Complacency in Manufacturing

There is no room for complacency in manufacturing. If you’re happy with what you’re doing relative to your subcon manufacturing, you’re happy! However, I would pose the question of what you’ve done in the form of an FMEA for your manufacturing model? If the answer is “been there, done that”, this post will do little but serve as a gentle reminder to keep up the good work.

On the other hand if you haven’t given it much thought because it seems to be working just fine, that’s what I pay the subcon for, or adopted the “aint’t broke, don’t fix it” mentality, etc., you might be guilty of complacency. Complacency kills: It kills growth, it kills innovation and it can kill companies just when everything seems at its best. If this is you, you might consider reading further.

Ask yourself the question “Why do the most successful companies have a presence in their subcons? Coming from that background I can give you a leg up with some of the important answers:

·         Ensure their company has a voice in the factory
·         Work directly with the factory floor mgmt face to face to improve Delivery, CT, Quality, Cost, etc.
·         Quickly address engineering/production issues on the floor, face to face
·         Give and receive real time feedback/immediate responses
·         Develop highly responsive relationships to support manufacturing goals; sprint capacity, cost down, heightened attention to manufacturing issues/ indices
·         Improve manufacturing to a level it becomes a competitive tool in growing market share
·         And they know “When management focuses on the problems, the problems go away”

I’m here to tell you bad things can and do happen when we’re not focused on manufacturing, maybe not today but if we’re not managing it well we will surely be bitten down the road at some time.

The big guys have come to understand how to get the most out of their manufacturing. That's partly how they became big.

Missing Deliveries

It’s never a good day at the office when you hear planned shipments are not coming out of your subcontractor. It could be:

·         die did not get launched into assembly when scheduled

·         your parts were pushed aside to run another customer’s product

·         or worse yet, a catastrophic issue that resulted in scrapping an entire run

The reasons don’t matter; your parts are not where you expected and needed them to be. One or two such events can wipe out a big part of your annual profit. 

The harsh reality - most companies wait for a catastrophic event to hit their subcontractors’ operations instead of proactively managing the situation. Can you afford the negative impact that subcon problems can cause you and your customers? Most companies cannot and you do have recourse to protect you interest.  

Large companies manage their outsourced manufacturing by having key people stationed strategically in Asia to manage their interests. Ideally, they should develop real-time working relationships with the subcontractors, and attend to daily hiccups and problems within the same day at the Subcon. Good approach, but a huge cash drain with all the extras thrown into the equation, costing $100’s of thousands of dollars per person each year.  

Another approach for companies looking for outsourced management that can be less costly when compared to sending in their own people offshore is utilizing in-country local talent. Some companies have had a modicum of success with this approach but usually it is not very successful. Primarily due to the difficulty locating individuals possessing the potential to grasp the company’s core values and culture, not to mention the capacity to understand Fab, Assembly and Test thoroughly. I am not saying it is impossible, but I know companies that have worked this approach for years without finding the right individual. 

Small companies cannot afford the large expense of foreign assignments or the time required finding local talent. In the mean time, they end up using in-house key resources that are pulled from critical projects to attend to the emergency problems and every day business. These people have to fly over to Asia to meet with the Subcons to solve problems, expedite your parts or negotiate with them face-to-face. This can take several weeks out of the year and can be very expensive. While this approach may solve one or two problems at a time, it is more of a fire-fighting approach. You are always working from behind, instead of proactively managing and improving your business. 

Semiconductor Management Services (SMS) companies like ours have an inside track on managing semicon manufacturing interests in Asia affordable to most any company doing business in Asia.