Reading time ( words)
Barry Matties and Nolan Johnson talk to Sunstone Circuits’ Dawn DelCastillo, Kelly Atay, and Matt Stevenson about the current supply chain challenges and how they are adapting. They also share insights on market conditions.
Barry Matties: Let’s jump right into the supply chain. What sort of changes are you making and how are you helping your customers through the supply chain challenges?
Dawn DelCastillo: We’re finding more ways to help our customers through some of the challenges, and not just parts, but the overall supply chain issues. Can we help find parts? Can we do something else for you? We are being more of a full-service supplier.
Matties: Have you noticed the ways your customers are working through this?
Matt Stevenson: We have heard several interesting approaches. There’s one customer who has five revs of a single board, for example, and they will order a rev depending on which parts they can get.
Matties: Are you seeing your overall customer base grow?
Kelly Atay: Yes, in fact our number of new customers is increasing recently. There was a lull in that metric throughout much of 2020 but we are starting to see it come back.
Matties: Does the reshoring mentality influence new customers?
DelCastillo: Reshoring is a trend we’ve been watching, and we’ve done some marketing around it. I think now is the time to capitalize on that. There are plenty of people out there who are exhausted from the challenges of doing business offshore these days, and many of them are willing to bring their designs back to the United States to avoid these unpleasant challenges.
Matties: It feels that the supply chain issue, especially with ships stacked up at the ports, is just accelerating the need because now people realize it’s not price alone that you must deal with when offshoring. There are a lot of issues.
Stevenson: We are feeling optimistic about 2022. In general, we think the economy is doing well. Electronics is doing very well, even though parts will still be a problem through 2022, into 2023, and beyond. So, until the supply chain with parts gets dialed in, it will be a struggle, but it will continue to improve as everyone gets more comfortable doing business in today’s environment.
Matties: That supply chain squeeze is felt through increased demand. At some point, where they can’t justify the price, perhaps they go to China or somewhere else. But where is that point?
Stevenson: It depends. Some customers believe we’ve already exceeded that price point. For others, there are grumblings that we are getting close, while still others pay whatever they need to in order to keep their suppliers domestic. It is really a balancing act by these purchasers with cost, lead-time, availability, and customer service.
Matties: What are you doing to lower your costs? Obviously, labor and materials are the two big costs there.
Stevenson: With every capital purchase that we have had since last year, we have looked at ways to build in any kind of efficiency into the process through automation or material handling. By doing so, we have less need for labor, especially for the menial, mundane jobs. This way, we can reallocate people to do something that requires more skill. In general, labor is going to be a problem for American manufacturing; it may get to the point where we will not be able to find what we need.
Even more than finding the labor will be retaining those employees. We’re not going to have 20-year employees anymore. We will be lucky to have a quality, hardworking employee who wants to work five days a week for two or three years. We need to understand that benchmark, speed up our training, and find even more ways to automate our product.
Nolan Johnson: You’re talking about moving the specific knowledge of how, the art of that, if you will, into your systems so that it’s not with your operators anymore.
Matties: It’s the smart factory mentality, but we know smart factories aren’t a flip of the switch. As you look at the potential of smart processes, what would be the most important area to automate right now? What process do you have where you could take out the human aspect?
Stevenson: We’re concentrating on our mechanical operations problems right now, mainly drill and fab. Any time that they must make a choice, such as on a cutter size for a rout program or how high for a drill stack, there’s the chance of making a wrong decision.
To read this entire conversation, which appeared in the January 2022 issue of SMT007 Magazine, click here.