The PC Systems Blog

I happened to read a very interesting article yesterday regarding the current state and future state of engineering.

http://memagazine.asme.org/Articles/2010/June/Engineers_Visionaries.cfm

Written by N.J. Slabbert, it is a very interesting perspective on the status of Engineering and what that potentially could mean to our society.  If you are the engineering type and have 10 minutes to spare, I strongly encourage you to read through the article.

There was also a pretty good dialogue going on GlobalSpec regarding this article with a couple engineers.

http://cr4.globalspec.com/blogentry/13468/Needed-Engineers-with-Vision

I think we all see that innovation has definitely slowed and the engineering discipline no longer holds the prestige and esteem it had in the past.  Would anyone care to offer their thoughts on this? 

Personally, I feel the value proposition to be an Engineer just isn’t as good as it used to be.  If you are selling the career just like you would sell a product, the amount of work (or cash) for the payback (or product) is hard to justify.  How about some thoughts on that?

Over the past 10 years, PC Systems has progressively integrated LEAN manufacturing concepts into our production flow to reduce waste and provide a higher quality and more cost competitive product.  We have done this with customer guidance as well as internal expertise.

Our conversions from batch processing to single piece flow have yielded some of our biggest improvements and this is one of the characteristics of our company that we really like to “hang our hat” on.  Recently though, an operator brought it to management’s attention that operators were experiencing symptoms of fatigue as a result of working in one of our cells.  In particular, this operator complained of sore/stiff leg joints and dizziness.  The cycle time for the cell is between 20 seconds and a minute, depending on the operator.  This particular operator was making ~900 trips around the cell in a day.  This is one of our most productive operators, but even 600 cycles a day would be an impressive amount of twisting and turning through a day.  You can see a video of the cell here:

LEAN Cell Video

As a management team, we decided the concerns warranted more investigation.  My first instinct was to work in the cell myself for 8 hours to get a feel for the ergonomics of the job.  I have to report that the experience was not terrible, although I felt there were improvements that could be made.  I also spoke with each operator individually to try and pull as much information as possible.  Finally, I looked to my professional network and interestingly enough, I gathered some useful information via Social Networking via LinkedIn.  That discussion thread can be found here:

LinkedIn Discussion

We have decided to limit the time in the cell per operator to 4 hours at this time, while we continue to look for improvements.  Ultimately, it is our feeling that the more comfortable our operators are, the better the quality of the product will be.  We want our operators to take pride in the product they create, the facility they work in, and above all the company that they stand behind.

After reviewing the video, are there any suggestions that you feel would improve the ergonomics that you think we could have missed?  We realize our customer base has a tremendous amount of LEAN expertise, perhaps you would be willing to share some of your comments or best practices that could ultimately reduce your product cost.

If you work in the electronics industry, you are most likely aware of the tragedies at the Foxconn facility in China that occured recently.

http://www.nytimes.com/2010/06/07/business/global/07suicide.html?scp=6&sq=foxconn&st=Search

I have been mulling this topic over for the past couple days and wondering the best way to address it in the blog. If you Google the subject I am sure you could find a couple hundred blog posts on the subject all with different viewpoints. I would like to approach it from an Engineering perspective, a PC Systems perspective, then also a personal spin at the end.

First, as Engineers, we must always be cognizant of cost. Design is critical, but if you can’t provide a product cost that will win the bid, your effort is wasted. This often leads us to offshore pricing for simple products to take advantage of the low labor costs.

We will save the topic of actual cost of offshoring which takes cost of quality, support, freight etc. vs. unit price for another day.

Often times are hands are forced into populating our designs with an offshored component. If we don’t do it, our competitor will, and we will likely lose the bid. A tremendous amount of time can be wasted this way. I am not quite sure what the solution is, but we definitely have a problem. Every Engineer who has sat through an ethics class has to be reeling from the news at the Foxconn facility. Also, we must also recognize that we can’t claim ignorance to the topic, as we were all well aware of the terrible labor conditions in the low cost regions such as China, India, and Eastern Europe. I am not sure of the solution, but it is a problem that weighs very heavily on me.

From a PC Systems perspective, we discuss and debate offshore sourcing on a daily basis. This discussion usually is focused on pricing, leadtime and quality. Many people will associate poor quality with products from China, but we do not find that true with many products, assuming you do due diligence in selecting and qualifying a supplier.

As a company, with regards to our more mature product lines, we are typically very competitive on cost. We reside in a very low base cost region where cost of living does not dictate a high wage for anyone from the janitor to the CEO. Also, we watch our labor costs very closely so that we may compete with offshore competitors, particularly on larger/heavier items that are expensive to ship. There are many reports that the recent salary hikes at Foxconn will have a ripple effect across the industry. Ultimately, workers will demand an improved quality of life, with consequences yet to be seen. Here is a link regarding the effect in Taiwan:

http://focustaiwan.tw/ShowNews/WebNews_Detail.aspx?ID=201006170013&Type=aOPN

The effect of this will likely be an increasing cost for all product because of transferred cost to the customer and also salary hikes at other companies to retain a competitive wage. I personally feel this will help PC Systems in the long run, because of our low content of offshore components and also it will allow us to be more competitive due to our already lower base cost. This is yet to be seen as well.

Finally, from a personal perspective, we really must ask ourselves “Is it really worth it?” when we are looking at purchasing new products. This is most important from a personal perspective because I feel the only way to improve the conditions in LCRs is to stop demanding the lowest price possible on goods, particularly on electronic components such as cell phones, laptops, etc. I am a strong proponent of free markets, and often stand in stores such as Wal-Mart and pick the product that saves me $0.05, blindly assuming that the suppliers are being ethical and the variability in price is due to accepting of a lower profit. They have said ignorance is bliss, and I feel this isn’t a decision I will be able to make as easily from now on. Supply will always follow demand. If we demand the lowest possible price, there will be suppliers who find the cheaper ways to manufacture product without regards to the effect on society.

In the end, we have to ask ourselves, is it really worth saving a nickel if it means abhorrent labor conditions for the workers producing the part? I know there isn’t a simple answer, but it should be a question we are all considering.

Understanding this is a very touchy subject, I would like to know your thoughts. Have the recent events changed the way you are buying products? What do you think the effects of the salary hikes will be on your business?

Have you ever heard this from a salesman? “We excel at providing low cost, high quality, and quick turnarounds. We can do anything from high volume to low volume and our customer service is the best in the business.” If I could paraphrase, “We are the world’s best supplier!”

We are not any different and I am sure our sales team pitches a very similar story. If we are going to claim to be a company with a continuous improvement culture, we have to show progress to meeting some of the above mentioned capabilities.

I would like to share an example of how we are doing this in our Harness Department. In the past, we typically would build custom harnesses in batches between 5 and 25, with some exceptions between 50 and 75. It is a very high mix, low volume manufacturing environment. One operator per shift would work on the parts, finishing an entire operation before moving on to the next. For example, operator A would terminate the entire 25 piece order, before moving onto splicing, then to layout, etc.

Lately, we have seen our order sizes jump to 100 and 150 pieces. What used to take a week to get an order through the system with one operator, now was taking 3-4 weeks. The throughput did not decrease, but it tied up cash and resources, and decreased our flexibility. All of which decreases our value to our customer. We needed to make a change.

We held a couple informal Kaizen events, started a 5S implementation, and manipulated the layout of our manufacturing space to facilitate better flow through the system. These all helped, but most importantly, we decreased our batch size to 5-10 pieces maximum ala Alex Rogo in The Goal. Using many of the same concepts used in this simple novel, we have increased capacity, reduced WIP, and increased our flexibility for the customer. Most importantly, our operators are happier. They now have much more ownership on the floor, they have the freedom to move around much more (opposed to sitting at a termination bench all day), and Quality is improving.

Interestingly enough, our throughput has increased slightly. Per all of our calculations we expected throughput to decrease due to increased setups, more walking waste, and a new system. You could point to the 5S organization contributing to our improved throughput, but I truly believe it is due to the general morale improving due to the new system. If you are cynical, which many engineers tend to be, you could also attribute the success to white coat syndrome. As expected with any change in manufacturing, our management team is keeping a close eye on the department looking for any potential faults. We aren’t hanging our hats up yet on the increased throughput, but it has been an welcomed surprise for our team.

We are closing in on a full month after making the initial changes. We realize the change is relatively new, but it is our hope that rather than regress we continue to progress with the improvement. All metrics point to an improvement, which we all know is reflected in value to our customer.

Does anyone else have a success story they would like to share, particularly related to using concepts from Theory of Constraints or The Goal?

I am not a strong proponent of bragging about accomplishments, but we recently had a success here at PC Systems that I would really like to share with you.

Not long ago, we received a call from a customer who knew what they needed an interconnect to do, but had no real idea on how to do it. They were pointed to our website via a colleague, saw a picture of a part they thought would work (it was a past prototype), and they gave us a call.

After a 10 minute conversation on the phone they asked if they could come to our facility. Our response was of course as we started to talk about our schedule for the next few weeks, but they promptly told us they would be there first thing in the morning. We immediately scrambled, creating prototypes and discussing design options.

The customer arrived around 10AM the next morning and we immediately went to the conference room. Within an hour we had a whiteboard drawing of an assembly. It would consist of 2 simple harnesses to be run on our automated leadmaker and one custom overmolded assembly. I won’t get into detail other than to say it was an injection overmold, with two custom components. We discussed project timing and quickly realized we were behind schedule. The customer needed final parts in 8 weeks. This would include designing the custom components, bringing a new supplier on board for one of the custom components (in Europe) and design and manufacture of a injection mold tool. We committed and the customer left for home. I am sure they had an uneasy feeling regarding how we would meet their timing.

By the end of the day we had formal drawings and within 3 days we had signoff from the customer’s customer (OEM). We did this by interacting directly with the customer’s customer for signoff, copying our customer, in an effort to eliminate delay from a middle man.

Now it was time for our supply chain to show us what they could do. Please keep in mind this was a very small order in the context of what our suppliers normally produce. We pride ourselves in developing partnerships with our suppliers where size of the order doesn’t dictate priority. They delivered.

I also want to say that our tool shop is a class act. Capitalizing on the decrease in powdered metal industry in our area, we have found a very competent shop with top of the line equipment who can produce tooling at a reasonable cost and provide true value for our customers. They helped alleviate some of our time constraint by providing design insight as our Engineering staff developed drawings for the part and tooling.

We were able to get our custom component manufacturers online very quickly and to make a long story short, we made our deadline. We ship the parts today.

We shipped custom overmolded parts in 8 weeks at no other customer’s expense. We did it without charging a single expedite fee and without cutting a single corner. All the credit in the world goes to our supply chain and the staff at PC Systems that supports them. Also, to the customer, who was responsive when they needed to be, and also hands off when they needed to be.

Are we proud? Absolutely. Are we surprised? Absolutely not. Here at PC Systems, every customer is truly important to us. We cannot afford to put anyone on the back burner because they are a small account or do not represent high growth potential.

If you are a consumer of electrical interconnects, I challenge you to let us solve your next design problem. If you want to know more about PC Systems and what we do, please take a look at our website here: http://www.pcsridgway.com/