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Hindsight is ‘2020’: The Organizational Stress Test
The big lesson from this unpredictable year is infrastructure planning pays.
“HINDSIGHT IS 20:20” refers to a vision measurement, not this crazy year. But from a planning standpoint, the year “2020” has rewarded electronics manufacturing services (EMS) companies that built resilience into their operational plans. As I write this, the Covid-19 pandemic continues to spur an era of new normal. The introduction of vaccines will hopefully drive a return to something close to the old normal. While this challenge is ongoing, however, it is important to look at some of the operational investments that have proved most beneficial.

Here are five areas that stand out to me:

IT. Companies that were already supporting employees working remotely as a result of business travel, remote home offices or a need to work in multiple time zones more comfortably had an edge in converting a larger portion of the workforce to work-at-home scenarios. VPNs, internal systems capable of supporting secure and fast access to remote users, videoconferencing tools, seamless transfer of work phones to mobile phones, and existing policies/training on maintaining security in home office environments are all key elements enabling employees to effectively work at home. Companies with these in place simply had to scale up to accommodate a larger user base. Systems strategy has also been integral in managing the supply chain and forecasting disruption driven by Covid-19. Companies with systems that can quickly assess inventory levels, material availability and production status globally were better off than those with facility-specific systems or systems that required much manual interpretation to gather that information.

Issues to consider in future investments include:

  • What security vulnerabilities did work-at-home scenarios create, and how does the protection and training strategy need to change?
  • Were connections fast enough for remote work and communication?
  • Overall, are systems providing enough status visibility when forecasts, availability and production capacity/output are changing rapidly?

Design for procurement. Covid-19 hit just as industry was returning to normal from multiple years of supply-chain constraints. Companies with good discipline in terms of getting customers to specify or approve alternates on all component line items, internal stocking programs, and good relationships with a broad base of suppliers were better prepared for Covid-19 disruptions. Unlike the previous constraints, Covid-19 disruptions ran the gamut: closed factories, logistics surprises and prioritized demand under the Defense Production Act. Consequently, it wasn’t a matter of getting in line for a later delivery on an allocated part. In some cases, it required a quick switch to alternate suppliers or broker authorizations because there was no clear timeline on when the original part would be available. There was also little predictability on which suppliers would be disrupted because factory closures and shipping disruptions were occurring all over the world. Internal stocking programs and finished goods kanbans helped buy time when alternate arrangements were needed, but they weren’t a total solution.

Issues to evaluate include:

  • Is the purchasing department too dependent on a limited supply chain?
  • Do program managers help customers scrub BoMs and AMLs early to flag potential part problems and ensure options are identified and approved for most of the BoM?
  • Are stocking programs and finished goods kanbans sized appropriately?
  • Do any areas of the supply-chain disruption mitigation strategy need to be enhanced?

Rapid, repeatable NPI. New product introduction has a lot of definitions in the EMS industry. In some companies it is a unique process every time, predominantly driven by customer requirements. In other companies there is a formal base process with a defined timeline, support team and systems which support rapid transfer and verification of documentation, process validation and initial builds. Companies with well-defined processes were in a better position to add business from companies needing to reshore or expand their suppliers to deal with disruptions or excess demand in their existing supply chain.

Issues to evaluate include:

  • Were any opportunities lost because of an inability to launch a new project quickly enough?
  • Are the systems supporting the NPI process automated enough to support rapid response?
  • Is the NPI process well defined and repeatable enough to launch projects rapidly without mistakes?

Lean manufacturing. Lean manufacturing philosophy offers a variety of benefits, including scheduling flexibility, optimized throughput and better organized factory floors. All these things have come into play during the pandemic. Some OEMs increased orders dramatically in medical or critical infrastructure sectors. Others cut forecasts or ceased production, then began increasing orders to address pent-up demand later in the year. Some EMS factories needed to shut down or had capacity constraints due to local mandates on employee headcount. Companies with production processes optimized for scheduling flexibility, combined with good visibility into inventory, material on order and production status, were in the best position to address this chaos. Additionally, the level of organization and lack of clutter or work-in-process (WIP) found in most facilities focused on Lean manufacturing principles made it easier to address mandated social distancing requirements.

Issues to evaluate include:

  • Did equipment constraints create bottlenecks or otherwise limit flexibility in accommodating demand increases?
  • Did factory clutter or WIP create issues in implementing recommended social distancing practices?
  • Is the company too Lean in areas such as inventory to accommodate this level of disruption?
  • Is there sufficient commonality in equipment and processes among facilities to accommodate rapid transfer of work in the event of facility shutdowns?

Cross training. Cross training makes it easier to shift employees around a factory as demand changes. It also makes it easier to accommodate vacations or absences. Companies that had invested in cross training were able to give production workers more flexibility in shift choices as schools closed and childcare became a problem. They also have been better situated to cope with attrition or headcount constraints driven by employee health concerns or local restrictions.

Issues to evaluate include:

  • Were all employees who needed shift changes due to personal issues accommodated?
  • Were there surprises in the employee competencies when workers changed shifts that should be better addressed in future training programs?
  • Have enough employees been cross-trained in critical functions to accommodate absenteeism where sick employees are asked to stay home and employees with health issues may want to stay home?
  • Does current shift structure fit the needs of the labor market, or would a different schedule better accommodate the workforce?

None of these five areas of investment is groundbreaking or new. Many companies are investing in these areas at some level. While 2020 is a year no one is likely to want to repeat, the organizational stress test is invaluable. In a year where all the original plans were wrong, investments made in these areas turned out to be of far greater value than anyone likely assumed. Companies that take the time to evaluate the gaps in infrastructure identified in this reactionary environment and the organizational investments that outperformed expectations, and incorporate that knowledge in their future planning, will likely leave 2020 in a better position than they entered it.

Susan Mucha
Susan Mucha
is president of Powell-Mucha Consulting Inc. (powell-muchaconsulting.com), a consulting firm providing strategic planning, training and market positioning support to EMS companies and author of Find It. Book It. Grow It. A Robust Process for Account Acquisition in Electronics Manufacturing Services; smucha@powell-muchaconsulting.com.