-
- News
- Books
Featured Books
- smt007 Magazine
Latest Issues
Current IssueBox Build
One trend is to add box build and final assembly to your product offering. In this issue, we explore the opportunities and risks of adding system assembly to your service portfolio.
IPC APEX EXPO 2024 Pre-show
This month’s issue devotes its pages to a comprehensive preview of the IPC APEX EXPO 2024 event. Whether your role is technical or business, if you're new-to-the-industry or seasoned veteran, you'll find value throughout this program.
Boost Your Sales
Every part of your business can be evaluated as a process, including your sales funnel. Optimizing your selling process requires a coordinated effort between marketing and sales. In this issue, industry experts in marketing and sales offer their best advice on how to boost your sales efforts.
- Articles
- Columns
Search Console
- Links
- Events
||| MENU - smt007 Magazine
Supply Chain’s Risky Behavior
February 2, 2022 | I-Connect007 Editorial TeamEstimated reading time: 3 minutes
Barry Matties and Nolan Johnson speak with Joe O’Neil, CEO of Green Circuits, about something that seems to be on everyone’s minds—the rising cost of, well, everything. Joe’s background in marketing and finance, as well as his leadership at Green Circuits, positions him as an expert on managing costs related to labor, facilities, lead times, employee training, and the future of the industry. But what rising costs actually surprised him? This is a must-read for us all.
Barry Matties: Joe, costs are going up and fabricators have tried to compress the cost, to not pass it on. But you can only compress for so long. In the past, you might have seen a fluctuation in a particular material or some components, but now it seems to be everything from shipping to labor to utilities. Is it everything?
Joe O’Neil: It’s not everything, but it is most things and they’re the big things. From an EMS provider standpoint, 60–80% of every dollar of revenue is materials, depending on the sector or region you’re serving. The supply chain is strained, inventory levels are down. We’re at the beginnings of the bubble of double and triple ordering. Everyone has horror stories about price gouging. Customers are suddenly okay with taking broker risk, as long as you test and do other things to mitigate the risk. Two years ago, it was, “Absolutely not,” and now it’s, “Whatever could make that two-year lead time turn into tomorrow, we’re open to looking at it.” They’re salvaging bone yards and pulling parts—so that’s the material piece.
There’s definitely a cost increase in labor. Entry-level jobs around here are $20 an hour and that’s if you just want to flip burgers. If you have somebody who will be dedicated, show up every day, and learn a trade, you expect to pay more. One area going the other direction is selling, general and administrative (SG&A) expenses. There’s an opening of the mindset to accept remote workforce, which allows you to contract out your workforce to areas where costs are lower. Our industry was late to the party, and we’ve made gains, although not enough to offset the direct labor increases.
Another surprise to me was factory costs, leases, and real estate. Because of that remote workforce, I thought commercial industrial real estate would go down. Instead, it has skyrocketed; it was a surprise, but it’s up like everything else. Equipment costs are brutal right now because of what our customers are going through. We buy equipment from OEMs, who are typically our customers, and they’re getting hit with cost and lead time increases. It certainly seems like a big inflationary environment.
Matties: With the mention of lead times up to two years, can you expand on that?
O’Neil: It used to be a 52-week lead time, and “we just don’t know how to tell you that it’s been discontinued,” or that “we haven’t gotten it out of the lab yet.” There can be 51 weeks of supply already committed, and you can be in line at 52, so it’s different. One part that seems to be improving is the decommit and recommit chaos. We had those three or four months of chaos on the lead time, where one day you heard it was two weeks, and the next day it was 52 weeks. How does the thing that you ordered two weeks ago suddenly turn into 26 weeks when it’s supposed to be here today?
In years past, you would see that maybe once a week. But it went from one or two things per month, to one or two things per week, to one or two things per bill of materials, to a handful of things per bill of materials. It’s an exponential set of problems, so more resources must be dedicated to validating the supply chain data and ensuring that we’ve got tracking numbers. You come to not trust your “trusted” suppliers because you keep getting burned. You need to validate everything, because you can’t get a production schedule without having some visibility on materials that you can rely on.
To read this entire conversation, which appeared in the February 2022 issue of SMT007 Magazine, click here.
Suggested Items
SEMI Applauds U.S. Chips Act Award for Samsung Electronics Facilities to Strengthen Domestic Semiconductor Supply Chain
04/17/2024 | SEMISEMI, the industry association serving the global electronics design and manufacturing supply chain, applauded the United States Department of Commerce’s announcement of a Preliminary Memorandum of Terms for an award under the CHIPS and Science Act to support the expansion of Samsung Electronics’ presence in Texas and the company’s development and production of leading-edge chips.
Microchip Technology Expands Partnership with TSMC to Strengthen Semiconductor Manufacturing Capacity
04/08/2024 | Microchip Technology Inc.Microchip Technology announced it has expanded its partnership with TSMC, the world’s leading semiconductor foundry, to enable a specialized 40 nm manufacturing capacity at Japan Advanced Semiconductor Manufacturing, Inc. (JASM), TSMC’s majority-owned manufacturing subsidiary in Kumamoto Prefecture, Japan.
MS2 a Beneficial System for Reducing Solder Dross
04/04/2024 | I-Connect007 Editorial TeamWe recently spoke with Octavio Raygoza, sales manager for P.Kay Metal in Mexico, to discuss how P.Kay’s MS2® system for reducing solder dross is both financially and environmentally responsible. By reducing solder dross up to 85%, you nearly double the output while consuming the same amount of solder.
Hentec/RPS to Exhibit Vector Selective Soldering and Odyssey Lead Tinning Systems at IPC APEX EXPO 2024
04/04/2024 | Hentec Industries/RPS AutomationHentec Industries/RPS Automation, a leading manufacturer of selective soldering, lead tinning and solderability testing equipment, is pleased to announce it will exhibit its Vector 300 selective soldering and Odyssey 925 lead tinning systems at the upcoming IPC EXPO 2024.
One World, One Industry: Sustainability Challenges—A Collaborative Approach
04/04/2024 | John Mitchell -- Column: One World, One IndustryMy personal belief is that changes to the electronics industry due to sustainability will be the most far-reaching in the industry’s history. This is not about if sustainability will impact us, but about when and if my organization will be left behind. We need to accelerate work that promotes sustainability and aims to achieve the ambitious sustainability goals set before us. The “we” includes all of us as individuals, but also as valued members of the global electronics manufacturing community. This diverse community can together address our greatest sustainability challenges.