The weakest link: more than a little supplier-customer loyalty is needed to successfully hurdle the lead-free mandate.
With the interest in what has to be the most all-encompassing technological shift facing our industry, along with the looming implementation date, I am acting with a greater sense of urgency, talking to colleagues about what they have considered or are doing and investigating seminars to which I can send key employees. I want to leave no stone unturned. Seems to me that taking such a proactive approach is not only appropriate but also essential to my company remaining a long-term "player."
Then I had one of those conversations that makes you think.
After discussing a colleague's attempts to stay ahead of the curve, my friend, an industry veteran, added a quick "but why bother with lead-free?" That threw me. After all, the entire world--by legislative mandate--is going to have lead-free electronics. Designers are grappling with design issues, end-customers are demanding quick compliance, and assemblers and fabricators are finally sweating the same bullet: how to produce a reliable product with emerging and unproven surface finish(es): What do you mean, "Why bother!"
My colleague elaborated. "Why bother with lead-free when your customers don't care if you are in business or not and will end up going to an offshore source--brokered by a U.S. shop or direct?" He continued, "It takes investment to bring online new technology, and it is obvious that domestic customers do not value domestic suppliers, so how do they expect us to be able to afford new technology? And even if we can, loyalty is history; price is all that matters, they won't buy from us."
I was more than a bit taken aback. "But haven't you had a pretty good increase in sales this year?" I asked. "Why sure, but I am brokering a lot of it to be competitive with the pricing customers are demanding." Hmm. Low margin, tough competition, high investment--seems to me that in college that was considered a "deficient business model."
When I repeated this conversation to another friend his immediate response was, "A basic case of use them or lose them!" Use your suppliers or lose them? Maybe, but I would hope that instead it is a wake-up call to the fact that all links of the supply chain are very much interdependent.
Let's face it: While everyone would like to have manufactured products to be as "green" as possible, lead-free was not proposed by the industry as an improvement but was instead mandated by non-technical politicians. The result left everyone scrambling to find reliable, robust, process friendly and cost-effective replacements.
There is an old saying that a chain is only as strong as its weakest link. When it comes to the implementation of new technology--be it lead-free, embeddeds, microvias, etc.--the greatest potential to be a weak link is not "if" the technology exists but rather how we as a supply chain work together to make that technology process-friendly and cost-effective.
Which brings me back to my friend's response. He may be onto an industry undercurrent that, like a cancer, could put an end to more companies at all levels of the supply chain than even the disastrous economy of the past few years. That undercurrent is the conflicting pressure of developing higher technology while drastically reducing prices. We've seen a very high percentage of domestic circuit board raw material manufacturers shifting production to lower-cost countries--or brokering materials made by foreign manufacturers. Fabricators are brokering more of their business, too. So if you reduce your local manufacturing base in favor of brokering product, then why bother to invest in developing new technology; just let the other guy do it! Besides, if you don't invest in new technology, will your customers really care?
They will care, and plenty, but only, I fear, after they get burned by falling behind the technology curve because of a diminished supplier base. There is a cost for new technology that must be borne by all levels of the chain. The cost of new technology is always lower when suppliers and customers work together, versus either denied or shoved down others' throats. More than a little supplier-customer loyalty is needed to successfully hurdle the lead-free mandate.
As everyone sharpens their pencils to get the best price possible, I hope they are equally concerned over who is manufacturing the product and whether they are working on how to provide lead-free product. It would be a shame if, at some point, today's "cost-effective" supplier is unable to supply product because of lack of investment! In the meantime I would hope that at least some customers care whether I am in business, so I plan to continue talking to colleagues and finding seminars. We must be up to snuff and ready to implement the best available technology on the product we manufacture for our customers.
PETER BIGELOW is president and CEO of IMI (imipcb.com). He can be reached at firstname.lastname@example.org.
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|Publication:||Printed Circuit Design & Manufacture|
|Date:||Jul 1, 2004|
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