Your customer wants to grow. Are you ready for the transition?
One of the difficult challenges small electronics manufacturing services (EMS) companies face is the transition from a transaction-based job shop to a relationship-based, full-service EMS provider. There are a number of issues to consider prior to taking that journey.
Is it necessary? Bigger isn’t always better. The US is full of small job shops that are profitable and right-sized for their ownership and long-term strategy. At the same time, there are also companies that successfully redefine that model within their region and grow at a pace they are comfortable with. And, a restructuring in trade agreements and tax structure may drive greater opportunities for growth over the next few years as OEMs update their business models to take advantage of this change in the playing field.
Is the bigger issue a lack of trust of those who don’t “look” like us?
A month ago I had a conversation with a guy who worked for me in my corporate days. We were discussing the #MeToo movement, and he said, “I’m no longer sure where the line is drawn.” This surprised me because over the two decades I’ve known my friend he has never been anything but great to work with. When someone like him is concerned about crossing an invisible line, it scares me. To me, the #MeToo movement has started a conversation that could end up improving opportunities and working conditions for women, or hardening the glass ceiling.
Before the “you don’t know what women have gone through” mail starts, let me say I deeply understand the pain and anger that drives #MeToo. I’ve been inappropriately propositioned in a board room and at industry events more times than I can count. But what was much harder to deal with as I moved up in my career was getting a boss who really didn’t think women should run sales organizations and dealt with that by doing everything possible to destroy my credibility with his boss and my team. I won’t go into details, but I left for a job that paid twice as much and the best boss I’ve ever had.
Businesses are happy, but more work remains to be done.
In February 2017, I published a column called “The Trump Effect and Manufacturing.” I thought it would be timely to revisit it since, with the passing of the tax plan, manufacturing companies face both opportunities and challenges in the coming year.
So, what will the Trump effect bring in 2018? Business is already seeing positive benefits:
Ways to resolve management variances across multisite operations.
One of the trends I’m continuing to see grow across the electronics manufacturing services industry is greater OEM focus on strategic use of multisite EMS facilities to maintain proximity with their facility structure or end-markets. Higher volume industries such as automotive and appliance have long dictated where their products would be built and sought EMS providers with facilities in the locations near their operations or distribution points. However, companies with much smaller volumes are also now looking at EMS facility site proximity to their operations. This can create an interesting challenge with smaller EMS providers.
Tier 1 EMS providers have done an excellent job of integrating their operations globally from a systems and process perspective. However, that is not necessarily true of multinational EMS providers in the lower tiers. Many in that category have grown by acquisition and have not standardized equipment and processes among facilities. Program management structures and processes may also differ.
And more important, who will it affect, and how?
It’s difficult to turn on a TV or read a major newspaper without seeing mention of Foxconn and the $10 billion flat-panel manufacturing facility targeted for southeastern Wisconsin. On one hand, it’s great to hear manufacturing jobs may be created on the scale being bandied about: 3,000 near-term, according to Foxconn’s quotes in several publications, and 13,000 (with an average pay of $53,000 plus benefits), according to Wisconsin Gov. Scott Walker. And while I don’t relish the idea of Foxconn becoming the poster child for the electronics manufacturing services (EMS) industry, after decades of working in and consulting to participants that are rarely known outside of electronics, it is nice to see the industry get this type of national recognition.
But will it happen? Foxconn’s track record isn’t stellar. A highly touted deal in Pennsylvania that involved a $30 million investment and 500 workers didn’t happen. Previously announced investments in Indonesia, India, Vietnam and Brazil have either yet to occur or were far below original projections.
Auditors can help improve processes, but certifying quality is another story.
Writing in the August issue of PCD&F, Peter Bigelow says quality programs should ensure quality, not hamstring ingenuity. “Micromanaging a supplier by approving or certifying processes the customer is not familiar with will ultimately hamstring their supply base and add unnecessary cost and time, thus defeating the purpose of the approval or certification,” he concludes.
I believe outside auditors or consultants can help improve yields, lower costs, shorten cycle times, and so on.