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What We Do Explained…in EBN

from EBNonline  August 22, 2016

The Latest Approach to PCB Sourcing

As U.S. PCB manufacturers disappeared in the 90s and early 00s, they were replaced primarily by sources in China, which now holds enormous capacity and actually performs with outstanding consistency in its more automated factories.  The challenge has been knowing how to tap into this resource without getting burned or spending so much on the vetting process that the savings are gone.

So, enter the Managed Manufacturing Services provider to bridge this divide.

When China turned to the USA to absorb come of their capacity, the cultural and communication gap was too great for most end customers.  PCB Brokers started to appear.  These are the guys that shop requirements to the lowest bidder and allow a path to China. On the surface it was a good solution, but then problems began to arise.  Consistency of quality could not be maintained because the sources kept changing as the broker chased lower cost. Delivery was long and inconsistent because the broker had no leverage with the factory. Design errors were allowed to flow all the way back to the customer because no one really looked at the manufacturability of the design.  Anything that could go wrong, did go wrong.

 

For the OEMS who braved the cultural gap similar problems arose but with the added grief of late night phone calls and misunderstood instructions. Worse, sometimes the OEM was not dealing with a real factory, but with a China based broker, so again, shifting factories created inconsistent quality.

 

Back in the USA, the remaining PCB houses found that they needed to focus on military and high end boards to make ends meet.  The rest were so hammered by the low cost of China boards, they drove their own prices down to a point they could no longer invest in equipment or worse the revenue fell below basic overhead.  The result for the OEM has been to pay prices that ruin the profitability of their product, or take their chances with China.

Enter a new approach.

Managed Manufacturing Services is a hybrid approach to all of the above. As the name implies, the heart of it is providing total management of the outsourced product, leveraging the best resources to satisfy the narrow boundaries of lowest cost and highest quality.

A recent article by Tom Hennessey in EBN, talks in detail about how some companies can solve their source cost and quality control needs by adopting a hybrid approach.  Some parts of the production process are performed in low cost Asia (primarily China) factories, and the balance of the production effort is performed closed to home.

See http://www.ebnonline.com/author.asp?section_id=3919

We see this a little differently, but along the same lines.  A Managed Manufacturing Services [link prior phrase to our About Us page ] model divides the sourcing and logistics task into 3 parts.

  1. Engineering review and documentation scrubbing (local)
  2. Factory fabrication and assembly (offshore)
  3. Quality verification and product distribution (local)

 

This is how it solves the above mentioned problems –

Imagine all of the iterative engineering communication taking place close to home, maybe even in the same time zone.  The 2-3 hours you spend hammering out the what ifs and cost comparisons are spent during your morning or mid day so purchasing can get the order placed in the afternoon. Those boring but critical details of your PCB or PCBA scrubbed to perfection.

Now imagine a far away low cost factory previously vetted and approved by your QA team. Delivering the board at the cost which makes the project a financial success.

Finally, imagine a quality verification process through the same local team that you relied upon to understand the original need.  Visual screening, pin gauging, certifying so that product goes into your house and to the line with minimal effort and delay.  No rejects, no QA meetings deciding if the boards are good enough to accept…because it is all good.

Now, for management, the pièce de résistance.   Imagine a USA corporation financially responsible for the order from quote to deliver

While we all want manufacturing in America, more than that we need to have the costs that allow us to compete….or we go under… One of these days, disruptive change will take place in the PCB industry.  (I am guessing it will be 3D printed high performance boards.)  Until then, we must find creative ways to leverage the installed capacity of China while artfully avoiding the associated problems.  This #hybrid manufacturing approach adapts well to solve those issues.

 

Categories: Management, Purchasing