When Your Fabricator Is Late

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The I-Connect007 Editorial Team recently had a wide-ranging discussion with John Watson, CID, of Legrand. Questions covered include, “What happens when your fabricator is late, whether it’s a prototype or volume production?” and, “What are the costs and ramifications up and down the chain?”

Andy Shaughnessy: You and I have spoken before about time to market, and how we’re all battling time. Let’s talk about what happens when one cog in the system is late. What are the costs?

John Watson: Time is the big issue that I hear about. The VPs at my company say, “We need to decrease our time to market,” because they see our competitors. The lead dog always gets that biggest piece of the pie if they can get out there with their product first.

Barry Matties: To that point, when you’re working with your fabricator, you place the order, and they give you a delivery date that then goes one, two, or three days late. What happens if they miss it by one day?

Watson: That has a significant impact.

Matties: From a designer’s point of view, what does that do to you?

Watson: It puts us in a place where you can’t put a number on it for how much market share you’ve lost. We have a lot of external things involved in our design process that throw monkey wrenches into it, such as tariffs because we do work with China. One of our places is in China, so we have some outside influences on our designs, but we try to keep it to a consistent schedule. We identify what we call “blockers” in what we’re trying to accomplish, meaning things that are blocking us both internally and externally. We need to identify those blockers and get them out of our way because those can constantly be problems. I would talk to the fabrication house about potential issues.

Happy Holden: The first thing you learn as a young engineer at Hewlett-Packard is breakeven time. It’s like ROI, but for designers. It came about because if design managers hit obstacles and they’re going to be late, they go to management and say, “I need more resources,” and managers say no. Lo and behold, they are late. Hewlett-Packard made money off of being the first to market. Then, Stanford MBAs used Professor William Ireson’s idea of break-even time, which the financial guys understood. Break-even time is when the profits have paid for all the R&D development money, so it’s not a return on investment. After the break-even time, you’re truly making a profit.

Matties: You had your schedule.

Holden: And if they were too late, they would pay us more.

Matties: Do they agree to that in advance?

Holden: Yes, before they ever took the orders. If they didn’t, they didn’t get any orders.

Matties: I don’t know many board shops that have a money-back guarantee for on-time delivery, so to speak, because it’s more than money back.

To read this entire interview, which appeared in the March 2020 issue of PCB007 Magazine, click here.


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