The COVID-19 pandemic and many other geopolitical and economic factors have created a volatile supply chain that is significantly disrupting materials and component lead times. In addressing this challenge, Benchmark has seen a significant increase in demand for combined supply chain and design engineering services under our Design for Excellence capabilities – Design for Supply Chain.
To explain Design for Supply Chain and provide the information manufacturers need to get ahead of supply chain challenges, we sat down with one of our Supply Chain Architects, Mike Lucia. Mike has more than fifteen years of experience in Aerospace & Defense sourcing strategy, and today helps Benchmark customers develop resilient supply chains that effectively balance risk, cost, and on-time delivery.
To begin, can you explain the role of a supply chain architect?
In a nutshell, we are an integral part of the Benchmark team who gets involved early in the process with both existing and potential customers. Our role is to analyze parts and components lists to determine where they come from and what problems could arise in sourcing these parts. We also help to predict the future of part and component availability to see where challenges may exist to offer an optimized solution that reduces risk and maintains continuity of supply into production.
I’ve heard about other Design for Excellence (DFX) methodologies, but never Design for Supply Chain…what is it?
Our role as supply chain architects is to help alleviate the risks involved with a disrupted supply chain. Design for Supply Chain takes this a step further by combining supply chain and design engineering expertise to make recommendations on preferred suppliers, parts, and components listed within the bill of materials (BOM) to ensure better lead times and, ultimately, faster time-to-market. We do this early because it becomes easier to set up an efficient supply chain when we can make decisions during the design phase.
The design engineers help look for interchangeable parts without impacting product function or help design away from particularly challenging parts, if necessary. As a supply chain architect, I also look for localization opportunities to maximize the build-to-print content sourced from within the chosen manufacturing region. This simplifies logistics and often results in lower costs.
Doesn’t Design for Supply Chain fall under Design for Cost?
In the past, it could have been considered a part of Design for Cost. We all took for granted that the supply chain would execute flawlessly, so it was all about cost and productivity. Today, it has evolved to be more multi-dimensional. With lead times for parts, components, and materials getting out of hand in some cases, it's critical to have a team invested in current availability and forecasting at least 24 months down the line. Getting parts quickly for development and ensuring you can keep getting them in production are two different problems that need to be addressed early in the product lifecycle.
What do you look for when reviewing a customer’s design and manufacturing plan?
Our goal is to analyze and foresee supply chain risks, then put potential solutions in front of customers to help prevent or manage these risks. The first thing we review is the parts list and components to see which have the longest lead times and then determine if we can find better lead times from other preferred suppliers or if we can find an alternate part or component. We have toolsets that allow us to quickly see which parts are currently available on the open market and which will need to be ordered at the full quoted lead time. This helps us to facilitate discussions with our customers around clear-to-build even before they place a purchase order with us. Another thing we look at is whether or not the customer is already listing alternate parts and components. Benchmark's Design Engineering teams employ the best practice of identifying multiple sources for parts early in the design process and can help our customers do the same. We always tell customers that the best BOMs have multiple alternates whenever possible because if they don't, and a part becomes constrained, they'll be in a very tight spot and often suffer through slower time-to-market or a pricey broker transaction, which slows everyone down.
This advanced planning also helps us reduce counterfeit part risk. By selecting parts sourced through audited preferred suppliers, we can be confident we're getting new, authentic parts and not exposing our customers to parts that may be mislabeled or faulty.
Is Design for Supply Chain here to stay, or will it fade out when the supply chain stabilizes?
Even before the pandemic, there was a significant downturn in manufacturers making investments in the production of electronic components. Capital investment into wafer fabs resumed first with higher-performance products, so we should see some relief in that area sometime in 2023. However, many other electronic component types may not see capacity catch up with demand for a few more years. It takes time to bring the new equipment and factories online. Further, there is a growing need for electronics components as everything becomes connected, and the demand in industries such as gaming systems, IoT, automotive, crypto mining, and others rises. Also, some manufacturers are looking to diversify the geography of their supply chains. Even when components are available again from familiar sources, they will still be interested in Design for Supply Chain specifically to address geographic or sustainability sourcing objectives. For those reasons, I believe Design for Supply Chain is here to stay.
How does Benchmark help customers navigate all of this?
We can do a handful of basic things to get customers 80% of the way there and at an optimized starting position at launch. We will place long-lead items with limited or no alternates on a PO immediately. This allows us to order those parts and components as we work through the rest of the design. We will then work closely with the customer throughout the remaining design phase to understand their part requirements and identify their lead times. If necessary, we will also help to recommend design changes when lead times on certain parts are too long. Another critical component of our engagement will be helping customers localize their build-to-print content, such as metals, plastics, and custom cable assemblies as much as possible.
As many manufacturers move some or all production from China to On-Shore/Near-Shore locations, does Design for Supply Chain have a role in those moves?
I would say that this would be a great time to do a review of their BOM and supply chain. We can then help localize build-to-print content and recommend alternate parts or redesigns. These transitions require planning and effort to avoid a break in the continuity of supply. Many customers are seeing similar landed costs when re-shoring or near shoring due to tariffs, logistical challenges, and the cost of capital having their inventory tied up for months on ocean crossings.
We appreciated the opportunity to sit down with Mike to learn how Design for Supply Chain is helping customers get to market fast despite supply chain volatility. To learn more about our supply chain architecture team and our supply chain capabilities, please visit us at https://www.bench.com/supply-chain-management.