Posted By Jeff Moad, February 05, 2013 at 5:02 PM, in Category: Factories of the Future
Recently I had the opportunity to visit Sonic Manufacturing Technologies, a $50 million electronic manufacturing service (EMS) provider in Fremont, CA, that, I believe, may serve as a model for U.S.-based manufacturers attempting to take on much larger competitors, most of whom source from factories in lower-cost offshore locations. Sonic, a 17-year-old privately-owned company with 330 employees, has been increasingly successful by focusing with laser intensity on one thing that its high volume, offshore competitives have the most trouble matching: providing speed, responsiveness, and on-time delivery to customers.
While Sonic's larger competitors require order predictability, large production runs, and offshore production and typically quote lead times in months, Sonic is able to deliver orders--from five to five thousand--on average within four weeks of receipt of a completed order. Often the lead time is much less.
Sonic has fined-tuned its processes to support agility and short lead-times. Take the company's highly-automated materials management process, for example. Sonic's Vice President for Supply Chain Management David Ginsberg and his team built a proprietary system (ominously nick-named HAL) that combines order management, BOM management, and e-commerce style sourcing. Using the system, Sonic can take most orders electronically, eliminating data entry time and errors. The sales order drives the bill of material which, after it is uploaded to the MRP system, automatically generates an e-commerce order to Sonic's suppliers. In this way 70% of purchase orders are fully automated, cutting wasted time from the materials management process.
Sonic also relies on a highly automated plant floor, operating 12 surface mount technology lines that, with little human intervention, place components on boards, solder them in place, and inspect the results using 3D xray and other technologies.
The emphasis on speed and agility also extends to the performance metrics that Sonic uses to measure itself. With materials moving so fast through production, for example, the company has not bothered to invest in an automated WIP control system. Nor does Sonic put a great deal of emphasis on equipment utilization rates at the machine or cell level. Maintaining customer service targets while keeping overall factory and workforce utilization rates in line is the priority.
"Utilization is far less important than speed, responsiveness, and on-time delivery," says Ginsberg. "It is only when these other metrics are strained by growth that utilization becomes a key management focus."
Speaking of growth, Sonic 18 months ago invested $6.1 million to buy a second production facility in Fremont, increasing its factory space from 70,000 to 108,000 square feet.
Do you see Sonic's approach as a potential model for other mid-size manufacturers attempting to compete with larger offshore providers?
Written by Jeff Moad
Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit