Issue link: https://iconnect007.uberflip.com/i/1216587
MARCH 2020 I SMT007 MAGAZINE 19 10,000 components on the shop floor on this reel, and your ERP took out 10,000 components. It will take you a year to use all 10,000 com- ponents. If you have exact consumption with material man- agement, you will always have the exact number of components in the ERP. Instead, 10,000 components will not be out; they are on the WIP (work in process), and then they are out from the inventory. Your inventory is not only managed better on the shop floor, but you send the just-in-time material to optimize the line, and the line won't stop because you keep feeding it with material and doing verification. However, you also have something that affects financial reports. If you have more value on the inventory and fewer millions of dollars on the shop floor, you have less excess. You can also improve your inventory and procurement process. With the lead time, it's becoming more and more challenging. We had some customers complain about the lead time, especially from sensors. With some oscillators, it has to do with the material, and they get a lead time of 26–52 weeks. Again, when you are from the shop floor level, you say, "That's not a problem," but it goes into the financial report. It affects your bonus and stock price; it truly affects every- thing. Every fraction that you can save or improve affects you financially. Matties: The savings of human time tracking and counting components—as well in your inventory through these automated account- ing and inventory management systems—is dramatic. You're going from hours to seconds. Reuven: Exactly. SMT007 Editor's note: Stay tuned for Part 2 of this interview in the April 2020 issue of SMT007 Magazine. that can dramatically improve the profit. There is no other way. We had one workshop using no machine learning or anything advanced— just basic analytics. Again, they had four lines and were not using the maximum capacity of the line. We measured how many components they placed per hour per line. Then, we looked at the specifications of the machine. Are they using the maximum capac- ity of the machine? The answer was no. Often, it's straightforward, such as, "Let's buy more equipment." Maybe they just need another test machine or to do better planning and sched- uling, but they have to start with data collec- tion to have real visibility. That's the first step. If you were to go back to how you do it step by step, then the first step would go to col- lect basic information and do data acquisition and analytics. Then, you have to ask yourself, "How do I improve?" Matties: The question also becomes, "Where do I improve?" Obviously, if there's a bottleneck, that may be one area. Many people may want to just step into it, start with inventory control, and then move on to the next piece. We see some of that happening where they bring in an inventory control system. Do you see people piecemealing this in or is the approach more all- in and they want to convert the entire factory? Reuven: Materials are definitely a big issue. I just prepared the material management presen- tation, and I looked into the financial reports for a public company. The company's revenue was $2.6 billion, and the cost of materials was around $2.4 billion. It's not a game. It goes into the financial report and affects the stock price. If you have better visibility, that is a good example. It's also growing because the lead time of the component is becoming challenging, and it will become more and more challenging now with the coronavirus and supply chain stuff. If you have 10,000 components on the reel and take the reel out, from an ERP perspective, it means that you now have 10,000 components on the shop floor—not in your inventory. But, as you mentioned, we are going toward low volume and high-mix, meaning you have