Heightened need to know your customer

SMS Electronics’ director of sales and marketing, Steven Blyth, discusses how the challenges of the past three-years will shape the industry for the next three decades and beyond

Agility and flexibility have been common buzzwords used by electronics manufacturing service providers over the past three-decades, to communicate their ability to scale up and down as production schedules change. However, such words have taken on a whole different meaning over the past three-years as EMS companies strive to meet changing and demanding market conditions.

The challenge faced by many EMS companies has been their size. Large global providers have faced challenges synchronising and streamlining their internal systems, whilst smaller regional providers faced resourcing issues and constraints. The sweet spot is large enough to achieve economies of scale, yet small enough to nimbly react or proactively get in front of issues.

Brexit, Covid-19, component shortages, logistical issues and resource absences meant SMS’ culture of constant collaboration came into effect ten-fold. The company recognised that to effectively communicate externally with customers, it needed to sing from the same hymn sheet internally. Internal meetings were weekly, but shifted to three times per day, every day. Like clockwork, the heads of operations, supply chain, distribution, HR, finance, sales and marketing would meet on Zoom or within the facility to align component parts, products, production and people. This practice—since reduced to three times per week—remains with the company as the communication benefits to customers became crystal clear.

Internal benefits also shone through as everyone got to know one another better. Even though most were complying with government guidelines to work remotely, the team actually worked more closely. Crises brought everyone together as the common goal was customer care. We all became strategically aware of cross functional working practices, and now understand one another’s departmental functions better, which will benefit customers long-term.

An open book internal policy was the starting block, so nothing came as a surprise that would have a knock-on effect across the entire supply chain. As this practice became second nature, the skills were transferred onto knowing the customer.

SMS started to bang the drum on extended lead-times as early as November 2019, which is when franchised distributors were receiving information from original component manufacturers that component shortages were forecast, with the term allocation back on the table.

This is when true ‘know your customer’ kicked-in. Discussions took place with all customers to understand their future production plans, whether for current product revisions or potential next generation developments, to secure a long-range forecast. Armed with this data, SMS worked with its strategic supply chain partners to understand their schedule for component parts. Harmonising supply and demand between all parties in the supply chain allowed placement of long term production commitments. Customers benefitted as they avoided shortages and, as demand quickly outstripped supply, the inevitable increased costs.

This process helped everyone and was adopted as the company started to see 12-months plus order commitments, now extended to 24-months plus with the majority of customers.

SMS has also taken a belt and braces approach with customers to protect their product production by asking them to consider: alternative components; 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, addressing e-waste by taking a more sustainable approach.