Material optimization in the SMT and Electronics Assembly Industries

The SMT and Electronics Assembly industries are facing numerous challenges due to changing customer requirements, rapid digitalization, component shortages and uncertainty in the supply chains owing to the COVID-19 pandemic. As OEMs, channel partners and customers increase their efforts to digitalize, the complexity of the products designed and manufactured increases. Reduced size of SMDs and higher PCB component density can easily result in PCBs with thousands of parts in total with hundreds of line items. Increased complexity in product design applies additional pressure on process management and material handling.

Mistakes made during assembly can be extremely costly. Product lifecycles too have reduced from years, now measured in mere months, making new product introduction cycles dramatically shorter. Lot sizes are decreasing rapidly as well, with more customized, highly specific products in demand, implying that every single board assembled needs to meet exacting, unique specs, reducing the margin of error to zero. To further add to the already-escalating complexity, material supply and manpower availability is adversely affected and disrupted due to the pandemic. 

High material costs are a factor in the electronics industry, contributing between 50% and 95% of the total product cost. With increased pressures on efficiency and reducing margins of error, management, logistics and storage of material becomes one of the most important aspects of shop floor management, if not the most important!

Challenges of Materials Optimization

Given the importance, typical challenges faced by the industry when it comes to material management are:

1. Poor stock management- When material flow isn’t well defined and reverse logistics of leftover parts are not well managed, it leads to false stock-out situations and missing parts. Without an overarching solution to monitor material movement and a clear transition from warehouse to shop floor to production lines and then back to warehouse, is difficult if not impossible to manage through an ERP alone. Order and re-order pick-up sequence needs to be defined and synchronized with actual production flow on the shop floor. Material flow and logistics need to be well defined for optimum stock utilization.
2. Parts available go missing- Missing parts are a major challenge for an SMT operation. Reasons this happens may be attributed to various factors. Reels of material might show availability in the ERP, but due to lack of traceability, can’t be located. Other times, parts may be delivered in excess when required parts are already available on the line  but are not returned to stock. Then there is the unaccounted for attrition due to scrap, poor feeder loading, miss-picks and/or nozzle failures. End-to-end material traceability is critical to process performance in SMT, but often missing due to dependence on point solutions.   
3. Poor shop floor management– Material or reels of components issued from the warehouse, unless situated at the right place and at the right time, may not be utilized to the fullest extent. Moisture sensitive devices (MSD) and time sensitive materials, for example, need to be  delivered at the right time for production to ensure effective compliance and utilization. These materials need to be handled with extra care and require accurate planning. Unless it is made available at the right time, it may cause the overall production plan to be delayed or affect a change in the planned schedule.   
4. Double booking and lack of standardization– PCB parts are typically used in reels which may contain tens of thousands of parts.  If more than one production line needs the part, chances of line disruption are high if material is available but committed to production on a different line. Lack of standardized machinery also plays a part in material management woes. Machine feeders hold parts to reduce set-up times and due to their specific designs it is imperative that reels be removed to transfer material. This increases the time needed to transfer material, thereby reducing throughput and yield. Process orchestration and traceability to individual stock item levels is essential to manage the shop floor standardization challenge.

Solutions for Materials Management in the SMT and Electronics

With the challenges pertaining to the material management understood, we move towards possible solutions. It is clear from the outset that material traceability, from the time it enters the warehouse until the time it is shipped out the door, is critical. It is also evident that with complex designs and time/condition sensitivity and the high cost of materials, the material flow needs to be perfectly syncronized with scheduling and material supply. Ideally, it should be just-in-time to ensure optimum material utilization.

Automation also becomes a crucial part of the solution, as it allows operators to focus on other tasks and eliminates human-related errors in material handling. Automated material movement through AIVs and automated storage through Smart Shelves and Material Towers can ensure JIT material fulfilment.

Finally, what is required is integration– an overarching application like the modern, modular IoT enabled MES data platform— which eliminates dependency on point solutions and provides traceability, automated material logistics and flow. It ensures process orchestration with optimum material utilization.

MES applications are essential building blocks of Industry 4.0, digital transformation and next-generation process automation.

From a material management standpoint, MES delivers:

1. Integration- MES integrates the IT/OT infrastructure. It forms the layer between the ERP and equipment-level automation to bring visibility and control across the value chain. From a material management perspective, assigning a unique identification, compliant with customer and/or regulatory requirements, to individual stock items at the time of warehouse receipt is simplified. Integration with all relevant applications allows MES to effectively track material from the warehouse to the shop floor to the SMT line. It prevents double booking, parts missing and haphazard flows from happening. Integration creates the synchronization needed for effective flow management.
2. Automation- MES allows for the true power of automation to be unleashed on the shop floor and in material logistics. Smart Shelves and Material Towers are becoming commonplace on the SMT shop floor. They allow material to be stored in optimum condition in the warehouse, on the shop floor, or even near the production line. Material towers, when integrated with MES, enable automated material supply and re-ordering for lines. The MES prompts which components are needed, where and at what time. With AIVs collecting reels of material just at the time they are needed on the line, material pick-up and flow can be fully automated. Optimized material picking routes are automatically calculated, avoiding unnecessary movements either by AIVs or Humans.  With this increased mobility and automation, MES enables lines to be broken into work-cells, allowing for even more efficient utilization of assets and material.
3. Traceability– MES defines the identity of each and every component sub-type with unique identifiers enabling manufacturers to meet all the requirements for process compliance and traceability. Importantly, the MES goes beyond labelling and identification in terms of traceability. Its ability to capture data in real-time across the shop floor allows stakeholders to know exactly where an unique component was used or where a material may be located. Material history and genealogy is available in multiple levels or conditions ensuring complete end-to-end operations traceability.  By keeping a record of the entire production and distribution history, manufactures gain visibility over the entire supply chain and improve their quality control systems that also helps to mitigate liability by reducing the extent of product recalls should any issues arise.

MES as the single source of truth

Above all else, MES becomes the single source of truth and allows material management to be aligned based on process needs. It adds intelligence by eliminating point-solutions and by integrating data which previously existed in silos. It’s an all-encompassing and overarching solution which allows for traceability to be achieved. It helps orchestrate the entire process and sets material flows between storage and production areas, with confirmation on material receipt and processing. The MES manages product transfer and tracking of picked materials through AGVs and Material Towers; this includes both material reels and semi-finished boards. Automated pick-lists, periodic inventories and self-replenishing production lines mean material storage, flow and management can be achieved in the most optimized manner.  

Industry 4.0 will continue to provide opportunity for SMT manufacturers, and with increasing competition, higher design, product and process complexity and increasingly lower margins, managing material logistics on the shop floor in the most efficient manner will become an absolute necessity. With the right MES in place, you can achieve the integration, automation and traceability required to achieve industry-best material logistics.