Inside Spirit Circuits
I was recently treated to a factory tour with Spirit Circuits’ Managing Director Martin Randall, to learn more about their process line and how it has evolved over time. In the discussion following, I learned about Spirit’s involvement in the China market and how they’ve structured their business to handle quick turn prototypes locally and high volume abroad.
Barry Matties: Martin, I know you do some metal backs among other things. Tell me a little about what you’re doing here.
Martin Randall: The metal backs is a special product for us but, to be honest, our USP is small batch quick-turn. This facility is all about small batches delivered on short lead times. Once we walk around you'll see batches of maybe 5–10 panels. You won't see much more than about 25-panel batches as you go through here. In terms of the overall business we've got the UK manufacturing here which represents about one third of our revenue, and we've got volume orders which are coming from China at the moment.
Matties: Is that done with a partner shop?
Randall: No, this is all on a customer/supplier relationship. We have no shared interest or shared capital in any of the companies that we work with in China, but we do have well maintained and long term relationships.
Matties: Do you just interface for your customers to the partner, or do you just connect the partner directly?
Randall: We do the interface. Basically the order comes into Spirit and we take care of it as if we were manufacturing it in the UK. It's really no different for the customer. We take care of the order and obviously the progressing of the order and so on.
Matties: Do you also guarantee the quality of that product?
Randall: We do. In the past we had a system whereby we’d take the first three deliveries of a new part and do our own received inspection here. Over time we’ve got a record of confidence in the suppliers and we now only need to do this on the first part. We've found from our own experience that the repeatable quality is extremely good. If you choose your suppliers correctly, and you work with the suppliers, the repeatable quality is very good. If there's a surprise to be had, it tends to be something that has maybe been lost in translation on the first batch.
If you take the first part and you vet that carefully, making sure that all the normal things like the thickness, size, holes, the colors are correct, then you find that you don't get too surprised on variable quality. We're not a company that chops and changes for a few cents here and a few cents there. We have some long-term relationships with suppliers in China.
Matties: That's what it takes. You really have to understand your suppliers in China. It's a different environment altogether.
Randall: Absolutely. We've had our office with a couple of guys that work for us out there for maybe four or five years now. Prior to setting up an office, the management of Spirit would spend quite a lot of time actually in China doing that job. It's not an arm’s length part of our business. It's a huge part of our business and we dedicate a lot of time to it, to be honest.
Matties: It's not necessarily a typical arrangement for a quick-turn shop to represent the customer’s interest with a fabricator in China, It's more of a hand-off rather than management though, right?
Randall: It's not unusual. I would say we're a little bit different. I think there are a lot of circuit companies in the UK that have a model similar to ours but are not necessarily promoting quick turn and the high turnover of part numbers. It's a little bit different in that respect, but we're not unique in terms of having a UK offering with an offshore volume supply. That's pretty common and we're competing against that.
Matties: So it's not uncommon for the fabricator to basically certify the quality of the product either?
Randall: No. There are obviously the pure brokers there where that doesn't happen and its direct shipment to the end customer. Having said that, with the repeatable business we have now, we have gained the confidence to do direct ships and don't have to handle everything here.
Matties: No reason to slow up the process.
Randall: Absolutely not, and incur the additional carriage and all of that stuff. That's reduced a lot so we only really see the new parts the first time a new part is made, or if we're replacing it with a different supplier for the first time for whatever reason that might be. There's quite a nice continuity between what we do here in the UK in terms of the first prototypes of a particular design. The customer obviously gets the approval, then we might have a slightly larger UK production batch and then the volume will be shipped offshore. We have a lot of customers where we are supplying both UK and offshore manufactured PCBs.
The factory here itself was a PCB manufacturing company long before Spirit came here. We've been here 13 years and we took this over from a company called Southern Circuits, who had been here for nearly 30 years in this facility. It's got a long history of PCB manufacture. What we have here today is totally different from the factory we came into. The reason basically is because, again, this is all about being able to do things quickly. We've had to bring in the right pieces of kit to do the job. When we came here, the sort of volume that was coming out the factory per day is what we're now producing per week.
Matties: Different world.
Randall: A completely different world. So it's all about quick set-ups, quick shutdowns, with not too much process maintenance required. That's been the investment really in terms of what we see today. I'd like to take you through a nice, smooth flow of ‘start of process’ to ‘end of process,’ but it doesn't quite work like that. Where we're standing at the moment as we enter the factory is actually the end of the process. It's the final inspection area where of course everything we produce ultimately ends up for basically a visual/workmanship inspection.
We know at this point that product has been electrically tested and all of the in-process QC checks have taken place. It's a final check against specific customer requirements, final verification of things like hole sizes, PCB thickness, etc. Then once we're happy with that, we generate the documentation, the certificate of conformity and the package labeling and then taken to the packing department.
Matties: What's your typical order size?
Randall: Typically, an average number of panels in a job at the moment would be probably about 10 panels.
Matties: So every panel is being visually inspected?
Randall: Absolutely. Some of the panel counts are slightly higher on the metal-backed boards that we make. We can do that here because we don't have to go through certain processes, i.e., plating. We avoid the through-hole plating process which you don't need to have for the single-sided metal boards, so we've got a bit more capacity and a bit more leeway in terms of how many panels we can process on the metal boards. Typically, on an average day we'll be shipping maybe 25 different orders and that would represent, in terms of the number of production panels, anywhere between about 170 and 200 production panels with lead times from two to five working days. There's not much in the factory here that is on more than about a seven-day lead time. We have a few specials which are longer because of the availability of the material if we've got some special materials, but with the standard metal and standard FR4, where the materials are readily available, a lot of what you'll see is on 2–5 days and some maybe 7–10 days.
Matties: What's your typical customer?
Randall: At the moment we are heavily into the lighting customers.
Matties: A lot of LED with all that metal back?
Randall: Yeah. It's not all exclusively metal, but predominantly metal. If we looked at what our business is at with China, it’s a similar story. That's been the real growth and that's fueled our growth over the recent years. I would say we are a typical medium-sized PCB shop, with standard technology here in the UK. We invest in equipment that suits our model of many small batch runs such as the inkjet printing the component IDs instead of the conventional way of screen printing IDs onto the boards. For us, when you're doing 20+ jobs a day, producing 25 screens a day, and sometimes only printing three or four panels on that, it would be absolute nonsense.
Matties: The set-up is more than the actual process time.
Randall: Absolutely. We would be employing people making screens all day so it's a bit of nonsense. We've made those sorts of investments but elsewhere you'll see what you consider to be very traditional process equipment. It's not so much about the plant where we're different or the way we're producing the boards, it's more around the service that we provide and being able to respond quickly to new parts on short lead times, coupled with repeat volume parts that we source in China.
Matties: How many employees do you have on the manufacturing floor?
Randall: Actually dedicated to manufacturing, we have 35 people that are physically making boards.
Matties: Is this a high point in employees or where is this at?
Randall: It's not changed too much to be honest but what we have changed is our shift patterns. We operate basically 24 hours from 6:00am on Monday morning until 6:00pm on Friday. Part of that has come with demands for much shorter lead times; we're getting orders that are coming in on 24 hours, 48 hours and so on. We need that whole day to do that. The headcount has increased a little bit through acquisitions where we've obviously added people as part of that process. If we were here four or five years ago, we'd probably be looking at 30 directs.
Matties: Not a dramatic difference.
Randall: It doesn't fluctuate that greatly to be honest.
Matties: As the managing director of a shop like this, what's your greatest challenge?
Randall: The greatest challenge is making sure that everything stays maintained and is available for processing because with the lead times that we have we've got no fall back. We need to make sure that our process controls are correct, we need to make sure that preventative maintenance is being done, and we need to be looking after and loving our kit. Obviously we're heavily reliant on the skills of the people, as any business is, but for us, we need to make sure that we're looking after our tools and our kit because if we do have a failure or a breakdown we have virtually zero recovery time. I step aside a little bit in terms of the sales revenue part of the business. I'm reliant on the other guys doing their part to feed the shop. My job and the job of the guys here is to make it happen and obviously deliver in full and on time.
Matties: It's all about investing in the right technology too, right?
Randall: It is.
Matties: When you look at the investments that you're making, what drives your decisions?
Randall: For us here, a lot of it has been about flexibility and about being able to set up quickly and not waste materials. Talking about screen printing, if you look at that, it's an extremely wasteful process if you think about the amount of ink that is actually deposited onto the boards and the set-up times. There's some good stuff out there and there's some good technology that absolutely we would like to have, but as it stands at the moment, it's a case that we need to maximize what we've got and get the best out of what we've got. The cost of some of this kit, when you start talking about LDI equipment for example is huge.
Matties: Do you see Spirit moving to inkjet technology any time soon?
Randall: Not any time soon, no. I know the technology's there and I’m very interested in it.
Matties: It seems like that would be one area where you could really have some advantage in cycle time reduction.
Randall: I absolutely agree. It's on the watch list if you like, but as I said I don’t see that we'll be moving there any time soon—the investment is just too great.
Matties: The idea is that you have the boards ready when they need them?
Randall: We do have some stock holding agreements with certain customers as well. A lot of it is spot orders and we'll just ship direct, obviously, but we do have call off agreements with certain customers where we'll hold stock.
Matties: You have the Rescue Me Program as well?
Randall: Yeah. The idea basically is that we typically don't load for 100% yield. Let's take a simple example, if we have a customer requirement for 100 pieces, we may load 105. If we end up with 104 and scrap one, we've got four pieces that are then available. They go into the Rescue Me Program and they're immediately available at a discounted price. You can have all four, you can have one, you can have three, whatever you need.
Matties: How has that program been working? Do a lot of companies take advantage of that?
Randall: It's been very successful.
Matties: Of course, being a quick-turn shop you have to maintain multiple lines for flexibility.
Randall: Yes, for example, we have a huge range of in-house final solderable finishes. We have both leaded and lead-free solder leveling. Then through the middle of the shop we have immersion silver and this line is our OSP, our organic line. We also have our ENIG process in the other part of the factory. We've got a good suite of basically everything we need. The only thing that we have to go outside and subcontract for is any thick or hard gold requirement. Everything else we can pretty much accommodate in-house.
Matties: You need to have all these finishes these days too, right? Especially in your environment with so many jobs.
Randall: We do. Particularly with LED lighting, OSP has become more popular. We still have some requirements for leaded solder, obviously the RoHS requirements came out many years ago, but there's still some exemptions and we still maintain the ability to provide a lead finish.
Matties: What sort of demands do your customers place on you these days aside from pricing?
Randall: From the quality side of it, I think that there's no longer any point of discussion, it's just taken as a given. Typically, everything is specified around the IPC standards and our default is IPC Class 2, albeit we are able to provide class 3 product as well. The way the business is structured with the volume being offshore and the ability to do quick-turn prototypes here is a real plus for us. The pure brokers don't always have the agility to do that.
Matties: They don't have the control or the knowledge.
Randall: There are obviously small shops available that will provide that service but I think the fact that we've got ownership of that and can start with a part here, provide the samples, prove the technology and keep ownership of that when it goes offshore is hugely attractive to customers.
Matties: Is there anything that we haven't talked about that you think a buyer of circuit boards should be aware of these days?
Randall: That's a very good question. I don't think we find quite so many issues now when we're in receipt of Gerber. In the past you would find some pretty challenging, if not impossible, requirements when you loaded the Gerber up and were doing your DRCs or your MRCs. Certainly that has improved, but so also has the knowledge from a buyer's point of view that PCBs are not an off-the-shelf part. These are all bespoke items.
We have a lot of customer visits here and we take people around like we've just done now. The response is often, "Wow, we did not know there are 20–30 processes to get to that point." It's not like buying a capacitor or buying a resistor from a distributor, and there's a greater appreciation of that now. I think times have moved on and buyers are pretty switched on now. As I said when we were talking before, IPC is the default. Everything tends to get specified around IPC, and that takes care of most things, to be honest.
Matties: The rest really becomes culture and fit, right? You’ve got to do business with who you can do business with.
Randall: Obviously we like to think we know our customers quite well. Certainly our key customers we know very well and we know what is important to them, what ticks the right boxes, and we do different things for different customers. A lot of that is just the way in which we engage and communicate with them. The product itself, remains pretty much the same. It's not so much about the product, it is more about the customer experience, the whole part of dealing with the customer from the point of enquiry to the point of getting their boards. Getting the small things right, that they get the product in the right packaging, in the right weight of packaging and so on. It's important to focus on the finer details right.
Matties: Martin, I appreciate your tour today and your time. Thank you so much.
Randall: You’re welcome. It was my pleasure.