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28 SMT007 MAGAZINE I JUNE 2020 tial work carefully with a flexible schedule and working directly with our customers. Under normal circumstances, suppliers are measured and rated on delivery and service levels to the customer. Currently, customers must be a bit more flexible with us. We are working dil- igently on their behalf, and we are focusing more on safety and health. What we worry about is being able to source material and building products to support our customers to meet their demands. We are mindful that with the pandemic affecting all geographies, there could be a future impact to supply through extended lead times for mate- rial and longer logistics chains for moving the raw materials to the production facilities for consumption. Behind all of this is the poten- tial for cost increases as supplies become con- strained, and the larger customers pull most of the available components into their companies for use in production. Right now, we believe that one of the best solutions is to have cus- tomers place orders in advance. This will help us drive supply to support their demands ear- lier and possibly avoid some of the potential constraints that may occur in the future. Forecasting and placing orders will change under the new normal. The data has shown that the market remains reasonably strong despite the impact of the pandemic. Customers have started to react quickly to plan ahead. We are encour- aging them to take a lon- ger view of their potential demand. If they are asking for us to quote for a quar- terly demand, perhaps they could order two quarters or the whole year if the design will not change. That will allow us to order materials to support and lock in the supply required to better service the customer. Johnson: It seems your best approach is to make sure that you have as much notice as possible so that you can plan appro- priately. Badriyeh: Many customers have responded favorably in this area. We are starting to receive increased forecasts and orders covering a longer horizon. I'm very sure this is in direct response to the possibility of constrained mate- rial supply in the future. Johnson: Some procurement departments are seeking secondary and backup sources. Are you considering that, or do you feel that bet- ter planning with your existing sources will be sufficient? Badriyeh: Our present sources will be sufficient for the foreseeable future. We are not currently seeking secondary sources internally, but we are encouraging our customers to specify alter- nate or backup sources for their components to protect against supply shortages from any single supplier at any time. This is a general rule since supply constraints can be localized to a given geography and impact a small num- ber of specialized manufacturers. If there are alternate components specified by the cus- tomer, we can exercise a backup source at that time to minimize the impact where possible. The Naprotek facility in San Jose, California.

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