How are You Measuring Success?

Communicate your improvements to keep OEMs satisfied.

My undergraduate degree is from the University of Florida and our football season has just begun. As I write this, the Miami Hurricanes have just wiped the field with the Gators in the opening game. It is our coach’s third season. The game included errors in judgment that triggered momentum-shifting penalties on the field. Overall, the plays were unimaginative and not substantially different from the previous two years.

Coaching has been a revolving door at Florida and there are two camps of fans. One camp believes in giving the new coach time and the other feels that with no measurable improvement in play, maintaining the status quo will prolong the losing. That latter camp just got a lot bigger because this season opener showed no visible improvement over last year. Social media is ablaze with discussions about firing the athletic director and head coach.

Contract manufacturer selection and relationships are a lot like football coaches and fan bases. It is expensive to change contract manufacturers, so if there are learning or performance issues over time, working through corrective actions may be the most cost-effective course. Some internal issues take significant time to change, particularly if the root cause relates to a design issue, while some are external to the contract manufacturer. Other issues may not improve even with a new contract manufacturer, and with change is always a learning curve. The justifications for taking a wait-and-see approach are many. If things don’t visibly improve, however, at some point the sourcing team starts to ask if it is time for a switch.

The past few years have given contract manufacturers plenty of plausible deniability when it comes to performance issues. Material allocation, supply chain disruptions, Covid restrictions and labor force shortages have been endemic throughout the industry as it emerged from one of the worst sets of operational challenges ever faced in electronics manufacturing services (EMS). Internal resource constraints and unpredictable demand spikes also had a negative impact on continuous improvement focus for many companies. Material has mostly normalized, however, and a cooling economy has improved labor markets and demand spikes are more infrequent. In short, the reasons that justified poor performance and lack of a strong continuous improvement focus have gone away.

Some contract manufacturers never lost their continuous improvement focus, others are working to put it back in place and some have embraced a culture of mediocrity that likely won’t change.

The problem for OEMs is that given the time it can take for some improvements to happen, it can be difficult to judge whether a contract manufacturer with performance issues is focused on improvement or embracing the culture of mediocrity that set in when everyone’s operational performance metrics dropped. Like football fans, they aren’t watching daily practice, they just see the mistakes and a monthly scorecard.

This confusion is exacerbated when companies in improvement mode fail to implement a strong communications strategy. Among the many reasons for a lack of strong messaging include a desire to not share poor metrics, the assumption that customers aren’t interested in the sausage making of continuous improvement process development, and a shortage of internal resources capable of developing the right messaging. The problem is that in the absence of that communication, OEM sourcing teams begin internal conversations about whether that contract manufacturer is capable of improvement. More often than not, shopping follows and a second source is added. If the second source performs well, the bulk of the business may move even if corrective action is happening.

The question becomes, how does a contract manufacturer with performance issues convince its customers it is on a measurable path of improvement? The answer is by developing a communications strategy that reinforces the messages being conveyed by program management to impacted customers.

It is important to note that a legitimate continuous improvement program must be in place. Firefighting issues as they arise without a standard process is not continuous improvement. A standard problem-solving process similar to DMAIC (Define, Measure, Analyze, Improve and Control) should be in place that ensures problem definition, analysis of likely root causes and solutions, finalizes the best solution and evaluates effectiveness over time plus a focus on overall operational metrics.

A complementary communications strategy helps OEM sourcing teams understand the processes put in place. It can be done via industry articles, an external newsletter, whitepapers or a combination. The goal is to explain the process, generically highlight how it is improving performance in small success stories and ultimately highlight how it is improving specific program performance over time. The types of articles or whitepapers that may make sense include:

• Overview of the problem-solving process and other core tools being used to rapidly identify issues and drive continuous improvement
• Success stories (customer names removed) of ways continuous improvement teams have used core tools to eliminate defect opportunities or correct a process issue
• Examples of process improvements that are standardized across the facility or company as a result of continuous improvement efforts initially focused on a specific issue
• Examples of the progress made on internal metrics as continuous improvement efforts achieve greater levels of success.

In short, the communications strategy should explain the process being utilized to drive improvements and gradually increase the scope of success stories as the program drives incremental improvements. Where possible, messaging should be quantitative indicating percentage improvements in throughput, yield or on-time delivery. When accompanied by concomitant issue resolution in an OEM’s program, this type of communications strategy gives advocates at the OEM ammunition in justifying their stay the course rationale. At the same time, the generic messaging externally can be a differentiator for sourcing teams searching for a new contract manufacturer. In short, there is little downside provided improvements are actually happening.

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. She can be reached at smucha@powell-muchaconsulting.com.