Call for a Quote (510) 580-8500

Or Email Us at Sales@Sonicmfg.com

The largest EMS in the Silicon Valley

Call for a Quote (510) 580-8500

Or Email Us at Sales@Sonicmfg.com

The largest EMS in
the Silicon Valley

Digital Supply Chain

By Mark Lawton, Supply Chain World Magazine

Every week, more than 1 million electronic components arrive at Sonic Manufacturing Technologies. Of those, over 500,000 are delivered to Sonic without human touch and within three days of ordering.

Sonic is a contract electronics manufacturer located in the Silicon Valley. The company partners with more than 100 original equipment manufacturers (OEMs), about 80 percent of which are located in the San Francisco Bay Area. Sonic’s 85,000-square-foot solar-powered facility manufactures electronic products for multiple markets including medical, military, automotive, industrial, IOT and consumer.

 “It comes in waves,” Vice President of Supply Chain David Ginsberg says. “As drones were catching on, we had a lot of drones running through the factory. We had to build a drone flight testing room. Lots of volunteers for functional tests.”

The competition in electronics manufacturing services (EMS) is both global and local with “perhaps 100 EMS within the Bay Area itself,” Ginsberg says. “There are probably six to eight we see regularly on competitive bids. Customers will also explore prices in Asia and Europe, so we must compete globally.”

Low Cost, High Payback

To manage cost and complexity, Sonic keeps about 3,000 of the most commonly used resistors and capacitors in inventory at all times. Customers participating in the program have immediate availably to exact quantities needed without liability on excess. “Without even seeing a new design, half of the customer’s parts are already in the building,” Ginsberg says. “And even during the recent capacitor shortage, not one customer on the program experienced shortages or delays.”

A majority of Sonic’s customers regularly launch rapid prototypes and new product introductions, with many products continuing at Sonic through volume production on its nine automated surface mount lines. “Our executive team is engineers that love hardware and all the new tech in this industry,” Ginsberg says. “We frequently work with labs and founders, including those coming into the hardware space for their first time.”

Sonic’s business model is different than the competition. “We decided early on that every process, prototype or production, would be optimized for speed.” Ginsberg says. “We could then accept our customers’ timelines and avoid quoting longer deliveries. Our customers see more responsiveness than perhaps anywhere else they could go.”

Supply Chain Automation

“In order to move quickly and cost-effectively, a digital supply chain is the best solution,” Ginsberg says. “Moving ones and zeros around the globe is faster and cheaper than moving parts. Being in the hardware industry, we use digital to move and query the supply chain without human touch and then convert it to hardware at the last possible moment. The digital supply chain can be thought of as data plus dollars equals parts; and commitment to pay is simply another piece of data.”

Here’s how a digital supply chain works:

  1. The engineering data of the customer is uploaded to Sonic’s business system (ERP).
  2. An MRP (material requirement planning) engine does the calculations, and a data quality engine auto- corrects bad and missing records. “It is simply impossible to keyboard your way to accuracy,” Ginsberg says. “Modern databases are huge.”
  3. With the data quality established, Sonic’s application programming interface (API) takes the customer’s material requirements and compares it to supplier availability– computer to computer – and auto-picks the best match on source, price, quantity and delivery. “API is a bit like electronic data interchange [EDI], but more accurate, lower in cost and better able to choreograph the process,” Ginsberg says. “It’s a conversation between computers.” Sonic’s API system then automatically places the purchase orders. “Within three minutes I can have 50 percent of my parts on order and on the dock in one to three days,” Ginsberg says.
  4. What doesn’t get API ordered is auto-sent to a program called CalcuQuote. CalcuQuote sends out the part requirements to suppliers for quotation by actual salespeople. Supplier responses are returned by CalcuQuote to the Sonic API procurement system which then attempts to buy from the new data. This brings Sonic’s automation up to about 65 percent.
  5. The final 35 percent gets turned over to the Sonic purchasing team. “While automation works beautifully for most parts, the last few percent takes an increasing amount of experienced sourcing, hand holding and collaboration with suppliers,” Ginsberg says.

Digital Future

While speed is obviously important on prototyping and new product introduction, it is also highly advantageous in volume production. “Our median delivery for turnkey electronics – buy, build, test, ship – is under 30 days after receipt of order, while the competition is typically at two to four months,”

Ginsberg says. “Shorter lead time means our customers can continuously adapt to actual market demand while holding less inventory. The best improvement to forecast accuracy you can make is lead time reduction; customers know demand for next month far better than the following quarter.” Ginsberg says a digital supply chain is easier to implement than most people think. Sonic’s digital supply chain does not require artificial intelligence, big data, robots or data scientists. As a mid-tier business Sonic contracts with Orbweaver for data transport and CalcuQuote to integrate human quotes with the API process.

“It’s very low cost and very high payback,” Ginsberg says. “We are always developing new API capabilities, and as our entire industry goes digital, our mutual call for new APIs will bring them to market faster. Digital is an industry- wide solution and collaboration is to our own advantage.”

Sonic certainly is better off for going digital. The company has been able achieve these results without the typical overhead costs of production scheduling, material planning and cost accounting. Shortage meetings are also a thing of the past. “All factory data and supply status are available from the desktop as immediately known,” Ginsberg says. “Why meet? Managers drop by throughout the day if they need an exception escalated.”

He adds, “Nothing is faster, more cost-competitive and higher in customer satisfaction than digital, so this is where the market is going. The quality and automation of transactional data are the keys to success.”

Originally posted at http://www.scw-mag.com/sections/manufacturing-distribution/1194-sonic-manufacturing-technologies-2

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Speed and Agility

For Sonic Manufacturing Technologies, the No. 1 goal is making customers happy and successful. “Everything is so razor focused on that one goal,” Vice President of Supply Chain David Ginsberg declares. Regardless of schedule compression or engineering changes, delivering on time is Sonic’s highest priority.
[Supply Chain World Article PDF]
In many companies, he notes, the various departments are at odds. For example, financial departments are incentivized to reduce inventory while customer service teams will want to increase it. This leads to conflicting metrics, unaligned processes and therefore frustrated customers. “We don’t have misalignment,” he asserts.
Instead, all the associates at Sonic are focused on maintaining the optimal processes to get jobs done and keep clients satisfied. “Everything has come around to a counter-intuitive model that is customer focused,” Ginsberg says. For example, standard metrics of inventory, capacity and utilization are of secondary importance at Sonic.
Based in the Silicon Valley in Fremont, Calif., Sonic offers its clients in-house board design, prototyping and new product induction (NPI) through full production in as fast as five to 10 days. Its senior team, he notes, started the company after working in the defense industry and then taking on medical customers at similar quality standards. Now Sonic services over 100 Silicon Valley OEMs.
Today, the company operates from a single, 85,000-square-foot location with nine lines, two shifts and runs on 100 percent solar electricity. “We’re pretty environmentally sound,” Ginsberg says.
Sonic stands as a leader in its market space thanks to its ability to do prototyping and NPI at its engineering intensive location. “We can work hand-in-hand with engineering and operations, and companies can avoid the extended lead times and travel of going o shore,” he says. Many engineers drop o products for design changes on their commute, and pick them up heading in the other direction. Others prefer to work on its floor side by side with its manufacturing and technical teams.
Sonic also serves a broad client base. “We’ll take everyone as small as two engineers and a credit card all the way up to the Silicon Valley top 10,” Ginsberg describes. “There’s a never-ending stream of new product coming through the building. It’s exciting to see all the things coming to market over the next few years.”

Industry Pioneers

Sonic has pioneered a new business model with the introduction of application program interface (API) technology, Ginsberg says. “In our effort to have a very high service level at a very low cost, we recognized early on that API technology was the way to get there,” he says.
One of the advantages of APIs, he notes, is that they automate two-way communications between buyers and sellers. “You can emulate the entire purchasing process between two companies, and generate 100 percent accurate purchase orders automatically,” Ginsberg says.
APIs work with one-time prototype builds as well as cost-sensitive production builds. “It makes a good recurring ordering tool once you’ve located a supplier and negotiated a price,” he says, noting that Sonic no longer needs someone to contact the vendor via phone or email on API purchase orders.
“The computer does the repetitive work much better. Human beings are best at sourcing and problem solving.”
While 45 percent of Sonic’s business is emulated by APIs, “We anticipate going over 50 percent within the year,” he says, noting that the ultimate goal is to become 65 percent automated and 35 percent people-based. “There are always supply exceptions that people and their business relationships must solve.”
One element that is critical for automated purchasing is having data that is 100 percent accurate. The traditional methods of correcting data via people and keyboards is no longer possible, Ginsberg notes. “A modern database of over a million, or a billion, records and attributes can’t be ‘typed accurate.’ Only the computer can x the computer. Accuracy must be scripted.
“We saw this coming even at the foundations of Sonic,” he says, noting that the company now uses a self-correcting database, which can make changes if prices, lead time or sourcing change and then take accurate MRPs and convert them into accurate APIs.
“The speed that this can move at is pretty incredible,” Ginsberg says. “This year our goal is to go from raw MRP calculation to picklist in the supplier warehouse in under a minute.”
Sonic also has benefited from the use of analytics and metrics, for which Tableau Software is central. “It reads the database directly and formats data into charts and graphs without Excel manipulations,” he says. “Since the analytics are from the database, the database must be accurate. An Excel ‘ x’ is not permitted.”
Today, the Sonic supply chain delivers in under three days median, while it was 20 to 30 days a decade ago. “We believe there is no one else placing a million parts a week on three-day median delivery in the United States,” Ginsberg says.
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Article originally published in Supply Chain World by Alan Dorich, VOLUME 6, ISSUE 3 (Knighthouse Publishing on behalf of Sonic Manufacturing Technologies).

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Net Zero Energy as Competitive Advantage to Produce More in US?

Energy usage is under strict surveillance as many states push hard to lower their carbon footprint.  California has been particularly aggressive in these goals and in 2017, the California Public Utilities Commission introduced the California Energy Efficiency Strategic Plan which sets specific goals for the development of zero net energy buildings.
An energy-efficient building is defined as one where the actual annual consumed energy is less than or equal to the on-site renewable generated energy.
The strategic plan calls for specific actions which include:

  • 50% of commercial buildings will be retrofit to ZNE by 2030
  • All new commercial construction will be ZNE by 2030
  • 50% of new major renovations of state buildings will be ZNE by 2025

Complying with these standards will cause manufacturers to dig in even deeper when evaluating energy usage. One of the largest benefits of this energy reduction effort is the accompanying reduction in the overall cost of doing business.
The question then arises as to whether this cost reduction could be one of the keys to keeping more manufacturing in the U.S?
Derek Hansen, CEO of Mynt Systems who recently completed the first retrofitted zero net energy building in Silicon Valley, thinks so.
“In order to compete with China and other countries, we need to compete on the operating costs of our plants,” Hansen explains. “One of the best ways to do that is to save on energy. And while we become more energy efficient, we are improving our environment.”
Mynt Systems retrofitted Sonic Manufacturing which is the largest electronic manufacturing services factory in Silicon Valley. Located in Fremont, it is the first in the Bay Area to be retrofitted for zero net energy.
Sonic, which leases its building, wanted to reduce its carbon footprint. And at the same time, the building owner wanted to reduce its overall footprint. For the building owner, the goal was to keep Sonic as a tenant and to increase the property’s value. As the goals of both parties dovetailed, Mynt Systems devised solutions that simultaneously met the needs of both parties.
The timing of the retrofit offered a further incentive as Sonic could become grandfathered onto the utility’s time of use rate structure which was being closed off to large commercial customers in early 2017.
To reduce total energy use Sonic looked at reducing the lighting and cooling loads. By installing a 750kW rooftop solar system and a 273kW carport solar system, the energy usage would be offset.
The annual kWh saving is 1,574,651 translating into $308,040 saving the first year. These solar systems will produce 1.6 million kWh of clean power per year and over $8 million in avoided utility costs, over the next 25 years. And if that is translated into gallons of gasoline
Furthermore, the ROI on the investment of $3.5 million for the systems was just under five years.
The speed of the ROI was matched by the speed of the city of Freemont in helping Sonic get the permits necessary. Projects like this can take anywhere from six months to two years, but the city of Fremont is “intentionally setting the pace,” said Hansen in order to help the manufacturing community.  He gives the city a lot of credit for the success of the program.
The model of manufacturing companies working with building owners to reduce energy use and provide benefits to both is something that Hansen sees happening more.
“It’s a good model to encourage companies to remain where they are since the building owner shares the costs of necessary upgrades.” And in this case, the building owner received a $1.1 mill tax credit and $6 million additional value to the property.
There are other benefits to become a green manufacturing facility, says Hansen. “The supply chain has become greener and in fact, some companies will only buy products that are manufactured at green facilities.”
Hansen notes that the paradigm of doing the right thing is a cost to companies is now being replaced with doing the right thing actually increases the bottom line.
Creating a green manufacturing facility is an all-around win says Hansen since it achieves triple bottom line results –people, profit and planet.
 
Article originally published Industry Week, written by Adrienne Selko, August 8, 2018.

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