Are you tapping all the opportunities in your labor market?

For US electronics manufacturing services (EMS) providers, the only thing in shorter supply than long lead-time components is labor. Decades of manufacturing job losses translate to a generation of workers who don't consider manufacturing jobs because they don't know anyone in manufacturing. EMS companies are addressing this in multiple ways including job enlargement for existing workers, greater use of automation and closer ties with community colleges. Flexible work schedules better aligned with college student or single-parent schedule preferences have also been successful tactics. In areas with large retired populations, flexible work schedules may also appeal to retirees who are feeling inflationary pressures to re-enter the workforce and want better compensation than found in retail.

Adapting Covid-era processes to a more rational demand level.

I frequently say that program management is the most challenging job in the electronics manufacturing services (EMS) industry because program managers are expected to keep programs on schedule with little control over the variables that need to align for them to be successful in their jobs. Supply-demand imbalances in both the supply chain and with customers have made that job even harder. And, just like those late night informercials that tease “but wait, there’s more,” the chaos of the past two years is about to get worse.

The new challenge program managers are starting to see this year is a return to historical demand in many customer industries. Material availability is starting to improve in some areas, but not all part manufacturers are relaxing the draconian noncancellable, non-returnable (NCNR) policies put in place during the supply-demand imbalance. That basically means that even if customer demand is coming down, in some cases, orders scheduled for delivery several quarters from now can’t be adjusted with some suppliers because extended NCNR terms put in place when chipmaking capacity was at a premium are still present.

Embracing the fear-based sell.

In times of uncertainty, the fear-based sell can be very effective in the electronics manufacturing services industry. There is no question that the past two years – and the current one – qualify as times with a lot of uncertainty. The difference between the prior two years and this one is that the uncertainty factor was so high in 2021-22, many customers were afraid to rationalize their EMS supply-chain strategy due to component availability concerns. OEMs are shopping now, however. The question becomes: How do you differentiate your company from the rest of the industry? The solution lies in the fear-based sell. In its barest form, the fear-based sell advertises a fear that keeps customers up at night and then discusses how your company keeps that from happening. The differentiating value proposition can be more elaborate, however.

Returning to normal is bringing new and familiar obstacles.

As I look back on 2022, I’m thankful for the return to normalcy I’ve seen. That said, this normal has new and continuing challenges for the electronics manufacturing services (EMS) industry. Here are a few that I see and some tips on better preparing for them.