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68 SMT Magazine • February 2014 perform a physical stock count. This is not a simple task because unmanaged materials on the shop-floor need to be counted as well as those in the warehouse. Several kits of materi- als for many work-orders for each line usually are on the shop floor, as well as partly used materials by the machines and on the machines, includ- ing live materials in use and materials not in use in a common family setup. Also, partly used materials are on trolleys reserved for produc- tion of other product fami- lies, along with partly used materials that are no longer in use, which have not been returned to the warehouse. Partly used materials are of- ten left on the shop floor as an additional buffer-stock in case unexpected materials shortages happen. These are almost always very poorly managed, with many materi- als lost from the operation. The complexity of the shop floor materials operation is the key reason why ERP tools are severely challenged to manage inventory ac- curately. The physical stock count often will ex- pose a 20–40% deviation between physical in- ventory and that recorded as available in MRP, which is financially very significant given that generally over 80% of the cost of a manufac- tured electronics product is in the materials. A physical stock count is disruptive to the opera- tion, requiring in many cases downtime of two or more days; with two counts per year, this can contribute a productivity loss of 1–2%. These poor practices coping with material issues cannot continue in competitive opera- tions. Changes in market-demand patterns are driving increasing product mix and the need for smaller job sizes. More flexibility is also needed as last minute customer demand changes are becoming more common. These factors com- bine to put increasing strain on engineering re- sources and materials processes. Sooner or later, every competitive operation will need to abandon the poor practices built up around the lack of material inventory man- agement. The solution, once poor practices are stripped away, would seem simple: to provide total material control management, over all warehouses and the entire shop floor. How then can this be achieved, and, if this is so important, why has this taken so long to get kicked off? For a system to provide a total control of materials, fundamental issues need to be addressed. These fall into two main categories, the first of which is the accumulation of spoilage related to the ma- terials supply and consump- tion: • Machine Spoilage: A significant amount of vari- able spoilage is created by the SMT machines themselves. Several factors, including small variations in how in- dividual components lie in their supply form, variations in size or even colour, or slight bend- ing of leads for example, can cause the machine to fail to pick-up and place materials correctly. This happens so frequently that almost every SMT machine has the ability to automatically recover from a failed pick-up and simply try again. The spoilage is usually not physically vis- ible or countable because of the small size of the materials and the sheer speed of the machines. Spoilage reports are usually available from the machines, though these need to be accessed in different ways and have proprietary data for- mats that differ across both vendors and mod- els. There has been persistent resistance toward implementing standards for shop-floor commu- nication. The dominance of SMT vendor's pro- priety solutions has created a formidable barrier to entry for ERP and MES providers. • Handling Spoilage: Spoilage can occur when putting reels of materials onto feeders or when performing splicing. Whenever materials are handled, spoilage can also occur because of ThE ESSENTIAl PIoNEEr'S SUrVIVAl gUIDE WHy are erP aND MeS SO LIMITeD IN eLeCTrONICS? continues Changes in market-demand patterns are driving increasing product mix and the need for smaller job sizes. More flexibility is also needed as last minute customer demand changes are becoming more common. These factors combine to put increasing strain on engineering resources and materials processes. " "