ROI

Peter Bigelow

To best help customers, suppliers must invest in dedicated software experts.

“Value add” is a term bandied about, especially when a business is in the process of selling its products or services to another one. Likewise, in manufacturing the term “capital investment” describes the process of a business selling its products to another. All too often, much less “value” is derived by the “investment.”

Over the years – decades, in fact – most of the equipment and services I’ve purchased have been of dubious value and less an investment than a needed cost. A significant portion of any capital budget is spent either replacing legacy equipment or on substantial repairs to keep old equipment functioning. While there are times a new technology is truly a game-breaking investment and provides real value for the future, the majority of capital spent is for the same-old, same-old.

Historically, capital equipment used in the fabrication of printed circuit boards has relied heavily on electromechanical/PLC controls to operate. Mechanics in most companies’ maintenance departments can troubleshoot and service or fix this technology reasonably well. Many a scrubber, etcher or drill that may be decades old can be found still chugging along in most established fabrication facilities. Technology and events, however, are impacting the same-old and offering an opportunity for some that, to date, have not been embraced.


When capital is spent to replace older equipment, the operating system of choice is no longer electromechanical PLCs but PC-based software instead. On one level this evolution has enabled greater value as functions and controls are significantly improved, enabling tighter tolerances, better yields and higher throughput. These traits in many ways embody what value add is and what a good investment should be.

However, with advancements comes equally daunting challenges. No longer can a mechanically adept maintenance person service or fix this new technology. Instead, an IT-savvy person may be needed to update software, reprogram if needed, and ensure equipment can communicate with other pieces of equipment or servers to operate effectively, if at all. Herein lies the challenge.

Most companies that develop, produce, sell and (allegedly) service capital equipment come from the paradigm of mechanical adeptness. Often capital equipment developers are experts in the mechanical part and outsource the firmware, software and operator interaction experience development to others that are experts in software applications. The staff that installs capital equipment and trains the operator most often is from the mechanical side of the organization and is proficient in the basics of equipment operation, but not in how to maintain, upgrade and troubleshoot software issues.

Worse, most companies walk away from a sale once the equipment is installed and move to selling the next customer or focusing on the next generation of equipment. Time passes and suddenly an event occurs in which the equipment will not operate, not because of a mechanical issue but because of a software issue. Anything can impact software, from a localized electrical spike to Microsoft, or whichever company is “updating” an underlying software system. When these events occur, the mechanically adept maintenance person and the mechanically adept equipment sales rep are left flatfooted, not having necessary software knowledge or skills.

An added kicker to any software-centric capital equipment is the amount of customer unique information (CUI), intellectual property (IP), etc., stored on the operating software. All this makes traditionally off-the-grid, electromechanical, standalone equipment prone to complying with the latest security protocols, such as NIST-800-171, IPC-1791, CMMC, etc., that demand systems and software are up-to-date, and adequate IT and physical security are in place, and hold the company that owns the equipment, the operator, management and potentially the company that produced the equipment and operating software responsible for the integrity and security of data processed on the equipment. In short, the majority of capital historically spent on replacing the same-old is now spent on software-centric equipment that demands a different type of maintenance service.

Still, most companies that produce or supply current-generation capital equipment fail to understand the critical need and responsibility to be able to service and support the various operating software systems, as much as in the past they serviced the mechanical systems. In many cases, upgrading software replaces spare parts. Being able to provide scripting support to customers when software upgrades disable existing programs is as important as it used to be to have an inventory of spare parts on hand. Having access to tech support for software not loading properly is as important as being able to walk a customer through replacing a mechanical part when it breaks.

There’s an opportunity to provide true value add and make replacing the same-old become a true investment. It’s called service, not necessarily old-fashioned service, but support of customers who have invested serious money on capital equipment and need a new level of assistance: software support. And, when the world shifts from one level of Windows to the next, for better or worse, the equipment that runs on it must have dedicated effort to transition all customers to the next generation. This is a paradigm shift. This requires investment. This demands commitment.

My prediction is the capital equipment providers that offer dedicated staff to support the operating software – akin to the tech support for applications and mechanical repairs and maintenance – will be those that can charge the most for their products, providing both superior value-add and a true capital investment to their customers. 

PETER BIGELOW is president and CEO of IMI Inc.; This email address is being protected from spambots. You need JavaScript enabled to view it.. His column appears monthly.

Peter Bigelow

Working unconventional hours in remote locations disrupts business more than material shortages.

As we enter the third year of our pandemic-altered world, more chains are strained than just supplies. With people working remotely during odd hours, changing careers, or stepping out of the workforce altogether to care for loved ones, the basic chain becoming strained is communication.

Communication has been transitioning over the past couple decades. Time, culture and technology have dramatically transformed. Long gone are the storied two-martini business lunches where colleagues, customers and suppliers met, broke bread and discussed one-on-one issues that needed ironing out. Over the past decades, face time (not FaceTime) with any business client has become extremely difficult to arrange. Today with Covid, meeting face to face is all but impossible for many. Long-changing trends compounded by recent events have had a negative impact on the ability to communicate effectively, which in turn has strained the quality of relationships in too many cases.

For years, a typical customer service or salesperson would spend so much time on the phone with clients, they were jokingly referred to as having “cauliflower ear.” The ongoing constant chatter between people – most business, but some social – helped build strong relationships. How times have changed. The phone-savvy businessperson and bonding over long lunches are no more. Over the past two decades, email has become the communication vehicle of choice. And the pandemic scattered employees, customers, suppliers – everyone – to remote offices, usually in their homes, hopefully with a quiet room from which to log on to Zoom, GoToMeeting and WebEx.

Read more: Strained Communication

Peter Bigelow

A counterargument to cutting staff and inventory.

One of those rituals that takes place around this time is developing the business plan and related budgets for the new year. Deciphering the crystal ball, discerning optimism from reality in the sales forecast, determining budget capital investments and human resource needs, and so on, is always a complex task. The very unusual pandemic/post-pandemic world we are now in makes it even more so.

As we look to 2022, we see some unusual and especially onerous hurdles: a more strained supply chain, deteriorating consumer sentiment, increasing inflation, and segments of the economy still reeling from the worst days of the pandemic. While no single hurdle can be compensated for, the combination of threats can tempt the planner to take a conservative approach and decide it’s time to hunker down.

But what does a conservative approach to planning and budgeting really mean? Typically, plans might include reducing inventory, cutting back capital spending and trimming staff (or hours worked by staff) to “right size” expenditures with the projected (feared?) lower levels of business. All are prudent steps that in normal times should be considered when an industry or the economy shows symptoms of fatigue. The problem is these are not normal times!

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Read more: Planning is Always Challenging. This Year It May Be Worse.

Peter Bigelow

The current crisis was years in the making.

One of the biggest current concerns for the economy, in virtually every country in the world, is the state of the global supply chain. Whether discussing the shortage of chip’s impact on the auto industry or the shortage of paper goods (think toilet paper), all fingers point to a supply chain that is showing signs of fatigue.

To fully appreciate the situation we face, one needs to first look at how the supply chain got to this point.

Historically companies strived for a fully integrated manufacturing capability, so materials, parts, subassemblies, etc., were designed and controlled by the company that produced the end-product they were to be used in. As an example, an automaker would own the steel mill, glass-making facility, radio manufacturer, paint factory, etc., so virtually all parts that went into their automobiles were manufactured – controlled – by one company. Shortages, if and when they occasionally might occur, could be quickly rectified by moving resources around within the parent company to increase supply of needed items.

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