Treat yourself to lower costs for the holidays

As we approach the holiday season, I am writing my final blog of 2013 about humanity; that is humankind rather than kindness, compassion or charity.

Humans make mistakes; on average, about 2% of the time. Fortunately, we have found ways to catch these mistakes so that their impact does not make it through to affect the result. In electronics design, simulation and Design for Manufacturability tools are some of the ways that mistakes are detected and averted. One useful example is Valydate’s Schematic Integrity Analysis™ that performs schematic checking to make sure inputs and outputs are connected correctly; very useful in preventing PCB re-spins.

When it comes to component management and the associated data, these checks and balances seem to be ethereal and I don’t understand why. At Lytica, we see many examples where care is not taken in creating an approved vendors list (AVL) for the components used in a company’s products. Does this matter? I think so, but maybe I am in the minority.

I see two recurring problems. The first is an over specification of a component for the application. This means that the component is probably costing too much unless there is an instruction that says only use this more expensive component if you can’t get the less expensive one. Examples here are faster components used in slower applications and tight tolerance parts used in looser tolerance applications. There is also a possibility that the manufacturer makes many times more of the tighter tolerance devices and the price is actually lower.

The second problem bothers me more – underspecified components where the opposite is occurring. A lower than required component is specified as acceptable in a higher requirement application. If this under specification occurs with voltage, you have a reliability problem; if it occurs with speed you probably have failures with temperature, intermittent operation or yield loss during manufacturing.

When we run our analytics reports, we see client part numbers with multiple descriptions that are inconsistent, approved manufacturers’ components that don’t match each other for specifications and often wildly variant commodity designations. Because Lytica sees this as a problem, we are working on solutions so that our analytics applications can identify under- and over- specified components, detect invalid descriptions and assist clients in collapsing their AVLs or AMLs (approved manufacturers lists). Our current analytics currently point out coding problems.

The other area where I see data issues is with incomplete MRP (manufacturing resource planning) runs. Many companies with complex products and structures don’t explode their requirements to the component level choosing instead to stop at the orderable product level. I don’t know how these companies can verify that their inventory revaluations with their EMS (electronics manufacturing services) providers are accurate. A few dollars saved in MRP runtime could be costing millions in inventory charges. Trust but verify.

Since it is the holiday season, I am now going to switch to the other definition of humanity; kindness, compassion and charity. I wish for you and your family, good health and prosperity in the coming year. If you are an electronics designer, business owner or manager I will go a step further and provide you with some suggestions on how you might take action to increase your productivity and prosperity in 2014.

Two general things that you can do:

1. If you are an electronics designer, take an interest in Operations. It will broaden your experience, increase your marketability and allow you to have immediate impact on your company by seeing and fixing data issues.

2. Over the holiday break rethink how you are using data to manage your costs. Are you letting shabby data and incomplete analysis rob you of savings?

As I can think of no better gift to a Canadian business than a productivity increase, here are three additional, specific actions that will save you money:

3. If you are a business owner or manager, take advantage of Lytica’s Silver Bells campaign; it’s free with no strings. It will benchmark your materials spending and specifically target at least $10,000 in actionable savings at the electronic component level. Details are available here.

4. If you have not reviewed your company’s packaging lately – do it. Bring in a packaging company to review how you are packing and shipping your products. Small changes can have a big impact on logistics and packaging costs. Transportation costs are rising so make the best use of every square centimetre of container space.

5. View your support groups (HR, Purchasing, and Accounting) as enablers rather than overhead. Think of them in terms of what they deliver rather than what they do. See them as increasing capacity, transforming your business or driving productivity rather than processing capital funds appropriations and budgets, downsizing staff or buying parts.

Enjoy the holidays!

By Ken Bradley – Lytica Inc. Founder/Chairman/CTO

Ken Bradley
Ken Bradley

Ken Bradley is the Chairman/CTO & founder of Lytica Inc., the world’s only provider of electronic component spend analytics and risk intelligence using real customer data.

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