What the Duck?! Episode 36 Transcript
ONBOARDING FOR DRUMMEYS: How to Successfully Onboard Customers’ New Products with Stephen Drummey
Welcome to What the Duck?! A podcast with real experts talking about direct spin challenges and experiences. And now, here’s your host, Source day’s very own manufacturing Maven, Sarah Scudder. Thanks for joining me for What the Duck?! Another Supply Chain Podcast brought to you by Source day. I’m your host, Sarah Scudder, and this is the podcast for people working in the direct materials part of the supply chain. I’m @SarahScudder on LinkedIn and @SScudder on Twitter. If you are new to the show, make sure to follow this podcast so you don’t miss any of our direct materials supply chain content. Today, I’m going to be joined by Stephen Drummey, and we’re going to discuss how to successfully onboard customers’ new products. If you work for a manufacturer and are struggling to onboard customer projects, especially in Electronics Manufacturing Services (EMS), then this episode is for you. Stephen is a buyer at Samina Corporation with seven years of experience onboarding customers with NPI projects. NPI stands for onboarding new customer products, specializing in EMS. Stephen uses that experience to Quick-turn prototypes while also positioning projects for long-term material success and production. Welcome to the show, Stephen.
Hi, Sarah. Thanks for having me. I feel like there were a lot of acronyms in that introduction, so just to clarify, we have NPI, which is new customer products. So, sorry, it stands for a new product introduction. And then we have EMS, which stands for Electronics Manufacturing Services.
Okay, perfect. So, how did you get your start in manufacturing? I think it’s kind of interesting that you fell into or purposely chose to go into manufacturing and you’ve decided to stay in the industry.
Yeah, so I got my first experience just as a summer job, actually. And I was that, so when you build PCBs, there are surface mount parts that go on the boards, and then there’s occasionally through-hole components as well. And so, those need to be put on manually by someone. So, my summer job was putting through-hole components onto circuit boards so that they could be wave soldered and continue through the process. So, that was kind of my first exposure to manufacturing and specifically, the in EMS process, which I liked. It was really cool, to be honest. It definitely kept me interested
What about the hardest part about working in manufacturing?
So, from a purchasing perspective, I would say that the most difficult challenge is getting 100% of the materials in-house every time for every job. The toughest part about that is it is very clear when you haven’t cleared all the material, and the production floor can’t finish building or can’t start building. That responsibility pretty clearly falls on purchasing. And obviously, there are legitimate reasons why you can’t get material in the building, but at the end of the day, it boils down to purchasing. So, that’s very tough. And I don’t think that there are a lot of jobs out there that kind of have that sort of level of demand that they expect from their employees on a regular basis. I mean, it can be very stressful.
Yeah, I definitely agree with you. It’s interesting to see how much work goes on behind the scenes and the level of control and strategy that’s involved in the procurement and supply chain process.
So, Stephen, you worked as a commodities manager for five years at a small original design manufacturer for EMS products focusing on custom motor controls. I think there are a lot of acronyms flying around that our audience may not be familiar with, so could you explain what EMS is for people who aren’t familiar with that terminology?
EMS usually means that if you’re providing EMS services, then you’re building printed circuit board assemblies or PCBs. This means that you’re going to go out, buy all the components, buy the printed circuit board, bring all the material in, SMT all the parts on the board, do through-hole components, wave solder inspection, and then send out a finished product that usually goes into a larger assembly or another project. Essentially, that’s what EMS encompasses. It’s the SMT surface mounting part of it and the full construction.
Where the commodities manager side of it comes in for me is that I would buy all those components and the PCBs and clear all the materials to the floor so that they could run the jobs and get everything built. The nice part about working for an original design manufacturer is that they design all of their products and they also manufacture it in-house. This is unique because it gives you a lot of flexibility and control. If you do it well, you can make quite a bit of money as well.
Yeah, I like to describe buyers and people who work in procurement and supply chain as musicians or magicians. There are things that they just do that, if you’re not in the space, you don’t understand and comprehend, and just think things appear. But there is a lot of strategy and work that goes on behind the scenes to get supply when you need it, absolutely.
So Stephen, you worked as a Commodities manager for five years at a small original design manufacturer for EMS products, focusing on custom motor controls. So, again, a lot of acronyms flying around that our audience may not be familiar with, so I’d like to have you explain what is EMS for people that aren’t familiar with that terminology.
EMS, what it usually means is your company that’s if you’re providing EMS Services, then you’re usually building printed circuit board assemblies or PCBs. Which means that you’re going to go out, you’re going to buy all the components, you’re going to buy the printed circuit board, you’re going to bring all the material in, you’re going to put you’re going to SMT all the parts on the board and then do through-hole components, wave solder inspection, and you’re going to send out a finished product that usually will go into, you know, a larger assembly or another project essentially. So that’s kind of what EMS, at least that’s what I’ve kind of think it encompasses, is really kind of that aspect. It’s the SMT surface mounting part of it and the full construction. And then kind of where the commodities manager side of it comes in for me is I would buy all those components and I’d buy the PCBs and clear all the materials to the floor so that they could run the jobs and get everything built.
So the nice part about working for an original design manufacturer is that they, in contrast to a contract manufacturer, design all of their products, and they also manufacture it as well, usually in-house. Sometimes you may want to outsource, but that’s typically if you’re in that business, then it makes sense to do it internally because you have more control. So this is very unique in the fact that somebody would design and manufacture most of everything in-house. Those who work in manufacturing know there are a lot of manufacturing facilities that are bringing in third-party products or things that have already been assembled to resell or just do some basic fulfillment or finishing touches. So I just wanted to call out that that is pretty unique to do the design and manufacturing in-house. Yes, I’ve heard people refer to it as companies like that are dinosaurs, they’re nearing extinction, but it does give you a lot of flexibility and control, and if you do it well, you can make quite a bit of money as well.
So, you mentioned as the Commodities manager, you were responsible for buying all the parts and materials and getting them there on time so you didn’t impact production line schedules. What were some of the key things that you purchased, and maybe highlight some of the challenges with those specific parts or materials that really stand out? So, kind of a bucket of the electronics components that I would be buying would be resistors, capacitors, diodes, connectors, fuses, MOSFETs, ICs (both digital and analog), the printed circuit boards (which is usually a big bulk of the material cost), sensors, LEDs, batteries, power supplies, inductors, transformers, a few crystals, pin headers, switches, heatsinks. That was kind of like a bulk of the material that you could expect to be purchasing specifically for the electronics or the PCBs. And then I would also buy all the other kind of MRO materials, like solder paste, solder bars, SMT glue, anything else that you would need to kind of support operations and things like that. And probably the most difficult to – it depends – so it does depend a little bit on the current market, but ICs are usually a pain. They’re hard to source alternatives typically, if they have like a unique or specialized number of pin pads they’ve got. It can be you have to go through a respin if you can’t find something that matches exactly what’s already designed on the board. And then occasionally MOSFETs can be a pain, and capacitors, large electrolytic capacitors, can occasionally be difficult too.
What is an IC? I think that may be something that a lot of our listeners haven’t had experience sourcing before, so would love to have you explain that a little bit more?
Yeah, so it’s an integrated circuit, so it’s kind of like the brain of the board. So you have like your active components, you have your passive components, and then you have – I usually refer to them as like connectors – they’re kind of like parts that communicate, not necessarily communicate, but they go off-board usually to another product or source or power.
So, ICs fall under the active category because they are kind of conducting what activities happen on the board. So it’s kind of like it just makes logical decisions as kind of the easy way to think about it. So we’ll kind of dictate based on what’s happening on the board what you know how much or what happens essentially. It’s the control piece. It’s like the brain.
So, you were a commodities manager for what I would consider to be a long time at one company, which is five years. Very high-stress job and not always the most accolades or appreciation. What was the most important thing you learned while serving as their commodities manager?
So, I initially thought that the most important experience I was kind of gaining was all of the purchasing experience I’d get with the electronics components, and I kind of valued that very highly, and I still do. But in retrospect, especially starting work at Sanmina, I definitely think that the NPI experience that I got at that company was probably invaluable. It really kind of gave me to see the contrast because when you can control all the aspects of the design internally, it’s a big difference going to a company where you don’t control the design, you don’t have necessarily that flexibility. I mean, you can go to your customers and ask for changes, but working with the ODM, you can just kind of see, okay, this is very straightforward, like this is not a complicated process. Right? Someone can fix this and get this changed, and so kind of knowing that and seeing how, you know, effective ways to onboard. Even just new revisions, you know, minor changes all the way up to, like, full-blown new product. It was was big. It was very helpful. Now, when you say “manufacturers often don’t control the design,” are you meaning that the customers do their own design and submit it to the manufacturer and the manufacturer, in some sense, is kind of stuck with whatever design the customer requests?
Yeah, I mean… so what… So if, like, a customer… if you have a company that’s designed a product and they don’t want to manufacture it, there can be a lot of reasons why they don’t want to manufacture.
It may be that logistically, the amount of money they’d have to dump into equipment and production stuff would just not be worth it. They might as well start a new business, especially with high-volume stuff. So they go and outsource with a company like Sanmina, or another contract manufacturer, and they’ll say, “Okay, I want you to build this product that we’ve designed, start to finish. I’m going to give you a BOM, I may have some other requirements sprinkled in there as we go along, but I want you to kind of build this product for us.” And so when that happens, you can run into situations where it makes sense to change the BOM or to make an adjustment, especially for products like production where maybe the design is not set up for producibility. And because of that, you might need to say, “Okay, customer, you know, you want me to build you a million of these every month, but your design doesn’t support that throughput. We’ve got to make a change.” But of course, that can impact and have different implications and ramifications for the customer. You don’t necessarily know what sort of specs or requirements they’re trying to meet for the product, so it becomes more of going from solving an internal issue with yourself to solving an external issue with two parties, and that can be difficult at times for sure. I would say that some customers get their hearts set on a design being a certain way, and getting a change pushed through can be very challenging. But it’s really important for the design and the supply chain teams to also work closely because just because you design something doesn’t mean you can source everything exactly as expected.
Oh yes, absolutely. That’s part of it. You’ll have engineers who are given a task, “Please design this,” and the engineer does it, “Here, I’ve designed this.” And then you go look at the BOM, and you’re like, “All right, well, some of these parts have a lead time that’s over a year. They’ve got 100,000-200,000 MOQs.” And it’s like, “All right, well, that’s all fine and dandy, but are you willing to wait a year to get your prototypes? Are you willing to spend $200,000?” That’s the sort of stuff that you run into, and you gotta have, at times, uncomfortable conversations with the customer about things like that, but that’s part of the business at times.
My boyfriend is a material scientist, so he works at Lawrence Livermore Lab in the Bay Area, which is a federally funded lab. And you mentioned prototypes; they’ve had a huge change in their prototyping since the rise of 3D printers. So they’ve invested heavily and are able to get prototypes now in some circumstances the same day or next day or within the same week, versus taking months and months to wait for some manufacturer overseas to produce a prototype. That’s been a huge shift in the work that they’ve been doing.
Yeah, I mean it’s crazy to think how you can just get parts next day, especially with metal stuff. I mean, if you have connections with suppliers and you’re willing to pay, you can get stuff really quick. But we’ve definitely seen a lot of rapid prototyping nowadays, a lot easier than I would think you could do, you know, several, well, many years, probably 20 years ago, early 2000s. It’s definitely become, especially with 3D printing, you can just make anything, well, not anything, but you have a lot of flexibility there. You can buy one machine and make a huge number of parts as opposed to buying six machines and then having to train someone on each one of them. So yeah, it definitely, we’re doing an internal project that I’m kind of spearheading. I’m calling it “Factory Tours in the Wild,” and we’re lining up manufacturing tours for our employees because we work with manufacturers, and I think it’s important for everybody at our company to understand how a manufacturing facility works. And we were touring Athena Manufacturing, which is a metal shop here in Austin, and they had a 3D printing machine, very, very cool looking. I just love spending time there. But they are using it to produce a wide variety of different tools and parts that would have taken them significant time and resources to get. It can now get them same day or next day, so a very important investment that they’ve made in their facility.
Stephen, you work at Sanmina. So let’s start off with, before speaking with you, I had honestly not heard of your company. So what do you guys do?
We are a contract manufacturer. So kind of the short answer is that we build finished products, typically for end customers. So we usually will get a BOM or a list of requirements that a customer needs to get a finished product that they want. And then we build it start to finish all the way through, so procuring all the parts, housing the material, the actual physical construction, or for EMS, the SMT line, and then deep analyzing and inspection and all those jazz. So that’s what we do in a nutshell.
They’re very flexible. They’ll, it’s not always just finished products that they do. Sometimes, a customer will want a portion of something built up because they either need to have a specialized facility handle the final steps or something like that. But, we also do have a position in some of the not raw materials but like PCBs. They do have PCB factories and plastics capabilities, injection molding, and I’m sure a lot more. I mean, we have plants all over the world, so I’ve only interfaced with a few of them, but we’ve definitely got capabilities to pretty much do anything. So, if I needed to have something manufactured, I could design it, send it to your team, and you guys would produce it. You send a bomb cat or CAD files and Gerbers and all that stuff for like EMS stuff, and then we go out, buy all the parts, get it in, shoot it down the line, and ship it out to you.
So, what do you specifically do for Sanmina?
So, I started as a buyer and I handled two NPI accounts when I first kind of got onboarded there. The expectation was my job was to clear all of the buys, and I had to do so with even if there was something preventing me from executing the buy. I was expected to kind of clear that issue and move forward. If it was supplier didn’t want to accept our orders or we hadn’t panned out costs or whatever the issue was, that was kind of what I was tasked with resolving. Because I had one of the projects, I had kind of gotten after it already started, they had kind of already started receiving in materials and stuff, and we were kind of transferring away from customer-supplied material to self-supplied material internally. So, we’re going out and buying the parts. And then, over the last several months, I’ve kind of transitioned more into a role where I’m managing a small team of a buyer’s admin and an expediter that are kind of responsible for a lot of the things that I have been doing for the last two years. And then my focus is more on kind of like NPI activities or things that would fall outside of the scope of your typical buyer position. So, kind of directly interfacing with the customer on a regular basis, sourcing parts, quoting – I mean, buyers will do quoting, but maybe more volume or initial sourcing activities, looking for crosses. Essentially, I kind of would get things that buyers would not typically be able to resolve immediately. So, I kind of get like the difficult stuff. And that’s so you’re in a leadership role now, and a lot of the things that you were doing, you now have a team doing that, and you’re more the higher level, it needs to be escalated type person to support the team.
Yes, yeah. I’m kind of like the first line of defense, and I guess the other aspect of it is, you know, when we don’t have anything that we’re onboarding right now, we’re kind of still… We’ve got things that have kind of progressed more into the pre-production phase, but the other aspect of my job is to kind of get things ready for production. So once it goes to a production level, you’re not running into material issues. Your everything should kind of be smoothed out to a reasonable degree. So I also kind of… That’s also another part of facet of my responsibilities as well.
When you and I were prepping for the call, what really stood out to me is your focus on NPI and how that’s really been a core of your experience and what you’ve done. So I’d like to have you explain to our listeners again, what is NPI, and why is it so important?
So, NPI stands for new product introduction. There are usually two categories that NPIs will follow under. So you’ll either get like a brand-new product that’s never been built, or it’s only been like, you know, they’ve done like Alphas or Betas in-house or the customer has, or you internally have if you’re designing it. And then you also will get kind of the pre-existing designs where maybe you’ve either designed this product and you’ve been manufacturing it, and now you’re like, “All right, we don’t want to do this anymore. Let’s outsource the manufacturing aspect of it.” That would also kind of fall into the NPI category, but it’s very different compared to new product development. You kind of already have an established supply chain and a flow of materials. It’s more about making sure that you don’t get hung up on internal processes, and that things kind of get up to speed, and yeah, you know, you can move towards production smoothly. And also, you can make supply chain changes, but so those are kind of the two categories.
And then, so it’s important for a couple of reasons, particularly in my position. Successful launches usually result in new business opportunities, continued business, even if the customer maybe they’re just doing a one-off project, and they don’t plan on designing anything else. That’s okay. You’re still going to get the continued business. They might not shop it around if you do a good job. And then, obviously, new business, if you’re working with a company that designs things or products on a regular basis, then that can be very important for new business opportunities. And then, from a monetary perspective, the time it takes to launch a new product is kind of like your time to first revenues. So if you think about it, when you’re launching a new product, it’s extremely expensive usually, depending on what you’re building. But you’re essentially spending money without making any money, right?
So the amount of time it takes, you’ve got to outlay a lot of cash. Yeah, yeah, absolutely. Cash is a big part of it too, but I mean that time it takes, the short of the time it takes to get your first revenue, that’s a significant increase in, or can be, has a significant impact, especially if you’re doing, you know, five projects and you can move them all through in three or four months as opposed to, you know, maybe taking six months. Right? That type of, you know, that directly impacts how quickly you’re going to start making revenues at a production level as well. So you’re kind of like just moving up your timeline revenue-wise. That’s kind of the monetary impact it can have. And then there’s also, like, compoundingly, from a production side of things, if you kind of resolve any material issues during the MPI process and you get things prepped for production, then you’re just going to have a nice, smooth revenue stream going forward. You’re not going to have surprises or gaps in your material, things like that. So, in my opinion, it’s extremely important for new business. You know, how quickly you’re increasing your revenues and then how smooth your revenue stream is going to be long term. So it seems to me one of the biggest things about getting a product launched as quickly as possible so the customer can start generating revenue is being able to secure supply. So getting those parts and materials that you need to actually do the production. So for those who are listening who are maybe about to embark on doing a new production introduction or somebody who hasn’t done this before but is looking to get more knowledge, what advice do you would you give somebody around making sure you get the right parts and materials on time? Like how do you even go about doing that for a small kind of one-off project like this?
So, I definitely start with the BOM. And what’s a BOM? Bill of Materials. So looking at the BOM, if you kind of want to go through and figure out usually at least where I start is your long lead time components. So you want to go through and figure out, ‘Okay, how quickly can I get all this material? Where are my long poles? You know, how many weeks or months could I be waiting before I get material?’ And if you do that right off the bat, then there should be no surprises further down the road. You’ve kind of set expectations right up front. So that’s usually where I start, with the longest lead time items, and then kind of work my way down. Or at the same time, also kind of clearing like easy or low-hanging fruits. So you go for the long lead time items, clear the low-hanging fruit, and then you’re kind of left with stuff in the middle. And you know, getting your long lead time items sorted out or into a cycle that supports what sort of production schedule you want to have for the finished product.
And I guess the only other thing I would recommend is, depending on how complicated the product is, there are a lot of other things to look at. But definitely taking the time upfront to review the BOM and the materials in-depth right off the bat, that’s important so you really know what you’re getting into. Because down the road, finding a surprise is not great. It can be pretty difficult to recover at that point.
Well, Stephen, thanks for discussing how to successfully onboard customers with new products. Where would you like to send people to find you?
So my LinkedIn page is probably the best place. Just send me a message or shoot me over an email, and I’ll respond.
If you missed anything, you can check out the show notes. You can find us by typing in “What the Duck?! Another Supply Chain Podcast” in Google. To have optimal search results, make sure to add “Another Supply Chain Podcast” at the end. To ensure you don’t miss a single episode, make sure to follow this podcast and subscribe to us on YouTube. I’m @SarahScudder on LinkedIn and at @Sscudder on Twitter. This brings us to the end of another episode of What the Duck?! Another Supply Chain Podcast. I’m your host, Sarah Scudder, and we’ll be back next week.