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40 SMT Magazine • March 2016 by Ben Khoshnood INoVAxE When you ask the EMS management team what is the material impact on their business, they typically respond by adding up the num- ber of people that work in the stockroom, and those involved in kitting and material stock re- turn, plus shipping and receiving. For so many years we did not pay attention to, or totally understand, the business impact of the material acquisition and handling costs. The more EMS providers get squeezed out of their profits from the vise grips of distributors and end customers, the more imperative it is that the industry totally focuses its attention, not only on the supply chain, but also on how material is delivered, handled, and managed in the operation. It is time to send in the armies of black belt, Lean Six Sigma ninjas to work, and provide the Western Hemisphere EMS provid- ers with more hope to compete globally. When bottlenecks are removed and automation is ful- ly implemented, locally manufactured product is most cost effective. Background Many years ago, I was running a high-mix, low- to mid-volume EMS business, and like ev- eryone else was experiencing at the time sur- prise shortages that were driving the million dollar SMT lines to screeching halts. It was of- ten that the sound of "cha-ching" would stop, and everyone, and I mean everyone, was deal- ing with trying to find the part that was sup- posed to be in the factory, but was nowhere to be found. The program managers, material staff, purchasing, production staff and I would get hourly calls from the customer who wanted to know the status of their desperately needed job. We would look everywhere, and no one seemed to have the answer as to where the part was placed. My purchasing manager would raise her right hand and swear that she brought the part in. All this would take place while the SMT line was shut down waiting for us to find the penny part. This is so common that the EMS industry added a phrase to our lexicon: surprise shortages. In one instance, when we finally found the part it was placed on top of a shelf because the A Practical Guide to Managing Material Cost Impact fEaturE

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