Savings at the Margin
In a study by Tom Mariano, recently published in Solid State Technology, the author posits that patterns of annual, double-digit growth in the semiconductor industry may be a thing of the past. After examining the book-to-bill ratios of equipment manufacturers, as well as other key indicators, Mariano sees few opportunities to improve top-line revenue through innovation and new product development.
He also found that to date, cost cutting on existing products has not resulted in significant gains at the margin. Sound bleak? It could except he offers a solution. He concludes manufacturers should be executing "a disciplined, rigorous and systematic approach," to reduce supply chain costs. Reducing your semiconductor packaging costs can provide one pathway to improve your margins.
What tops the list of our shipping tips for semiconductor equipment? First and foremost, rather than measuring shipping expenses in terms of "cost-per-crate," we recommend calculating on the long term basis of "cost-per-trip." When packaging semiconductor, equipment, it's necessary to think about design, durability, product life and any other service and support you may require in the shipping process. What at first may seem the least cost alternative, may cost more over the long run. Why?
- High quality custom crates cost more, but because of their quality, they can be used repeatedly.
- Since they are more durable, they can be modified with little additional investment.
- A reliable crating partner can have units ready on short notice to assume additional trips.
- Re-use, made possible by expert engineering, can reduce supply chain cost.
When you partner with a top packaging engineering and design team, you will discover that cost-cutting innovations can be realized through a dedicated engineering and design team.
Finding the lowest cost packaging company may not be the best way to unlock hidden savings. Typically, lower costs means lesser quality materials are being used. Especially in the fields of robotics, medical devices and semiconductor packaging, reliable packaging is essential. In addition to examining the cost of materials, we advise companies to measure the costs of:
- Missed deadlines and delays. Have you incurred penalties? Have orders been canceled for not arriving on the agreed due date? Experiencing price reductions as a result of delays? These are hard costs that can add up quickly.
- Lost goods? Are packages disappearing into thin air? What is this costing you?
- Damaged goods, returned at your cost? What percentage arrives damaged? Is this getting worse? Are you receiving the best service possible? What is the source of damage? Inferior packaging? Careless handling? Both? What is this costing your company?
- Additional labor costs. Anytime something goes wrong, chances are someone's time is wasted trying to correct the mishap or mistake. Have you considered what this might be costing you?
Rethink Your Packaging Partner
A reliable packaging vendor can make a measurable difference to your bottom line. Does your existing packaging engineering and design team measure up? Could you be getting better value at less expense? A top packaging partner should be able to meet the demands of a well functioning supply chain. It's also highly probable that a top grade packaging team can reduce your supply chain costs. In "measuring" the value of your packaging company, think about the costs in relation to the following:
- Can your packaging company meet last minute requests? Do they have the supplies in inventory and necessary staff to turn a project around quickly? Have you lost orders where speed was an important factor?
- Can your external packaging engineering and design team be relied upon to provide technical knowledge and assistance to your sales staff when necessary? Have you lost orders as a result of slow response or no response?
- Do they find ways to expedite your ordering, receiving and shipping requirements?
In short, do you have a packaging partner that always has your best interest in mind? To find out if a packaging partner can do more for you and your bottom line, the professionals at LPC can work with you to find ways to create savings in the semiconductor industry and related businesses.