Review pricing with current and outside suppliers to confirm you are paying the going rate.
“We don’t have the bandwidth to move business.”
That's what a printed circuit board buyer told me recently.
Let’s unpack that because it could be a shortsighted attitude.
When an EMS firm puts a PCB supplier on its AVL, it often asks only for pricing on new projects. When it comes to existing work, the response is often, “We don’t move boards once they are placed,” or, “we don’t have time to rebid those,” or, “it takes too much effort to move to another vendor.”
Even in the face of rising board costs, many buyers and procurement managers resist moving production away from suppliers they’ve used for years.
What about your company? Do the people responsible for overseeing your supply chain and ensuring the most cost-effective operation make buying decisions based on lack of “bandwidth?”
If so, it’s business malpractice.
Because when that is the prevailing mindset, the PCB supplier is aware of it. They know your board buyer doesn’t want to upset the apple cart, and they will take advantage of that. OEM and EMS companies that invest too much of their annual PCB spend with only one vendor are making a costly mistake.
I understand a buyer’s concern for good quality and consistent delivery, but you can get that from more than one fabricator. And then it comes down to price. Complacency will cost you money. When EMS firms focus only on winning new business, they are putting their existing business at risk.
Many EMS companies are not being proactive to protect their existing assembly business from jumping to a competitor, especially when it comes to the cost of the bare board. Although the common wisdom is, once won, assembly programs will stay in place, in fact, over the last year several OEMs have asked me to suggest new homes for their assembly work. OEMs are taking a hard look at their assembly costs to remain competitive and maintain profit margins. PCB materials, metals and freight pricing are skyrocketing. It is good business to look at reducing costs wherever possible, especially on existing orders. It can be done successfully without sacrificing quality.
And it’s not an excuse to say board buyers are overwhelmed with responsibilities. Keeping the vendor base on its toes is a core responsibility. More important, it’s the job of upper management to ensure board buyers regularly seek offers from other vendors to compare with the prices they’re getting.
Business doesn’t always have to be moved to get better pricing, however. The PCB is usually eight to 12% of the BoM, and any savings found can either add to your bottom line or be passed on to the OEM customer, making it less tempting for them to move business away from your company.
As a custom-made item, the printed circuit board’s price is somewhat subjective, depending on technology required, volume needed, speed of delivery and location of manufacture.
PCB buyers should always review pricing with present suppliers and go outside the company AVL to confirm what they’ve been paying is in line with the going rate, especially on jobs that have been with the same vendor for a long time. With good industry knowledge, they’ll be able to negotiate intelligently. EMS management should encourage buyers to make time to actively quote other qualified sources.
Are your board buyers leveraging their annual PCB spend, or are they being leveraged by a current vendor?
It is not hard to explore the PCB market. For additional PCB supplier leads, buyers need to attend industry trade shows, read trade magazines, search LinkedIn or ask their favorite component rep about good suppliers.
Once that information is accumulated, get an NDA and ask for several quotes. If the quotes are competitive, ask for and follow up on references. If all looks well, then get your quality and production departments involved by following your corporate procedure for a new vendor addition.
At the same time, let your existing vendor base know you are looking elsewhere, even if the reason only has to do with price and not performance. At a minimum, this exercise will keep your vendors on their toes when it comes to price, delivery and quality.
Supplier diversification is vital to your success.
Don’t get complacent with your PCB purchasing practice. You may regret it.
GREG PAPANDREW has more than 25 years’ experience selling PCBs directly for various fabricators and as founder of a leading distributor. He is cofounder of Better Board Buying (boardbuying.com); This email address is being protected from spambots. You need JavaScript enabled to view it..
That was a saying posted on the wall of a prospect I visited some 25 years ago. It’s funny, of course, but it also speaks to an unchanging truth about PCB buying: It’s often an emotional experience, especially when it comes to the bare board.
The PCB is the foundation of your products. It represents a good chunk – about 8 to 12% – of the cost of the bill of materials. While it is the first item needed to begin the assembly, it is usually the last item ordered. That alone can make buying boards stressful.
In my years selling boards and training companies how to buy PCBs, I’ve found it’s not a lack of knowledge about circuit boards that prevents buyers from leveraging their annual spend most efficiently; it’s misplaced loyalty or an aversion to risk.
Read more: Emotional Investment in PCB Suppliers Shouldn’t Hamper Business
A board’s level of technology should dictate how often to expect imperfections.
One of the most common questions I get from PCB buyers is, “How many X-outs are acceptable?” Some might say receipt of a PCB manufacturing panel or array with any X-outs indicates the supplier cannot maintain a high level of quality.
This is not necessarily the case.
An X-out occurs when a defective board in an array or manufacturing panel of like PCBs has been shipped. The board is literally marked with an X in permanent marker to signify it is flawed.
While a panel or array with zero X-outs is ideal, the board’s level of technology should dictate how often to expect this kind of perfection. If the board is a single-, double- or easy four-layer item, then a PCB buyer should expect – in fact, should demand – the manufacturer deliver panels free of defective boards.
Read more: A ‘No X-Out’ Policy is a PCB Cost Driver
The source of domestic manufacturing woes is customer service, not offshoring.
I’ve sold PCBs for over 30 years, sourcing boards both domestically and internationally, and I find it much harder to source boards from American manufacturers, not so much because of pricing but because of poor customer service.
Of course, many US-based PCB fabricators meet or exceed customer expectations, but unfortunately, even more American shops struggle to deliver printed circuit boards on time and communicate promptly and effectively with customers. That directly affects their sales performance.
Many domestic manufacturing companies point to offshore manufacturing – with its lower pricing – as the cause of their sales woes. They call for government involvement to level the playing field. While I applaud efforts by PCB industry trade groups to bolster business for US-based PCB manufacturers, government intervention is not a guarantee for growth. No matter how hard the government tries to control business – be it with incentives (rewards) or tariffs (punishment) – board buyers aren’t motivated to do business with firms that lack good service.
Many PCB buyers would like to buy American, even if it means paying more for their boards, but they will not do it if they can’t be certain manufacturers will treat them well. Lobbying the government is expensive and time-consuming. In the meantime, domestic manufacturers should take note of what they can do now to improve their business, while they wait for that government help to arrive.
Here are some suggestions:
Improve customer service. Price isn’t the only reason PCB customers choose to buy from offshore manufacturers. It is also the willingness on the part of overseas vendors to jump through hoops to win and retain business. Too many times when dealing with domestic board builders, I’ve had to call again and again about a quote or order, and still haven’t gotten a timely response. I can count on one hand the number of US PCB shops that have a human answering incoming calls. The personal touch is invaluable and would help make domestic firms more appealing. I’ve also noticed a lack of urgency with the basics, like notifying customers about schedule changes or ensuring paperwork is correct. Getting people to respond to an email or promptly return a call is often a struggle.
Quote quickly and accurately. A board house needs to produce quotes in a timely manner, and pricing needs to be consistent. A customer shouldn’t have to call to confirm receipt of an RFQ. The customer certainly shouldn’t have to follow up days later, looking for an update on the quote. Many US-based sales departments fail to communicate pertinent information to their quoting teams, meaning the quote is often inaccurate, or it sits overlooked on someone’s desk or in their email. In my experience, it is often the quote that comes in first that gets the order, not the one with the lowest price. How many orders have been missed because of a delayed RFQ response?
Empower your customer service team. The inside sales teams at many domestic PCB manufacturers appear overworked and insufficiently trained. They have no real authority to resolve quality or production issues when they inevitably arise. This causes delay and frustration for customers.
Today’s PCB buyers want to feel valued. They need to be able to trust their vendors are continually working to earn their business.
To be clear, I won’t deal with certain offshore board houses because of their poor customer service, even with their government subsidies and attractive pricing. It’s not only a domestic problem. The truth is, however, no amount of government incentives will guarantee the success of US board shops. Yes, the government can play a valuable role in the success of the domestic PCB industry, but the responsibility for customer service rests squarely with the ownership and management of these companies.
Whether it’s printed circuit boards, assemblies, TVs or vacuum cleaners, the basics of stellar customer service are the same. Available training can be easily tailored to fit the PCB industry. When was the last time a professional development course was offered to your key employees?
GREG PAPANDREW has more than 25 years’ experience selling PCBs directly for various fabricators and as founder of a leading distributor. He is cofounder of Better Board Buying (boardbuying.com); This email address is being protected from spambots. You need JavaScript enabled to view it..
