Extended lead times, fake parts, 300% price hikes: What could be next?

It’s commonplace among electronics manufacturing services companies to develop workarounds for problems that crop up quickly, or to think on our feet to find ways to deal with seemingly insurmountable obstacles. Worldwide supply chain disruptions are not unusual to the electronics design and assembly and design industry. The current situation is exceptional, however, and its causes wide-ranging, but of course we still must get the product built and shipped to the customer. That doesn’t change.

The current shortage of parts came as no surprise: We saw the writing on the wall some four or five months ago. Anticipating problems is critical in this business. We secured large quantities of components that, for example, we knew were becoming very hard to find but also required for current and future customer builds. Indeed, some parts now have lead times of up to two years, such as certain types of FPGAs, microcontrollers, and other types of ICs. Unfortunately, this means larger-than-normal inventory on hand and at our partners’ locations, which is contrary to our “just in time” operational model.

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The wrong attitude can send customers shopping for a new EMS provider.

I frequently say program management is the most difficult job in the electronics manufacturing services (EMS) industry. Program managers play a dual role of their customers’ champions within their organization and their employer’s enforcer to ensure each account hits its revenue and profit targets. I see great similarities between PMs and airline gate agents, for whom getting customers where they need to go is often impeded by forces outside an agent’s control.

If we use that gate agent analogy to describe the program manager’s dilemma in today’s chaotic materials situation, the plane is running four hours late; the passengers who were loaded an hour ago now need to be told the crew needs to deplane because they’ve exceeded their legal flight time limits, and there are no alternate flights because a bad storm has shut down the entire East Coast. The state of imbalance between supply and demand in today’s materials market is so bad, the issue isn’t whether customers will be disappointed but how badly they will be disappointed. Program managers are the point people in delivering that bad news.

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It’s time to consider more in-person visits.

Are we in the post-Covid world yet? That simple question will ignite both outrage and debate in many parts of the world. Yet in other places people are ripping off their masks and starting to resume normal life. This disconnect has significant implications for electronics manufacturing services (EMS) companies and their marketing strategies. It also has implications for people not wishing to transition from temporary work-at-home settings.

I live in Texas, and our governor has made mask mandates illegal, so I have had a preview of the psychological changes that hit when people who have been masking up and hunkering down for over a year suddenly don’t have to do that anymore. I’m fully vaccinated and am choosing not to wear a mask. Once the mask mandate was lifted, stores switched to encouraging those not vaccinated to continue to wear masks, but that choice is left to patrons. The first week I went shopping without a mask, I was in the minority. Three weeks later, the aisles are full of maskless people. Even store employees are ripping off their masks. In short, attitudes on masking shift quickly once unmasking starts and case numbers continue to drop.

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EMS companies are undertaking a range of measures to appeal to new recruits.

Material constraints combined with unanticipated spikes in demand and shortages in transportation capacity apparently aren’t enough of an electronics manufacturing services (EMS) management challenge for 2021. Labor shortages are also an issue, despite unemployment numbers double what they were pre-Covid. The reasons are complex. While government stimulus payments and more generous unemployment insurance may be incentivizing some to stay home, other factors such as lack of childcare resources or health concerns are also at play. The availability of more remote work options and relocation of previously available workforce due to Covid restriction adaptations are also factors.

In a constrained labor market, the manufacturing sector often finds it hard to recruit. Several decades ago, everyone had friends and family who worked in factories and spoke of the benefits of that career choice. The service economy and offshoring changed that. Today, many potential employees do not even consider manufacturing sector jobs.

How can these trends be changed? I’ve interviewed executives at Firstronic and SigmaTron International to discuss what works for them. I also interviewed a recent “new to manufacturing” hire at Firstronic to add perspective on what makes factory work appealing.

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