Issue link: https://iconnect007.uberflip.com/i/1493797
60 SMT007 MAGAZINE I MARCH 2023 But when you stick to authorized distribu- tion in this market, BOM completion may take 12 months—sometimes 24 months. at's just a non-starter for those companies. Many EMS companies made the adjustment to work with whomever found a part. e customers under- stand the risks; just give them a strategy to mit- igate them. How are you protecting your customers from counterfeits? We may be a "new kid on the block" with ven- ture funding, but we hire supply chain people who have been doing this for 20 to 25 years. In Houston, a lot of our staff comes from HP, Compaq, Foxconn, or Smith & Associates. Flex is big in Houston as well, so you need peo- ple who can find those materials that obviously look wrong, maybe where somebody in receiv- ing can tell that the labels don't look exactly like they expected. We're doing a lot more lab testing now that we are buying from secondary distribution, and in some cases, this stock may have been in a large factory somewhere for a couple of years. Maybe it was unused, and the parts are fine, but you still have to validate them. Depending on the parts, we might run everything from ver- ifying that the parts are still usable, to wheel runs, solderability tests, and making sure that they will behave as expected. Obviously, cus- tomers must carry that cost; usually they're more than happy to pay because that's the only way to move forward. But as you know, it causes major price increases for customers. We've seen BOMs go up by 40%, and a few by 80%. I think many OEMs are just absorb- ing that cost. Secondary distribution of parts is where you run out of price elasticity. This must have changed your data collection and tracking practices. We collect a lot more traceability data. We want that data to be in the cloud—to always be accessible. I think there's a chance to innovate for a lot of EMS companies over the next five years. e last 20 years have been nothing but a race to the bottom—the lowest possible price. Yes, there will be a space for innovation in the next 10 years. Do you see that additional traceability as being a value to your customers? Do you have to sell that idea to them, or are they seeing the value of that all on their own? We often associate traceability with down- stream production requirements. Let's say I work for BMW; it has a requirement for my sup- ply chain to be traceable, and I must prove it. We look at that as a mandated requirement. But if you ask the question a different way, we can make this information about which parts were used and in which production cycle avail- able to you. Would that be useful? Yes. You do that through the traceability. It depends on how you describe that information. I think the government can do a better job of mandating those things because it adds to the degree to which our manufacturing industry can innovate. Many will buy into that notion, but others will wait until they receive that requirement from their customers. Misha, thank you for sharing your insights. You're welcome. I'm glad to talk about it. SMT007