Zentech: Expanding EMS Solutions and Supporting Innovation

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Matties: That is the area we have to really focus on here in America. I spend quite a bit of time in Asia, and China in particular, and I see them writing into law that they have to bring automation into factories, because they already realize that labor cost is the variable that is going to drive the market away. Obviously, it's not going to disappear in China; there are a lot of low-cost producers still there. But I look at their national strategy and they're already making adjustments. When I look at America, back in the ‘80s, when I published CircuiTree Magazine, we were talking about automation; at the time it just didn't seem to be important as a national strategy to lower labor costs. Everybody was fat and happy, making lot of money; and then we know what happened.

It feels like there's this new mentality taking hold in America now and a whole new infrastructure that's being built, and Zentech is a part of this; it's a really exciting time.

Turpin: It is exciting, and as part of the national manufacturing strategy, which compared to China and other countries, the U.S. does not have, we're trying as a nation to get our act together in terms of trade policy and at least are looking at some of the currency issues and things like that. But the U.S. is doing a much better job at what I call the ‘basic blocking and tackling,’ like STEM education for example, at the state level and the national level. STEM education is getting the next generation of the workforce into companies like Zentech, and they will replace people like you and me, who grew up in the ‘80s in this business and will be checking out in the next 10–15 years.

We need that next generation, and fortunately, manufacturing is becoming popular again. Ten years ago, schools just weren't promoting manufacturing, but things like 3D printing—which is not the panacea that the news media seems to think it is right now, but it is an interesting and enabling technology—have created a hook for students to say, “Wow, there are some really cool things going on in manufacturing.”

Matties: I saw a quote on your website that says you are turning your customers into raving fans. What does that mean and how does that work in your company?

zentech_factory.jpgTurpin: At a high level, it's a belief that a transactional relationship is generally not a healthy relationship. In other words, whether it's the supply side or the customer side, transacting is doing business like you do business at CVS, Walmart or McDonald's, where you come in, it's impersonal, there’s an exchange of value and you're done, without knowing anything about either side of the relationship or what the expectations are. You don’t know how they do business, where their pain points are, how you can solve their problems, etc. If you are just focused on the transaction, on either side, in my view it's not a healthy relationship. It's short-sighted and does not consider all the variables.

Whereas, if you can foster a relationship, either as a supplier, or as a customer with your suppliers, where you're exchanging information, you both know what you need out of the relationship. You both know where you're going in terms of a product development roadmap, what technologies you're looking at adding, and those are generally a result of conversations with customers about where their technologies are going.

To that extent, we have an open dialogue with all of our customers. If we know where their products are heading and what their needs are going to be in the future, we can better support them and enable their success and foster their ability to innovate in a way that a transactional relationship doesn't. The output of that are customers who have become raving fans because they can look back and say, “Man, we killed this quarter and we did it because we had a partner that was able to anticipate our needs and had ample capacity to take care of what we needed. They hedged the inventory, understood our forecasting, executed properly, and had engineering support available when we needed it. And this is the result.” On the other hand, if they tried to get that same result through a transactional relationship, my view is they would fail nine times out of ten.

Matties: I completely agree with that business strategy. How do you keep your employees tuned into that philosophy and what sort of training do you have?

Turpin: There are two parts to that. We are big on training. We tend to use IPC as the reference point for all of our training, and there has been a lot of action lately. Obviously, IPC has always been focused on standards and documentation, but about two years ago they came up with a model called the IPC Trusted Source or Qualified Manufacturer, where they engage in an audit program very much like the quality management system audits. You go through an ISO audit or an ISO 13485 audit, where you have an audit team consisting of one or two people, who come out and turn everything upside down for five days. But as we all know, especially people on the supply chain side, just because somebody has a registered quality system doesn't necessarily mean they are producing good quality. Whatever they are producing is consistent, but it may not be all that good.

What IPC has done is to use that same auditing and registration model, but against IPC standards. They have an audit process called the Qualified Manufacturer Listing (QML), IPC's Trusted Source, where they come in and do that same level of auditing against J-STD-001, IPC-A-610 and other standards.

With that in mind, the QML process has helped us establish a training and communication program, using IPC standards as the reference point—like a curriculum. We then graduate the staff and the employees from a training perspective by getting the organization and all of our processes certified to that. We've always had certified operators and inspectors through J-STD-001 and IPC standards and such. But going to the next level and having the processes certified has been an interesting exercise. It has also resonated with our customers. We've done that on the training side and also on the other employee engagement activities. Just having consistent and repeated messaging on what we're doing, why we're doing it, and what is going on with our customers is important. We have had customers come down and address the employees in an open, “all hands” format. That has been very powerful too.

Matties: I would think so.

Turpin: We had a customer not too long ago whom the employees still talk about, because it is part of our message and what we want to be as a manufacturer. So this VP of supply chain came down and he said, “There are 50 other contract manufacturers between my building and Baltimore that I could do business with, most of whom are less expensive than Zentech on a per-piece basis. But, on a value and total cost basis, I feel like I'm getting the best deal from Zentech because I don't have any returns. I always get what I need when I need it, and you always know what we are going to need. When we need to change, you are able to change quickly with us, and that has value.”

Matties: That has huge value.


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