Bypass the PCB Broker?

This article has been published in the October 2016 edition of the magazine “Printed Circuit Design & Fab Circuits Assembly” and is a response to Greg Papadrew´s column “Shortening the supply chain” published in the same magazine in August 2016.

After having been such a passionate advocate for brokers, it was surprising to see Greg Papandrew’s column (“Shortening the supply chain,” August 2016). We congratulate Greg on his new job. We also agree with much of Greg’s article. His historical review of how the situation developed over the years is accurate. We know this because we were there, leading the way since 1992.
Where we part company with Greg’s analysis of the industry is where we are now. Yes, from the early ’90s to about 2010, when the shakeout began, most brokers were small, with limited technical expertise and limited resources. That’s what ultimately led to their demise. However, some “brokers” did things differently. Early on, these companies saw the value of having world-class technical knowledge to support both the customers and factories. They had daily local presence in the factories to ensure the best quality, delivery and communications. Their customers, large and small, saw them not just as a board source, but an extension of their company. Customers looked to these companies for design and engineering expertise, material and finish selection and any other issues that involve the entire PCB supply chain. It’s not a coincidence these were the brokers that excelled and grew into multimillion dollar businesses. They delivered the lowest total cost PCBs, and their customers used this to their competitive advantage.
Higher quality and reliability requirements
As Greg was exiting the business, a few brokers continued to innovate to meet the changing demands of PCB customers. Key among those changing demands was, and still is, a relentless drive to ever higher quality and reliability requirements. Gone are the days of “standard fare.” The military and aerospace industries are not the only drivers of quality. Whether it’s multimillion dollar construction equipment, medical equipment, or industrial controls for the oil and gas industries, quality and high reliability are required. Leaving it all up to a factory 10,000 miles away sounds great until you have an issue with your most critical component. While the China factories have made good progress over the years, they still benefit from the input of western engineering and PCB manufacturing experience. Few PCB customers can afford or have the capability to develop the expertise needed to provide oversight and support to China factories.
That’s where the innovation and expertise of the integrated circuit board producer comes in.
What makes an integrated PCB producer?
It starts with complete process ownership and PCB manufacturing expertise. Add to that purchasing power of $100 million or more, local customer presence and local factory presence. An integrated PCB producer doesn’t own the factories; they create and own the relationship between the customer and the factory that is far deeper than a smaller PCB buying company could develop. They leverage their large PCB spend and technical expertise, along with their local factory presence, to drive consistent, superior performance and support. Integrated PCB producers work with multiple factories to ensure unlimited capacity, to match the right factory for their customers’ need, and to manage risk.
Extensive PCB manufacturing knowledge
If Greg is advocating buying boards direct from one factory, you’ll live and die with that factory. If the factory has a major quality issue, a disaster such as a fire, or gets overloaded, the impact could be devastating to your company. If he’s advocating working directly with multiple factories, your PCB spend gets diluted; you become an even smaller customer to more than one factory, and your vendor list grows, spreading your resources ever thinner. Integrated PCB producers have staff permanently located in the factories and have daily production meetings with the factory management. They have quality teams with extensive PCB manufacturing knowledge that are consistently conducting fullscale annual audits and doing focused process audits randomly and as part of corrective action follow-up.
A company that’s buying a million dollars’ worth of PCBs can’t afford to do that. In a world where procurement and quality departments have been cut to the bone, the majority of PCB buying companies are hard-pressed to come up with the personnel or resources to send to China, even for annual audits.
The circuit board is your key component
Lowest total cost. That’s what it comes down to. Before you consider working directly with a factory, take a good hard look at the all the issues and costs involved. The circuit board is your key component. Working with the professionals of an integrated PCB manufacturer is the sustainable, lowest total cost way to achieve the best possible time to market and competitive advantage.