Technology & Business Report

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Each month, SMT Magazine's SMT Trends section polls industry leaders on topics at the heart of the surface mount industry. This month, we ask industry leaders for their opinions on the state of the industry and possible directions it will take in the future. Of key interest were topics related to global expansion and time-to-market.

Q What procedures do you have in place to bridge communication between design/manufacturing and management?

KALEN: Our communications are complicated because of the language barrier we face between English and Japanese. We pay close attention to details that are not even thought of in domestic companies.

We try to simplify and illustrate as many details as possible to get our point across. Sometimes using a drawing is much easier to explain details than translating text. We use forms and action-item checklists to monitor communications. To make sure something does not fall between the cracks, questions and responses are tracked.

PINKSTON: We utilize project-management teams to ensure all aspects of a project are handled, from quote to design through production. This team tracks and reports project status and issues not only to our management, but also to the customer. Management is also involved in a quarterly meeting where all quality issues and corrective actions are reviewed.

Q What steps has your company implemented to address the environmental issues that affect the global PCB assembly industry?

KALEN: We are constantly trying to demonstrate the environmental friendliness of the bulk feeders on our machines.

PINKSTON: We eliminated all of our solvent-cleaning processes several years ago, and have developed no-clean processes for all types of soldering. Our no-clean processes allow us to manufacture more than 80 percent of our products with no-clean operations. In the instances where an assembly must be cleaned for cosmetic reasons or because of some post-soldering operation such as conformal coating, we use a water wash that utilizes a closed-loop filtering system. Also, we are developing many other processes such as lead-free solder, solvent-free fluxes, etc.

SMITH: My company is currently reviewing environmental issues of the printed circuit board (PCB) process at its facilities. There are many recycling efforts that are presently in place and others that are being evaluated.

Currently, we are recycling lead solder. Dross and unused paste is collected and transported to a secondary lead smelter for reprocessing. Lead solder is produced from this smeltering process for reuse; no lead solder is disposed. My company also recycles the plastic trays and reels generated in the production of PCBs. These plastic wastes are recycled through the SemiCycle Foundation.

We are currently evaluating the environmental efficiencies of our PCB operations. The solvents that are used in the process are presently collected and disposed of through incineration, which the Environmental Protection Agency (EPA) and Texas deem as the highest level of waste management outside of waste minimization and reduction. The reduction or substitution of this material is slated for review.

In anticipation of future client's needs, my company has conducted research on the environmental impact of lead-free solders. The replacement solders presently on the market include certain alloy blends of antimony, silver and copper. All of these are also regulated under federal and state law and have significant environmental impact. It appears that the substitutes may not be better and the regulatory burden just as notable.

Q From a business perspective, what are the advantages and disadvantages of offshore manufacturing? What drives companies to utilize "regional" manufacturers?

KALEN: Advantages can range from getting a better price to sidestepping governmental regulations. Automakers have been very proficient in taking advantage of offshore manufacturing for decades. (They have established plants in third-world countries for years, but have the price of cars gone down?)

If a company does not have its procedures and documentation in order, offshore manufacturing is painful and costly. If a company can define a process and procedure so it can be "put in a box," it can set up efficient manufacturing anywhere in the world. Regional manufacturing cuts down on time-to-market and shipping costs.

PINKSTON: Labor is the obvious advantage, but it isn't just direct labor that is less expensive. There are often larger cost advantages on indirect labor such as engineering, purchasing and management. These show up in the form of lower overhead rates. The disadvantages encompass a wide range of items, from time-zone issues for communications to a higher potential for breaching confidentiality and intellectual property agreements. It seems that the real reason for taking a product offshore is when raw selling price is the main driving issue. You can typically make a much better case from all other perspectives, i.e., quality, communications, speed-to-market, flexibility, etc., with a regional or North American supplier.

Q How does a global company deal with regional market differences? How can services be personalized to address business practices in different cultures?

KALEN: The only way to effectively deal with cultural differences and different business practices is to establish a local presence with local people. If processes or services are defined well enough, problems can be monitored and corrected from afar.

PINKSTON: Customer service is the key. Making sure that the customer has a contact that may be reached during business hours is important. That person must make any issues related to where the product is manufactured transparent to the customer. The key is to make any geographical, cultural or other issues yours, not the customers.

Q What impact does design for manufacturing (DFM) have on today's manufacturing environment?

KALEN: When engineering and production work together to make products easier to build and support, it lowers overall costs while improving quality.

PINKSTON: Proper DFM and design for testability (DFT) are crucial in today's environment. With the never-ending push for lower prices and higher quality in the electronics industry, it is critical that a product is designed to be manufactured and tested. Without taking DFM and DFT into consideration, a product will never reach its maximum cost-reduced state. Almost any product can be manufactured, but how cost effectively and at what level of quality is dependant upon whether it was designed to be manufactured. Our industry is seeing an increase in the number of companies that are turning to the manufacturer earlier in the process to help ensure their product can be produced at high quality levels and cost effectively. This trend is causing our industry to offer more product design and DFM services to customers.

Q Today, manufacturers need to compete on the basis of speed, i.e., time-to-market. What steps have you taken to decrease time-to-market to accommodate shorter product life cycles?

KALEN: Our business is not affected as much as consumable products, so our product life cycle is longer.

PINKSTON: Our company uses a project management team philosophy that allows team members to concentrate their efforts on getting a product into production. This encompasses all phases of the process from quoting to shipping. We are also constantly evaluating all of our business processes, such as quoting, product design, material procurement, etc., to identify and make improvements. Understanding the customer's needs, focusing to meet those needs and constantly looking to improve are the keys to being flexible and meeting the customer's time-to-market requirements.

SMITH: At its inception, our company had no product-introduction process and relied on the product knowledge and skills of individual product engineers and managers. This approach led to serial processing of new product-introduction activities, as well as unforeseen problems when the product was launched. In 1998, we instituted a new product-introduction process based on the automotive industry's process. It is detailed in the QS 9000 series of standards. This model requires a complete process flow from dock to dock, and a control plan for steps critical to the manufacturing process or to the product's function. Later steps include failure mode and effects analysis to raise issues that would adversely effect the manufacturing process or the product's reliability. The pre-production manufacturing runs for the new product are also prescribed. There are prototype, pre-launch and launch phases. The significance of this portion of the process is the cross-functional discussion of data drawn immediately after pre-production runs this has significantly reduced problems before production quantities start. When the skills and viewpoints of all groups involved in the new product-introduction process are used (materials, manufacturing, quality, engineering and test), the process is much smoother and takes far less time to complete.

Q Will there ever be a time when surface mount can duplicate the characteristics of through-hole for every component on the board? Why or why not?

KALEN: I don't think so; the mechanical characteristics of the two are at odds. Many times, the SMT equivalent of a part is better than the through-hole part, but the opposite can also be true. There are times where you do not want to go backward, and to duplicate through-hole is a step backward.

Q Many in the electronics industry are experiencing a skilled labor shortage. Is this really the case? If so, how should this dilemma be addressed (i.e., increased education, government intervention, new recruiting tactics, etc.)?

HUFFMAN: All industries are affected by today's record low unemployment. It is not necessarily a deficiency in one or more skilled areas; companies are being challenged in multiple areas, including hiring and retaining employees. Meeting this challenge requires specific and targeted recruiting strategies. Increased focus on referral programs entice everyone in the organization to become a recruiter. Employers who engage the services of on-site temporary companies are now finding that one source with multiple backup vendors will no longer meet their needs. Instead, multiple agencies with specialties must be included on-site. Temporary agencies are including custom training as a value-added service for their clients. Employers must continue to form stronger partnerships with local high schools, trade schools, machine vendors, junior colleges and colleges. Internships, work-study programs and flexible work schedules strengthen the possibility of securing the graduate. Managers and supervisors need additional training in coaching and retaining a diverse work force. In the low-unemployment environment, many have a tendency to think money is the answer when most changes really occur because of a lack of training, dissatisfaction with the job, poor relationships with management or any combination of the above. The best solution remains promotion from within. This provides the opportunity to train, promote and retain employees who have already proven to possess basic skills. In addition, open positions would be filled further down in the organization and may require less training or minimum training before recognizing any return on investment.

KALEN: Many companies are experiencing problems in getting qualified applicants. The major reason for this is the degradation of our public education programs. Government intervention has caused the degradation, so it is best to get our education system into private industry. It is hard to believe that companies have to pay to teach basics such as reading and arithmetic, but this is taking place today. Our engineering prowess is not what it used to be. Other countries that have concentrated on education as a way to improve their standards of living are the countries that will provide higher level workers.

PINKSTON: I'm not sure that there is a "true" skilled labor shortage, but there is definitely a conflict between locating the raw labor rates required to be competitive and locating good skilled labor, such as engineers. Our industry is being put in a position of having to locate manufacturing facilities where they can draw enough production labor at a rate that is low enough to allow competition in a global market. These locations often are not attractive to the top talent coming out of universities. Another issue is paying a high enough wage to draw talent to these areas. This in turn drives up costs and causes companies to be less competitive. This is an issue that is going to get worse over the next couple of years and there really hasn't been much of an effort spent in developing creative ways to resolve it. One way we try to address this is having various programs in the local high schools that try to get students interested in our company and returning home once they graduate college.

Pam HuffmanVice President, Human ResourcesK*Tec ElectronicsSugar Land, Texas

Dave KalenMid-South Regional Sales ManagerNissei Sangyo America Ltd.Irving, Texas

Duane Pinkston Sales Engineering ManagerKimball Electronics GroupJasper, Ind.

Edwin B. Smith, IIIQuality Assurance ManagerK*Tec ElectronicsSugar Land, Texas



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