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Written by Mike Buetow   
Friday, 31 October 2008 19:00

A touch of Midwestern pragmatism and a large dose of Lean go a long way at MEC.

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As the US economic situation yo-yos wildly, the pressure is on companies to seek financial stability and be selective of their suppliers – and their customers.

For Milwaukee Electronics Co. (meccompanies.com), that’s no sweat. The 50-year-old firm holds many of the traditional blue-collar ideals the Midwest is known for. And chasing the next big thing isn’t part of the company’s plan. Instead, the focus is on established firms that are leaders in their respective – often non-electronics – fields.

The company maintains three factories with a combined production space of over 100,000 sq. ft. The largest – MEC Midwest – is in northwest Milwaukee, a 63,000 sq. ft. facility once the home of Philips placement division. On the West Coast is Screaming Circuits, based outside Portland, OR, which houses three SMT lines in a 55,000 sq. ft. space. Finally, in Tecate, Mexico, about 40 miles from Tijuana, the company operates two SMT lines in a 20,000 sq. ft. plant. Equipment sets include Ekra printers, Asymtek dispensers, Fuji chipshooters and Mydata pick-and-place, and Vitronics reflow and waves (one dedicated to lead, one to Pb-free). The high-speed lines are the same in each factory. AOI is not a part of the SMT line, but employees view the first-off parts. Testing is performed on an Agilent 3070 and with CheckSum ICT. MEC employs aqueous cleaning where needed. Potting areas take place in three open spots around the plant. Although traditionally an unsightly operation, MEC opts to keep potting in the open because, as quality manager Don Sivilotti says, “We want it to be clean.”

The product mix ranges: medical, appliances, military, industrial and consumer. While publicly vague about revenues – the 300-employee company typically claims sales of “under $100 million” – the Milwaukee plant charts show sales per employee of about $220,000. Inventory turns run about four this year, down from five in 2006-07.

According to the company, it’s not necessarily easy to become a customer. “We conduct a lot of interviewing and courting of potential customers,” says general manager Hani Malek. “Are they able to articulate a robust outsourcing strategy? Are they the right fit in terms of technology, volume, margin and cultural fit? Are they a leader in their business? And are they willing to meet our team, because that shows they are sincere.”

As president Michael Stoehr elaborates, “Our best customers are companies from outside the electronics industry, like farm equipment, where they count on us to be great at electronics.” And Stoehr counts on customers holding him accountable: He personally knows more than half MEC’s customers’ presidents.

Its business model breaks down like this: Milwaukee handles design and high-mix/high-IP assembly, plus certain box build and integration work. The factory in Canby, OR, handles rapid prototypes in lots as small as one to 10 boards, in one to 10 days. Tecate performs higher-volume, lower-mix production. A fourth unit, MEC Innovation, is dedicated to hands-on design. While MEC seeks cradle-to-grave programs, each unit has its own P/L, which allows the company to offer customer-specific services without having to pass on unutilized overhead costs.

What makes Screaming Circuits interesting is it carries its own brand, apart from the MEC label. The idea behind that unit, says Stoehr, is not about establishing a separate identity, however. Instead, he asserts, conducting quickturn efficiently mandates an operational model that focuses on it to the exclusion of everything else. Moreover, he notes, many engineers directly handle procurement for such jobs, rather than shuttling them to purchasing. “We wanted to set Screaming Circuits apart from volume EMS companies that try to do prototypes,” Stoehr said.

Program management takes a hybrid form, with PMs generally tied to specific customers and also in regular contact with the company’s 12 reps. Plant loading is performed in concert with customers.

Beyond noting the dedicated quickturn operations, Circuits Assembly came away with three distinct impressions during our visit in late September: one, the extreme use of Lean at all points within the facilities (not just the factory floor); two, the depth of consideration to the roadblocks, not just to process flow but to customer deliverables; and three, a startling emphasis on understanding the role marketing plays in customers’ strategies.

Marketing matters. Marketing of the end-product is an after-thought at most EMS companies – particularly the smaller ones. In perhaps as much as 25% of SKUs, the EMS provider may not even be informed as to what end-product the assembly is earmarked. Yet, it clearly weighs on the minds at MEC. Explains MEC Innovation vice president of technology James Scholler, “Many industries are myopic in how they solve problems. We like to be involved with customers’ marketing people so we can help generate new ideas. It’s difficult to get there; you’d think it would be black and white. But why shouldn’t we go about extracting from the customers what metrics they would consider to be a success? I think I should be in with my customer’s marketing team 80% of my time.”

Adds Terry Martin, the company's Lean and Culture Leader in Milwaukee, “We want to eliminate the filters of design. We can do this if we ask the five ‘whys’ at the front end of the relationship.” This goes beyond Scholler’s boundlessly enthusiastic and analytical obsession with knowing what his customers are trying to accomplish. Indeed, in some cases, MEC also puts its designers into the design centers of major customers.

Infected by Lean. A Lean culture infects the entire Milwaukee facility. Now five years into its Lean initiatives, MEC has conducted roughly 120 Kaizen events. The factory is laid out in several cells. (While MEC Northwest has a traditional layout, MEC Midwest is designed to facilitate customer interaction with team leaders.) Setup times are tracked with a digital timer mounted high on the wall. All materials are stored at point-of-use. Raw material is received and dispersed to stocking areas immediately, explains Sivilotti, with no kitting or transferring. So-called “in-house supermarkets” maintain standard release quantities (Figure 1), with a pull system that operates under a rule that if nothing is pulled out, nothing goes in. Parts are bar-coded for traceability. High changeover counts are the ideal, and lot sizes kept low to maintain velocity. A large scheduling board located on the factory floor identifies, by color, the status of WIP. Unlike many firms, MEC technicians and operators are encouraged to speak with their counterparts at customers. “Our techs talk to theirs,” says operations manager Bob Schultz. “We always want to grow the number of touches (with customers),” adds Sivilotti.

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Likewise, Lean manager Martin maintains a Lean Level Training Matrix on which he posts schedules and tracks Kaizen events. The status board is color-coded. The company holds book clubs to emphasize worker training.

Interestingly, Malek points out, the company actually called a temporary timeout on Kaizen events after it noticed returns were slowing; it is using the time invest in team building, and when it returns to Kaizen next year, the firm hopes to have better team and communications tools in place. It then tried to revamp its approach to generate more velocity (a term heard often at the company). Employees undergo regular training workshops and are encouraged to supply feedback. “We won’t survive the way we want to survive if we don’t do that,” Malek says.

In a room that once housed high-speed lines, the company now performs panel wiring and testing in six cells. The space became available following several Kaizen events, and the service has become a “very large activity for us,” Sivilotti says.

NPI is visual, too, with a large board showing all the steps. Each customer is asked for feedback by means of a launch release form.

Never stop moving. MEC operates under the thinking that it doesn’t know what it will take to complete a project until the customer says “It’s done.” Most manufacturers – electronics or otherwise – go through “stage gates” to get from design to manufacturing, without giving deep consideration to the deliverable, which MEC defines as “what the customer values.”

“Our goal,” says Scholler, revealing a series of process flows and sounding more like an industrial engineer than his electrical background would suggest, “is to keep the project moving at all costs. We want to make the ‘gates’ flexible and embed the critical paths.” Gates – hard steps in each process – are necessary to control risk. Unfreezing them implies greater cost and time. Yet MEC proposes to do exactly that. The program, which MEC calls FreezeGate, pushes documentation to the team level, out of management’s hands, which speeds decision-making. Explains Scholler, “We said, ‘Let’s not freeze documents; let’s freeze features’ ” of the end-product.

Some of the biggest hurdles MEC sees lie outside the facility doors: finding engineering talent and the right customers (and having the courage to pass on the wrong ones); and the frenetic pace of electronics today, which makes it exceedingly difficult for customers and supplier to find time to talk.

Still, while 50 years in electronics assembly suggests a track record of success, Terry Martin sounds uneasy. “Are we giving our employees the environment to step forward and be creative?” he asks. It’s precisely that type of self-awareness and pragmatism that will keep MEC around for another 50.

 

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