As I begin focusing on the New Year, I can’t help but reflect at least a little on the year just ended. I spent a lot of time in various meetings, workshops, presentations and industry gatherings focused on supply-chain issues.
In each one, it seemed everyone was frustrated with the state of the supply chain. As I look forward to 2012, I see that same frustration-driven mantra escalating. That said, I really believe the supply chain itself is not the problem.
Instead, the problem – a major one, at that – is how Procurement is failing to change with the times. From OEMs at the theoretical top of the supply chain, through assembly and fabrication, right down to material and equipment suppliers, many (especially the large, sophisticated North American “Tier 1” companies) approach the supply chain as if Dwight Eisenhower were still president.
To wit, the big boys, especially those focused on the Defense Department, insist they cannot find “technology” in North America. They insist that the supply base, especially printed circuit board fabricators, has dwindled both in size and capability to a level that cannot support their technological needs. Well, yes, there are fewer companies than in the Cold War days of the 1950s. But capability abounds, except today it is with mostly smaller companies providing highly focused “niche” capability. Long gone are the days when a lot of large companies offered soup-to-nuts “whatever you want” capability. Today, in part because of offshore migration, but also because of the complexity of technology that can be supported on various levels of PCBs, all companies have “niched” into focused specialty manufacturing. Meanwhile, procurement people are stuck in the 1950s, insisting on reducing the number of suppliers so they can “leverage” their buying influence, rather than expanding their supplier base to leverage the total technical expertise available to support current and future projects.
There’s the rub. Big OEM procurement staffs don’t like dealing with small companies, so they instead whine that they have no viable supply-chain options. Yet, engineers at the same companies yearn for additional players to help transform cutting-edge ideas into ruggedized, manufacturable, robust product. While engineering and design staffs solicit input from additional new potential suppliers, Procurement stifles that effort by creating a death march for suppliers to endure in order to become a supplier. All too often, fabricators are invited in by Engineering to solve a problem or provide technical input, only to be told (always by an embarrassed engineer) that we are not an “approved” supplier.
It’s high time large OEMs and military primes take off their blinders and enter the 21st Century. With so few PCB fabricators in North America, apply your resources to take advantage of the strength that exists. Pull a person from procurement and another from engineering, give them a credit card, and tell them to visit, in person, all the 350 or so fabricators. Tell them to follow a focused one-hour schedule at each company, something along the lines of the first 30 minutes, where the fabricator makes a presentation explaining their sweet spot, followed by a 15-minute plant tour, so you can see if/how they actually manufacture product, followed by a 15-minute Q/A; then head out the door to the next company. By following such a tight approach, all shops in New England could be visited in fewer than three days, and all the rest within a month. When done, I would guess fewer than a hundred companies would be eliminated for one reason or another, leaving 200-plus viable companies, which should all be included in a report listing each company and technological sweet spot, and segmented into a few classifications, such as flex/rigid-flex, HDI, RF/microwave, backplane, high volume, high mix/low volume, etc. That report could be made available to all engineers as a resource guide with the “all clear to buy from any of them you want.” Embrace the current supply chain and discover that tremendous, cutting-edge world-class capability readily and locally available.
Perhaps you are just trying to find new materials and suppliers? Consider this example from the other end of the supply chain. We all recall the good old days when there were ample options for purchasing capital equipment or materials. Everyone blames the lack of options today on the shrinking number of companies or the migration of business to lower-cost centers in Asia and India. Once again, the whining supersedes a refocusing on current supply-chain realities. The number of EMS companies and fabricators has actually grown significantly over the past decade or so; it’s just the growth has been in Asia. As the Asian market has grown, so has the number of local Asian companies providing materials and supplies. The options for suppliers and variety of capital equipment have not necessarily decreased, but where you have to go to find those options has indeed shifted to Asia.
However, not many managers from smaller North American and European EMS and fabricators travel to trade shows in China. Equally, not many entrepreneurs have gone to China with the intent of marketing – and servicing – Chinese equipment to the West. While language can be a hurdle, for those who make the effort and commitment, there could be significant opportunities.
Throughout the supply chain, options for capability, materials, supplies and equipment are aplenty, but the paradigm of where and how to proceed has changed – not gone away, just changed! This year, I hope our collective, global industry resolves to begin to appropriately address our supply-chain’s current paradigm, rather than trying to live in the past.
Peter Bigelow is president and CEO of IMI (imipcb.com); email@example.com. His column appears monthly.