Issue link: https://iconnect007.uberflip.com/i/1189040
12 SMT007 MAGAZINE I DECEMBER 2019 and we can then give you an analysis. For exam- ple, "This material is more expensive, so use it first, or this material is going to expire first, so use it first." We can also do insights here. We take the supply chain data from a couple of components that are interchangeable, such as a resistor or capacitor; once you factor in the quality, the different components change. One component may have a more expensive pur- chase price, but if you factor in the quality, it's cheaper. As my grandmother always used to say, "Buying the most expensive is sometimes the best option and comes to be the cheap- est." Now, we have a customer CEO who says exactly that: "80% of the cost is material. If I screw up the material, my profit and mar- gin are gone." First, if the material doesn't get to the line when it's needed, then the line is down. The primary reason is the material is not there. Second, if we create the product, it's not working and I have scrap, that's killing my profit. We did an analysis, and you can save a lot with a good material management solution; you can save anywhere from 150K to two mil- lion euros a year by reducing inventory and making better decisions. This depends on how much material you have. I think 150K is if you have one or two lines; that's probably what you're going to save. A shop with four lines could save maybe 400K–500K. We have customers with 15 lines, and when they did the estimation, they said, "We saved two million euros a year because of material, reduced inventory, reduced real estate, reduced air conditioning for this mate- rial, etc." This a good example of something that is important for the big players but also very equivalent and applicable for the smaller players if they want to continue to be competi- tive and profitable. Matties: They really have no choice because the drive to a digital factory is already there, and the only way you're going to stay competi- tive is to become a digital factory. Manor: Exactly. And what's the driver? Com- pliancy? Is somebody making you do this because you have a contract with an OEM, like a mobile phone maker or a car manufacturer, demanding that you collect all of this data? Or do you want to see a return on investment? If you say, "I'm willing to give you $1 million, but show me how I make money out of it," or, "My internal software sucks, and I don't want to keep these people anymore. I want to go to the commercial software, and I'm going to find a commercial solution," these are the three main drivers. When we talked to the manage- ment level, we can work with them based on these drivers. What type of solution should we deploy? What should we attack now? Matties: So when you have the drivers from a financial or inventory, there's a lot of drivers. What's the primary driver that you see right now? Is it financial, or is it customer demand? Manor: I would say it's a 50/50. Compliancy is very strong, but you're not going to put in a whole new MES system and spend multiple millions of dollars just because a customer is making you. You'll do the bare minimum and say, "I'll certify one line, and then from your 10 lines, you will put the software on one line and get the certification to be done with it. For an ROI, you're going to do the whole factory." From our perspective, these ROI-driven prod- ucts are many times for a bigger solution. We see that material management is something with a very proven ROI. And that's where when customers say, "Show me the money. Let's do a project around materials because the money is there." With quality, it's harder to improve, and if I was a financial guy, I'd go with mate- rials. You can save anywhere from 150K to two million euros a year by reducing inventory and making better decisions.