Industry challenges heightened the need to know your customer
The words agility and flexibility have been common buzzwords used by Electronics Manufacturing Service (EMS) providers to their Original Equipment Manufacturing (OEM) partners over the past three-decades, to communicate their ability to scale up and down in accordance to changes in production schedule demands.
These words, and words like them, have however taken on a whole different meaning over the past three-years as EMS companies strive to meet changing and demanding market conditions.
September 2022 marks the third anniversary of Steven Blyth’s appointment as Director of Sales and Marketing at SMS Electronics (Smart Made Simple) and as someone who has been in the electronics industry for 30-years, in this article he talks about how the challenges presented over the past three-years will shape the industry for the next three decades and beyond.
Clear communications have always been key between an EMS provider and their OEM partner, but never more so than recently. The challenge faced by many EMS companies in the electronics industry has been their size. The large global providers have faced additional challenges in synchronising and streamlining their internal systems, whilst the smaller regional providers faced resourcing issues and constraints. The sweet spot is around where SMS Electronics – Smart Made Simple sits, as we are large enough to achieve economies of scale, yet small enough to nimbly react or proactively get in front of any issue.
There has never been a time where the Henry Ford statement “If everyone is moving forward together, then success takes care of itself”, has been more accurate. Brexit, Covid-19, component shortages, logistical issues, and resource absences meant that our company culture of constant collaboration came into effect ten-fold. We recognised early in the crisis that to effectively communicate externally with our customers, we needed to always be singing from the same hymn sheet internally. We pride ourselves on our culture, which is a common cornerstone to our company. Our internal meetings between all rock functions were weekly, however these shifted to three times per day, every day. Like clockwork, the head of all our operational rock functions e.g., operations, supply chain, distribution, HR, finance, plus myself for sales and marketing would meet on Zoom, or laterally within the facility once more to open our order books, to align component parts, to products, to production, to people. This practice, whilst it has reduced from three times per day, to now three times per week, has stayed with us as an operational procedure as the communication benefits to our customers became crystal clear.
The internal benefits also shone through as we got to know one another better. Even though most of us were complying with government guidelines to work remotely, we actually worked more closely. Crises brought us together as our common goal was customer care. We all became strategically aware of cross functional working practices, and we now understand one another’s departmental functions much better, which will help us and benefit our customers for the long-term.
Our open book internal policy was our starting block, so nothing came as a surprise to us that would have a knock-on effect across the entire supply chain, and as this practice became second nature, we transferred these skills onto knowing our customer.
Know Your Customer (KYC)
Being in sales in marketing for my entire career, knowing my customer isn’t something new to me, however what I did realise through this time, is that there is knowing your customer at a strategic level, and knowing your customer at staple level.
Our internal collaboration enabled me to provide our customers with regular, accurate, clear supply chain updates that were real-time.
We started to bang the drum on extended lead-times as early as November 2019, which is when our ‘franchised distributors’ were receiving information from Original Component Manufacturers (OCM) that component shortages were forecast, with the term allocation being back on the table.
This is when true KYC kicked in as we spoke to all of our customers individually to understand their future production plans, whether for their current product revision, or a potential next generation development, to ensure we worked with them to secure a long-range forecast. Armed with their data, we were able to work with our strategic supply chain partners to understand their schedule for component parts. Harmonising supply and demand between all parties in the supply chain enabled us to place long term production commitments. Customers benefits as they avoided shortages and, as demand quickly outstripped supply, the inevitable increased costs.
This process helped all immensely and was adopted as we started to see 12+ months order commitments, this has now extended out to 24+ months with the majority of our customers.
On top of working in this way, we have also taken a belt and braces approach with our customers to protect their product production by asking them to take into consideration; component alternative, research redesigning their product to accommodate daughter boards, or to harvest component parts from previous generations of technology. All of these solutions also address one of the main trends in electronics manufacturing, to address e-waste by taking a more sustainable approach.
As things start to go back to the pre pandemic ‘normal’, we are taking the positives out of what was a difficult time for all. As a team we are closer. Our customers have taken the time to congratulate and compliment us for going above and beyond during these times. Plus, we’ve learnt valuable lessons that have improved our operational efficiency, leading to overall time and cost savings across our business, and that of our customers.