Issue link: https://iconnect007.uberflip.com/i/1447212
68 SMT007 MAGAZINE I FEBRUARY 2022 eral, customers will communicate the cost and market pressures they are under, as will we. Between that, we'll come up with pricing that both companies can live with." Capers looks to the horizon, saying, "A lot of our educated customers are looking far beyond this year in terms of cost and availabil- ity of materials. ey utilize us as their supply chain partner to locate, secure, and purchase the materials used to build their products. In addition, most customers are willing to pay for materials far in advance of the build to mitigate and avoid additional delays." Q: What are some actions/responses (strategic or tactical) that colleagues in the industry can do right now to offset input costs? In answering this ques- tion, Capers echoes Vardya's partnership columns, not- ing, "If you're an EMS pro- vider, I think you should be talking to your top custom- ers and discussing product forecasts for the next couple of years. Look at the BOMs to identify long lead materi- als and components which are susceptible to large price increases (ICs, connectors, bare boards, etc.) For example, we just received a purchase order for materials needed for 2023 production orders." Benson offers a technical spin, saying, "While it may not seem directly related to pric- ing pressures, encouraging minor design spins can be very helpful. e overall pricing situa- tion is affected by components shortages as well as vendor price increases. When one or two parts are not available out of a 100 line- item bill of materials, the contract manufac- turer will still need to purchase the remaining available parts. at leads a large increase in inventory carrying costs, which eventually need to be absorbed down the line. A small redesign for a different package. or similar but more available part, can allow the boards to be built, mitigating that inventory burden." "With in-house production, companies can be flexible, adjusting what they choose to pur- chase and when they choose to purchase it." Mann points out, "Anyone who is currently outsourcing their production should strongly consider bringing manufacturing in-house so they can have better control and lower costs. By fixing your costs, owning your assets, and having good personnel, you can weather the ups and downs and continue to serve custom- ers in the best way possible without your com- pany suffering losses." Q: How do you see this increased pricing pressure affecting your business relationship with existing suppliers and customers? Benson says, "ough we've weathered many supply-chain and inventory challenges before, this cycle seems to be different. Unlike some times in the past, suppliers and cus- tomers all seem to understand that this is just the world that we live in right now. No one is happy about it, but there is a sense of coop- eration that we haven't seen in the past. at understanding that we are all in this together really helps." Capers adds, "I have never lived in a world where cost of living has gone down. Inflation is reported at +10% as of yesterday's news. Our industry is no different and most customers understand the increases, but we do all we can to lessen the sting of rising costs. Loyal cus- tomers understand that pricing is not going to be much different at another EMS company." Q: What is the biggest challenge you're facing right now with respect to input costs? Charlie Capers