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April, 2012 ElEctronic Mfg SErvicES Firstronic: Eliminating Hidden Costs By Rick Herndon, President & COO, Firstronic LLC, Grand Rapids, MI O
riginal equipment manufac- turers (OEMs) outsource to lower manufacturing costs.
However, missed deadlines or fuzzy communications can eliminate this savings. The largest cost overruns typically come from unanticipated issues such as excess inventory, missed deliveries, quality issues or product obsolescence. Firstronic addresses these con-
cerns with systems and processes designed to identify issues before they become problems. The company is a Michigan-headquartered EMS provider, serving customers in the automotive, industrial and medical industries. In 2006, Firstronic’s team of
seasoned electronics manufacturing services (EMS) executives decided to automate the program management function using an internal manage- ment information system called ProManage. The in-house develop- ment of ProManage was the first phase of a complete systems upgrade designed to work in tandem with the company’s ERP system. The goal was to efficiently man-
age processes in complex projects from new product launch through end-of-life and facilitate a high
finished goods kanban to support unanticipated demand. Adequately addressing these challenges requires both management judgment and a strong systems approach. For example, when one of
Dual-pot wave system allows changes between leaded and lead-free on the fly.
throughput velocity culture within a lean environment.
Supporting Complex Projects The company’s customer base
includes many complex projects. Some are high volume and some have a configure-to-order (CTO) requirement and/or highly variable demand. In these situations there
are several areas of key focus: l
Ensuring designs are manufac-
where applicable. l
plan for material requirements. l
in demand. l
turable and optimized for CTO, Developing a forecast sufficient to Setting up a supply chain willing
to support minimized inventory along with fast response to changes
Developing a manufacturing process which handles variations in
demand effectively. l
Establishing an efficiently-sized
Firstronic’s customers was launching a new product, its forecasts were high- ly variable. The customer’s marketing department quadrupled the demand from 50K EAU to 200K and then pulled 90K in the first quarter of vol- ume production. Initially, they wanted all the material to be purchased imme- diately due to materials allocation con- cerns. The customer had a historical pattern of large ramps, followed by decreases in orders once demand was clearly established. Firstronic’s mate- rials department also saw that the material availability situation was improving, which would likely drive lead-times and pricing down over time. Program management recom- mended placing orders to cover 35K with adjustments as demand and material allocation trends were better understood.
8K Per Month Demand Over the first few months, it
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