Issue link: https://iconnect007.uberflip.com/i/1447212
66 SMT007 MAGAZINE I FEBRUARY 2022 At some point, though, the expectation is that we all will share in the impact. We've found that the best approach is to keep our level of service up where we want it and support a solid long- term relationship with our customers. "Entering into this market trend, then, with margins so tight to begin with, it seems there wasn't much room to absorb the costs. So, we turned the questioning to upstream suppliers to see what's happening with pricing incoming from suppliers." A s a m a n u f a c t u r e r o f equipment for EMS assem- bly, Manncorp's CEO Henry Mann faces a different set of challenges, sharing, "As Manncorp has faced pricing changes, we have not passed the increases onto our cus- tomers directly. Each year, we update our pricing aer evaluating the big picture. Our products (SMT equipment) are of a more stable nature than many products on the market, and this allows us to issue price changes only when absolutely necessary." Q: How have your upstream suppliers adjusted to pricing changes? For example, are they still absorbing the costs, or passing them along to you? What other adjustments are they making? "Typically, when we issue a purchase order using our quoted cost, the supplier may make slight adjustments based on the current mar- ket price," Capers says. "We adjust our pur- chase order accordingly. If the PPV is negligi- ble, then we may choose to absorb the addi- tional cost. e main issue we are dealing with now is lead times. Pricing on some items has remained fairly steady, but lead times are extending 52-plus weeks on certain compo- nent types." Benson highlights the added flexibility, not- ing, "Upstream suppli- ers have been passing costs along to us for most of the pandemic. However, they have been very flexible with terms and that has been quite helpful. We appreciate their spirit of partnership. I don't know that I could call out any one specific incident. It's really the same all around." While it's unclear how much the upstream suppliers may have absorbed the cost in their respective margins, what is clear is that some of the pricing pressure the suppliers are feel- ing has pushed through to the EMS providers. A s a sup p lier of cap ital equipment to the EMS industr y, Mann's answer sheds some light from further upstream, saying , "As indi- vidual companies decide to increase pric- ing for customers, it is based on their own costs and profit margin. For manufacturers, it is important to decide whether the products you are purchasing at inflated rates are truly worth the cost. A key aspect of keeping reve- nue stable is retaining existing customers. By meeting the needs of the customers you have, and not raising the pricing astronomically, you can keep cash flow consistent and even out the fluctuations that come." If you're a reader of Anaya Vardya's I-Con- nect007 column, then you know he promotes ongoing dialogue between supplier and cus- tomer to create the most collaboration in the working relationship. So, we asked about that. Q: How have your customers involved you in their adjustments to rising input costs? "Between us and our customers, their pric- ing needs and our cost requirements are always a dialogue rather than a demand," says MEC's Benson. "I can't give you a specific example due to customer confidentiality, but in gen- Henry Mann Duane Benson