Supporting variable demand and staying flexible in production schedules to serve our customers takes a multifaceted approach. This article covers the four areas that synergize at Burton Industries to ensure every customer receives their product when they need it.
As systems have evolved to have real-time visibility for raw material availability, demand predictions, and production status, sourcing teams have shortened the supply chain pipeline to minimize the amount of raw material and finished goods carried in inventory. For products that have a predictable demand and forecasting, the order process is simple. A Supply Chain Management strategy that includes finished goods Kanban will accommodate products with less predictable demand. However, products with variable demand often contain hidden costs. Also, the current state of component constraints can lead to empty shelves. If a contract manufacturer is experienced in high-mix and variable demand products, minimizing costs and continued production will occur. In a stable materials market, one strategy is to carry finished goods to Kanban. A better approach involves working with the EMS provider to create a system that provides the needed flexibility but minimizes added costs associated with material or finished goods.
Design for Procurement (DFP)
Design for Manufacturability (DFM) and Testability (DFT) are frequent practices in new product design. These practices can lead to a decrease in hidden costs in production and test. However, this analysis does not ensure the approved vendor list (AVL) and component specifications are set right for variable demand. Design for Procurement or DFP focuses on minimizing the number of unique parts required, minimizing customization. An Engineering Change Request (ECR) is complete during the DFP process. This process ensures a broader range of supplier choices. Additional benefits of DFP and an ECR can include better pricing, reduced inventory line items, and improved quality. At a product development level, DFP focus should incorporate:
DFP can be more challenging in legacy products, as redesign options may be limited. That said, redesign provides cost benefits in the following areas:
“They are very good with obsolescence. They are very proactive to reach out and suggest changes to our projects.” Burton Industries Industrial Controls customer
Supply Chain Management and DFM are very closely linked. The core group of suppliers used is willing to support DFM and DFP efforts. These suppliers include custom part commodities such as printed circuit boards, metal fabricated parts, and plastics.
Forecasting & Program Management
While it is not unusual for larger OEMs to have a comprehensive forecasting method for outsourcing, smaller OEMs often do not have a formal process. The Program Management function at Burton Industries addresses forecasting in the initial program setup. The Program Manager will evaluate the OEM’s initial demand projections against historical trends and ordering patterns. The goal is to set a system that is as transparent as possible on both sides where variations in demand are noticed quickly and addressed.
“Burton reacts to our needs better than all of the rest. They understand us better than all of the rest.” Burton Industries Building Controls customer
Inventory and Stocking Programs
Stocking Programs are one way to provide reasonable flexibility at optimum cost. Stocking agreements at the raw material level are a way to ensure sufficient stock is on hand to meet unanticipated production upsides. A crucial element of this strategy revolves around supply chain relationships. Supplier selection looks closely at the supplier’s willingness to be flexible in each program. Regional EMS providers with secure supply chain relationships may have a greater ability to support variable demand in their customer’s programs because the bulk of their business involves variable demand in mid-range volumes. At Burton Industries, custom component suppliers have created optimum minimum lot sizes for their typical customer program volumes. This practice also includes pre-set bonds on high-risk components. Finished goods Kanbans are developed on an as-needed basis, provided a master ordering agreement is in place.
Production Throughput & Flexibility
Factories with lengthy frozen production windows or manufacturing equipment optimized for high volume production are often inefficient at serving customers with variable demand. Changes in demand often translate to missed deliveries. The speed at which orders move through a factory also helps reduce lead-time in addressing variations in demand. Additionally, facilities driving high throughput through LEAN manufacturing typically eliminated hidden costs and quality issues. At Burton Industries, the goal is for production orders to be complete within two-to-three weeks of material availability. The lead times are customer-defined and built out as ordered, rather than stocked as a partial build to be completed based on actual demand. This process eliminates the cost of supplying subassemblies plus the risk that engineering change orders (ECO) could drive rework of that inventory.
Achieving high throughput and flexibility involves several areas of focus:
“Their entire team is very friendly and extremely flexible. They are very flexible with schedule changes, support, answering questions and guidance. From their program manager to their engineers, they take the time to work with us and answer our questions. they are very responsive. “ Burton Industries Medical Industry Customer
At the regional EMS level, achieving optimum flexibility at competitive cost requires a multi-point strategy. This strategy needs to include transparency among customers, the EMS company, and the supply chain. Key areas to analyze in selecting an EMS company capable of supporting variable demand consists of engineering resources, program management competencies, production area efficiencies, and supply chain relationships.
Burton Industries specializes in high mix, variable demand projects on PCB assemblies and Higher-Level assemblies. This support includes full product lifecycle support from product development through end market support services. Production facilities are certified ISO 9001 and ISO 13485, lead-free processes, and Electrostatic Discharge (ESD) Control program. Follow Burton Industries on LinkedIn, Facebook, or Twitter. New website coming soon!
