Teams are overworked and on the edge. How to combat the slide.
One of my favorite bosses pointed out that a contract is only as good as the intent of the parties who sign it. Yes, you can haul a party in breach of contract into court or arbitration, but the resolution rarely completely fixes the issue, and in many cases parties breach agreements with no consequences. Nowhere is that more evident than in today’s semiconductor industry. You’ll get parts when they arrive even when there was a commitment for an earlier date; they may cost more than the agreed-upon price; and the order is noncancellable regardless of how many previously agreed-upon terms change. In short, one party has no intent to adhere to the terms of its agreements, and market conditions will likely enable that behavior to continue indefinitely with no consequences.
This type of environment can be as contagious as the most recent Covid variant. Customer service and honoring commitments are sliding across the board. Last month, I listened to a gate agent lecture a 6 a.m. flyer who foolishly thought she could get to her destination in a single day, saying the airline wasn’t obligated to put her on a different airline until she had been stuck in transit for 48 hours. Separately, three contractors I called for glass cutting informed me that they couldn’t commit to a time for quoting or delivery but would a call an hour before they arrived. One finally did call back a week later and got the job. The other two still haven’t called back. When all competitors in a market are getting away with behaving badly, mediocrity thrives.
Strategies for finding a long-term employer-employee fit.
Firstronic and Lacroix took a long-term approach to joining forces, eliminating the usual learning curve.
As a 40-year veteran of the electronics manufacturing services industry, I’ve seen my share of EMS mergers and acquisitions from both sides of the equation. The basic EMS industry business model adds complexity to that equation not found in most industries because EMS companies are an extension of their customers’ manufacturing operations or, in some cases, their entire manufacturing operation. If a larger conglomerate acquires the company that manufactures your dish soap, you won’t notice unless the product’s effectiveness or branding changes dramatically. If your EMS provider is acquired, it’s obvious on day one.
In many transactions, the only consideration of impact to an EMS company’s customer base is visits to key customers during the due diligence phase to enable the acquiring entity to assess whether the business levels they anticipate are likely to continue in the new entity. The alignment of EMS brand/differentiating processes and facility redundancy are often minor considerations.
Strategic conversations are key to sustaining existing business.
The current business environment is creating two significant challenges for mid-tier electronics manufacturing services companies at a strategic planning level. The first is program management workload. Material exceptions have become the norm, and program teams have become highly reactive to respond to changing program variables. Second, material constraints are causing OEMs to keep projects at their current suppliers and push out launch plans on new products. Taken together, planning for account growth beyond what is automatically going in the pipeline based on spikes in existing demand may not be a great use of program management time.
While it is unlikely a significant number of projects will be awarded in the short term, a lot of dynamics in the background make strategically assessing larger accounts an important activity right now. These include:
Given the current workload, the next challenge is determining how this type of analysis can fit into busy schedules. Strategically analyzing larger accounts relative to the dynamics mentioned doesn’t need huge effort.
When a program manager is prepared, discussions on ways to align solutions more closely with short- and long-term customer needs become easier. Analyzing accounts for opportunities is one way to counter the continuous bad news on the materials front. This type of analysis also helps identify potential vulnerabilities and either address the issue or build the assumption of eventual business loss into the forecast. In the current high-inventory business environment, it is always a good idea to understand which accounts have growth potential and which are quietly planning an exit.
Tips to avoid burnout while applying resources to mitigate the impact of two years of Covid.
By the time this is published, we will have been working in “Covid new normal mode” for nearly two years, which means EMS program teams have been working under extreme stress for longer than most physical bodies can handle. This is creating two big dangers: physical damage caused by exposure to long-term stress and disappointing customers becoming acceptable because so many variables are outside of the program team’s control.
In the ’80s, one of the management associations I belonged to had a stress management seminar built around the movie Twelve O’Clock High. The movie is set in England in WWII and follows a new squadron commander from his optimistic arrival through his total burnout. The seminar focused on behavior changes related to command stress in situations where the odds were against most crews surviving, including a rise in irritability, an increase in alcohol consumption, insomnia and a breakdown in decision-making. The commander in the movie experienced a physical and mental breakdown.
In the seminar, we looked at coping mechanisms to deal with occasional stress at work. The stress many teams experience today is closer to what was shown in Twelve O’Clock High. No matter how well you do your job, the odds are stacked against you. And, sadly, most of us now know at least one friend or family member who has died of Covid-related complications.
That said, the Covid new normal isn’t going away anytime soon, so thinking about coping mechanisms is important. Here are a few stress-management tips to consider:
You may not be able to control the stress of the new normal, but you can control your coping mechanisms. Good coping behaviors include:
The second danger relates to the cult of mediocrity. The electronics manufacturing services industry has been built on the idea EMS providers do things faster, better and cheaper than their OEM customers. In the new normal, cost increases are a given, and material and logistics constraints are building frequent customer disappointment into the service equation.
I use the airline gate agent analogy frequently in my articles because it has a similar chaos factor. On a bad weather day, there are two kinds of gate agents: One is customer-avoidant and does the job mechanically with minimum critical thinking or effort; the other communicates frequently and looks for ways to improve the situation in the areas they can still control.
Do something for a few weeks and it becomes a habit. Right now, the new normal habit is accepting customer disappointment as a given. Some things will be out of your control, but in what areas can you improve?
In my consulting business, I see material constraints impacting everyone. Some companies have a little more leverage than others, but none has a magic bullet to change the situation. The one differentiator I see is some companies are actively applying resources to improve areas they can control.
Typical examples include:
In short, don’t let the new normal create a cult of mediocrity within your team. Figure out what you can control and then show customers you are improving in the areas you do control to help mitigate the impact of the external chaos. An added benefit of incremental control improvements is stress relief, particularly if you celebrate those small wins as a team.
You can’t eradicate the new normal completely, but you can control how you deal with it. When things start to improve, the EMS providers that have shown they are still trying to go the extra mile will win accounts fleeing the cult of mediocrity.
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:
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