(excerpted from the 2020 ETT presentation by Shan Morgan, President Elma Electronic Inc.)
This blog starts with a story—about surfing. On a recent trip to San Diego, I was watching some of the more experienced surfers sitting in the calm water, getting ready to catch the big wave. So, I charged into the ocean, got about 10 yards in, and the roller pushes me back to the beach. But I'm not daunted; I get back on the board and the roller pushes me back again. I got rolled back to the beach about 10 times in a row. I thought I was going to drown. Let’s stop right there…
Interestingly, this image leads a little bit into the changes the defense industry is facing. If you feel like you're getting rolled back to the beach more often than catching a wave, you're not alone. The complexity of solutions needed in the defense industry is changing quite a bit, putting significant strain on all of the resources we have, not just in technology but across the board. At the same time the defense contractors are doing cost-down initiatives, electronics manufacturers are being asked to do more and more, with the pressure to do it for less and less.
Cost-down effect on military electronics
The trend across the board is the cost pressures from the DoD pushing down to the primes, bringing about a new wave of technology where more is being investing in research and development. Advancements in high performance computing and initiatives, like SOSA, to standardize COTS equipment are all driving the pace of technology, pulling more components in from the commercial market to keep pace with the speeds necessary.
Those effected by these changes can be broken down into four major categories:
1. The primes are trying to outsource, or rather, they're looking for ways to either get rid of a volume problem or a technology problem withing the supply chain.
2. The system platform providers are having to pull in more technology, putting together chassis, backplanes and active cards and maybe operating systems as well as solving IPMI issues.
3. The traditional building block people—the backplane, chassis or power supply only people—they have to find a place to play in this market
4. Lastly, because of the pace of technology, we're also seeing commercial suppliers trying to get into the marketplace.
Accelerated pace means increased pressures
Everything is accelerating and the pace at which technology is changing is ramping up forcing the industry to keep up. By taking on these new challenges, companies are exposed to more risk, but it turns out, our industry is not alone.
Take the pre-industrial age, where cost versus volume was pretty much linear. If you wanted to make another widget, you added another person--another widget, another person and so on. In the industrial age, fixed costs dominated, so more volume meant a better cost curve with the goal being to pump out a lot of widgets on an existing infrastructure. Our current post-industrial age is not dominated by volume, but rather by complexity, and we're looking to manage this impact of complexity on our costs. Unmanaged cost increases not only hurt an individual company, but also the entire industry in how companies are perceived by its customers. (Figure 1)
Demands pushing downstream
In the old days, a company spent as little time as possible to get a widget out the door, but that's not today’s business. Success requires a longer cycle, with a typical project starting about 18 months before a prototype is developed, than three or four years later, production may begin. The complexity of this cycle not only relates to technology, but impacts all aspects of a business, from sales, program management and compliance to change management, customer approvals and design reviews. The rate of technological change is putting tremendous demands on not only on the engineering teams but, the supply chain, as well.
As this flow down occurs, manufacturers need to make sure that the vendors are being compliant with the DoD requirements, for example, when sourcing components. And with constant price increases, of 20 to 30% for obsoleting technology, it’s a big challenge. Supply chain side operations will also need new tooling new equipment, more people and added training to make sure that the yield and quality coming out of the manufacturing group stays high and that customers’ delivery expectations are being met.
The key to managing this complex business environment is to stay current with the technology and not falling behind by balancing your resources to increase project risk properly. This needs to happen across multiple departments and all partner relationships, so you are delivering quality solutions that meet your customers’ expectations at a at a good price point. This affects the ability to grow both as a company and as an industry.
A new wave of consciousness
So, going back to San Diego, there I am, just getting rolled back to the beach over and over again, even though I'm a really good swimmer. As I got back to the beach, again, and was going to quit, I stopped and watched one of the good surfers get ready for his turn in the queue. A nice wave rolled up, he caught it and rode it all the way in, got out of the water and walked to the beach.
Then he walked past me, all the way down to the pier, got in the water and then just jetted right back out into the queue of surfers. See, there happened to be a little rip current that I was trying to go right out against, so I found out that if you just go a little farther, you can find a path to the success. Sometimes, you just have to take the time to look for it.
