I was asked to contribute to the Palomar Technologies’ blog after a recent visit to their factory. This came about by way of meeting an employee of Palomar who was part of an executive education program that I am participating in at USD. He shared with me a little about Palomar: their advanced microelectronic packaging systems manufacturing business, their contract assembly division (Palomar Microelectronics), the growth that they were seeing across all lines of the business and their goals for the future. Being a supply chain professional I was very interested in learning more about the supply chain behind Palomar, hence I graciously accepted the invitation to visit.
Upon entering the facility, I was received with a warm reception. Here are some brief thoughts from what proved to be a fascinating and insightful visit:
Supply Chain Defined:
In short, a company’s supply chain represents the flow of value from raw materials to the end customer. Or, “a supply chain is the system of organizations, people, technology, activities, information and resources involved in moving a product or service”.
The term “supply chain” is admittedly a loose metaphor. I prefer the term “Value Network” (see depiction below) as a network is more indicative of how most companies interact with competitors, customers, suppliers, regulators, etc. Advanced value networks have a lot of characteristics, some of which include: systems of trust, collaborative innovation, lean processes, and advanced relationship management techniques.
It was exciting to see elements of Value Network Management in practice at Palomar. For example...
Innovation:
My new friend shared with me how Palomar works with its customers to solve their large, unmet needs (needless to say, I was thrilled to hear this). It was evident that the company has carved out a nice niche in that it has (and is) consciously chosen not to be in the market of mass production;rather its focus is on high mix/low volume, high quality production – this enables them to be very attentive to solving unique customer problems. An example given was the work they did with a military and defense contractor based in Europe. This customer had been turned away by other suppliers because their packaging challenge necessitated a customized solution and required only a few systems – these other suppliers could not meet the customer’s need even if they wanted to – they were entirely in the mass production mindset (these suppliers were in the business of selling 50-100 systems at a time, Palomar is in the business of customizing and selling1, 2, or 10 systems). Palomar was able to win the customer’s order having proved able to meet their challenge and provide a custom solution (this included service and support, something the other suppliers were incapable of providing). Result: a satisfied customer who invariably will be a net promoter vs. detractor.
“Lean”:
Supply chain professionals like me have been indoctrinated over the years on TPS (Toyota Production System)thinking. Many companies havetried to replicate TPS with mixed results. Toyota even invites potential competitors into its factoriesto see TPS at work. Why would they do this? Because they know a lot of what’s behind TPS “is in the walls” meaning you can sense it and feel it but it’s very hard for an outsider to replicate.
The Intangibles:
While walking the “supply chain” at Palomar, I got the sense that something special was “in the walls”. You know it when you see it: professionalism, cleanliness, pride of work, order…it’s all there. Having worked for a Fortune 50 company and gained a sense for world-class operations, I must say what I witnessed at Palomar appeared to be as good or better than what we had going at a multi-billion dollar company.
I’ll pose a few questions to close on:
1. Is your Supply Chain and Procurement organization looked to as source of competitive advantage for your company? What characteristics have you seen with these organizations?
2. In a fast moving, rapidly changing world the most sustainable source of competitive advantage is….?
Visit Cask Technologies to see how CEO’s answered the last question in a recent survey.
-Jim Goodall
Jim Goodall is a Supply Chain/Value Network expert with Cask Technologies and can be reached at jim.goodall@casktechnologies.com.For more information, you can visit www.casktechnologies.com