Issue link: https://iconnect007.uberflip.com/i/1505694
AUGUST 2023 I PCB007 MAGAZINE 73 Some PCB fabricators provide design ser- vices, for example. I would strongly recom- mend your readers consider getting into things like design services that make it harder to become commoditized. What are some of the other services that you can differentiate your- self on? Are you affiliated with an assembly site? Do you have assembly onsite? Can you do prototypes? Can you simulate the perfor- mance of the design before it's actually fabri- cated? Matties: Now, another area that Michael Porter talks about is operational effectiveness, which some people see as a strategy. It's necessary, but it's not a strategy. Operational effective- ness will definitely create opportunities for lower cost. Greater efficiency cer- tainly allows you to lower your internal expenses and, in theory, be able to offer lower prices. If you want to maintain the same price and higher mar- gins, it provides an opportunity for higher quality. We haven't talked about quality yet, because that could be an opportu- nity for differentiation as well. An interesting thing about strategy is that it helps define what you do. It also helps you to find what you're not going to do. It's a hard place for small fabricators to say, "We're not going to bid on that business because it's not a good fit for who we are." Matties: When your sales are down, it's very tempting to just say yes to keep your people busy. But oftentimes you just wind up sending a $20 bill out with every board you ship. A good example of this is low-volume pro- duction, which doesn't make good utiliza- tion of your production assets. You can actu- ally end up losing money on a low-volume work order. Now, there are situations where you might decide to do that anyway, because there's the possibility of higher-volume orders in the future, and those would make better use of your assets. Matties: When someone is starting to develop a strategy, they should look at operational effectiveness as a step in the process, but they have to realize that it's not the strategy. Operational effectiveness is a way of achiev- ing that strategy. If you choose to compete on the basis of cost, then you absolutely need to have that oper- ating efficiency. Going back to the example of Walmart or South- west Airlines, that's what they're really good at—operational efficiency. Matties: I would argue, though, that you need operational efficiency regardless of what strategy you choose. Absolutely. You shouldn't be throwing money away under any circumstances. Matties: I agree. If you're in a red ocean, you had better find a way to put yourself in a blue ocean and make those others irrelevant, so to speak. In the world of printed circuit fabrication, can you come up with a new product offering of some kind? at's becoming increasingly harder, and it will only provide temporary com- petitive advantage, not permanent competitive advantage. Now, we see rigid board fabricators getting involved in full flex circuits, for example, or chip-on-board type technologies. at was revolutionary for a while, but it doesn't provide permanent competitive advantage because it's too easy for competitors to copy. If you choose to compete on the basis of cost, then you absolutely need to have that operating efficiency.