Harnessing our technologies to assist humanity.

There is a a technological solution for most things these days, and in this case virtual reality (VR) has been put forward to help new employees explore their working environment, find the locations of essential amenities, and experience lifelike introductions to the various activities and departments. The process can be completed quickly and efficiently, without the logistical challenges and delays that occur in the real world. It’s also as cost-effective and easy to onboard a group as it is an individual, and can save section heads and other presenters from repeatedly taking time from their main duties to address the newcomers.

VR is not new, of course. What’s happening is cases for using it in an ever-expanding variety of activities are becoming stronger as computing power and affordability increase. When a viable business case can be perceived, software application developers can get started, and a new market can begin – with all the new opportunities for technical and commercial development that come with it.

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Be quick with customer forecast review meetings when orders slow.

I believe 2022 will be a pivotal year for most electronics manufacturing services (EMS) providers. Material lead-time and availability issues are slightly improving, and supply-chain executives are cautiously optimistic about a return to normal in mid-year as demand levels out and additional chip manufacturing capacity comes online. That said, a return to normal brings its own set of challenges, if past cycles of this nature are considered. It is particularly important for EMS program managers to start considering the issues likely to come with a mid-year pivot:

• Forecasts on some products may drop substantially. While component manufacturers, distributors and EMS companies typically have checks and balances to identify situations where customers have increased forecasts as a hedge against allocation, uncharacteristic demand spikes make those controls iffy at best. Most EMS companies have orders into 2022 and exceptionally high levels of inventory in-house. Any downward trend in forecasts should trigger a forecast review meeting with the customer to determine how rapidly orders and inventory levels need to be adjusted.

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Government-imposed inflation hurts the overall domestic market.

The Office of the United States Trade Representative (USTR) is considering whether to reinstate Section 301 tariff exclusions that expired late last year on certain Chinese-origin products, including some printed circuit boards.

If granted, the exemption will pertain – as it did before – only to 2- and 4-layer rigid PCBs made of epoxy-glass. The tariff will continue to apply to single-sided and higher-layer counts, flex circuits, and other substrates such as aluminum or ceramic.

While 2- and 4-layer boards represent only a narrow portion of the PCBs manufactured in China, an exemption continuance will provide some relief to many OEM and EMS companies struggling with supply chain challenges.

The tariff aims to encourage “reshoring” by making domestic PCB manufacturing more appealing.

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A counterargument to cutting staff and inventory.

One of those rituals that takes place around this time is developing the business plan and related budgets for the new year. Deciphering the crystal ball, discerning optimism from reality in the sales forecast, determining budget capital investments and human resource needs, and so on, is always a complex task. The very unusual pandemic/post-pandemic world we are now in makes it even more so.

As we look to 2022, we see some unusual and especially onerous hurdles: a more strained supply chain, deteriorating consumer sentiment, increasing inflation, and segments of the economy still reeling from the worst days of the pandemic. While no single hurdle can be compensated for, the combination of threats can tempt the planner to take a conservative approach and decide it’s time to hunker down.

But what does a conservative approach to planning and budgeting really mean? Typically, plans might include reducing inventory, cutting back capital spending and trimming staff (or hours worked by staff) to “right size” expenditures with the projected (feared?) lower levels of business. All are prudent steps that in normal times should be considered when an industry or the economy shows symptoms of fatigue. The problem is these are not normal times!

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