore PCB manufacturer offer terms – the same terms offered by a broker – to customers? Many overseas manufacturers want to directly deal with customers, as evidenced by the volume of direct emails received by customers every day. And it is easier than ever for customer quality departments to vet overseas manufacturers and confirm the manufacturer’s customer testimonials.
A pure broker is not a manufacturer. Brokers are at the mercy of their board houses. That’s why they deal with several manufacturers and need an expanding and costly staff. Granted, some brokers are still providing a valuable service to their customers. But I believe the niche they (we) carved out in the industry will shrink as offshore manufacturers become more sophisticated and PCB buyers more worldly.
And that’s why my return to the industry is not as a broker. I’m a “PCB Sales Guy” again, with a PCB manufacturer – albeit part-time, as I’m still in the LED world. It’s an American-owned, privately held, ISO, TS, AS-9100 firm that has facilities in Taiwan and China, and an ITAR-registered customer service center in Florida.
Customer service is getting better, and the quality of product received meets or exceeds most of today’s specifications. Buyers need to seriously review their PCB purchasing process. In this highly competitive market, it is beneficial to drop a costly link or two from your supply chain.