About SigmaTron

International

SigmaTron International (NASDAQ:SGMA) is a full service EMS provider with a network of manufacturing facilities in the United States, Mexico, China and Vietnam. We focus on companies who want highly customized service plus a scalable global manufacturing footprint. We serve a diversified set of markets which include: aero-space/defense, appliance, consumer electronics, gaming, fitness, industrial electronics, med-ical/life sciences, semiconductor, telecommunications and automo-tive. Our quality certifications include ISO 9001:2008, ISO 13485:2003 and AS9100C. We are also International Traffic in Arms Regulations (ITAR) regis-tered.

Inside this issue:

New Quality Director 2

UC Focused on

Quality/Efficiency

3

New Box Build

Project

4

Volume 3, Issue 1 First Quarter 2015

When the labor dispute that

impacted the flow of cargo

through 29 ports on the U.S.

West Coast ended in Febru-

ary, businesses breathed a

sigh of relief. Companies de-

pending on timely flow of

goods through those ports

were experiencing two-to-

four week delays.

While product shortages were

not severe enough for the

average consumer to notice

it, it did cause some empty

shelves and had it continued

unabated was likely only a

few weeks away from creat-

ing widespread shortages of goods imported

from Asia. The degree to which companies

were impacted was highly dependent on sup-

ply chain management strategy and creates

some lessons learned in common wisdom about

optimum raw material and finished goods

inventory levels. In SigmaTron International’s

(Continued on page 5)

SigmaTron Avoids Supply Chain Interruption

SigmaTron Supports Multi-Facility Accounts

As customers are analyzing the total cost of

outsourcing, many find that the proximity of

the contractor to either their facility or to the

end market contributes to achieving lowest

total cost. One of the advantages of Sig-

maTron’s strong North American and Asia

manufacturing footprint is the ability to sup-

port customers wishing to have their contrac-

tor’s manufacturing site close to their facility.

Additionally, SigmaTron’s company-wide sys-

tems and unified processes provide the visibil-

ity and standardization needed to support

customers wishing to use more than one Sigma-

Tron facility.

For example, a manufacturer of industrial

equipment is using SigmaTron’s Elk Grove Vil-

lage, IL and Union City, CA facilities to sup-

port their Midwest and West Coast facilities.

They are keeping some projects in-house and

outsourcing a mix of printed circuit board

assembly (PCBA) and box build production.

In the current arrangement, SigmaTron’s Un-

ion City facility produces PCBAs and the

customer’s California facility handles all final

assembly. The Elk Grove Village facility is

doing a mix of PCBAs and higher level box

build, and the customer is doing final assem-

bly on some product in its Chicago facility.

Elk Grove Village’s box build portion of the

project includes environmental stress screen-

ing, product reliability and life cycle testing.

SigmaTron’s standardized systems help its

team act as an extension of the customer’s

manufacturing operations in several ways.

The Bills of Materials (BOMs) are entered

into Agile as received. This provides visibility

(Continued on page 3)

Above, SigmaTron’s purchasing teams, including this group in their Suzhou,

China facility, helped successfully address the procurement challenges created

by the labor dispute at U.S. West Coast ports.

Page 2

Poissant New

Director of

Quality at EGV

Greg Poissant

Design for testability (DFT) is as critical a

service as design for manufacturability

(DFM), particularly as printed circuit board

assemblies (PCBA) shrink in size and be-

come more densely populated. At Sigma-

Tron International’s Union City, CA facility,

the test engineering team frequently helps

new customers with DFT as part of the

New Product Introduction (NPI) process.

“We start the NPI process by analyzing

test coverage when a customer doesn’t

have a strong test engineering team and

test strategy. We take their computer-

aided design (CAD) data and enter it into

our DFT software to perform the analysis,”

said Andrew Vo, the Union City Facility’s

Director of Test Engineering.

Common issues found during a DFT analy-

sis include:

No termination of a single connection

More than one connection to the circuit

but no via to access to test

Circuitry does not match layout design

From a DFT standpoint, best practices in-

clude:

Each single connection should be ter-

minated either pull up or pull down,

depending on the internal integrated

circuits (ICs). When terminated cor-

rectly the circuit performs better and

there is less electrical noise during in-

circuit test (ICT).

Even with multiple connections on the

circuits, printed circuit board (PCB)

layouts have very poor test accessibil-

ity if the PCB layout designer does not

provide vias which can be accessed.

Unless the product incorporates RF or

high speed technology, the PCB de-

signer should bring all multiple con-

nections to test vias that are accessi-

ble from the bottom side of the PCBA.

When there is a mismatch between

circuitry design and the PCB layout,

Greg Poissant has joined SigmaTron In-

ternational’s Elk Grove Village (EGV), IL

facility as Director of Quality. Previously

he served as Director of Quality at

TouchSensor Technologies. He was earlier

associated with Fellowes Manufacturing

and Appliance Controls Technologies in

quality management functions.

“Greg has nearly three decades of qual-

ity management experience and has

been instrumental in setting up key quali-

ty processes and philosophies in all of his

previous employers. We see him as a

strong addition to our team and integral

to our focus in supporting customers with

requirements for superior quality,” said

Jim Barnes, EGV’s Vice President of Op-

erations.

Greg is a Certified Quality Manager

and a Certified Quality Engineer through

the American Society for Quality (ASQ).

He has served as a Lead Auditor for ISO

9001:2008 and is a Certified Six Sigma

Green Belt. He received an Associate of

Science degree in industrial electronics

technology from Devry University.

components can heat up or blow up

when power is applied to the PCBA.

Routinely checking this issue as part

of the NPI process, ensures the de-

sign can be corrected before this

level of damage occurs.

The goal of SigmaTron International’s

NPI test strategy is to screen thoroughly

enough to ensure that the circuit design-

er will be able to power up first articles

and test with no short or open circuits. A

three-pronged inspection and test strat-

egy is used in that process. Automated

Optical Inspection (AOI) is used to verify

the placement and polarity of all com-

ponents on PCBA. X-ray is used to in-

spect all solder joints. Flying probe or

ICT is used to test for short or open cir-

cuits, and bad components. The degree

to which the PCBA can be tested for

shorts/opens depends on the level of

accessibility provided by the PCB layout

designer.

This approach to address issues as early

in the NPI process as possible, helps

customers avoid production delays and/

or field failures. This is particularly im-

portant when companies utilize third-

party design resources or do not have a

high level of in-house manufacturing and

test expertise. For example, a start-up

company with a new consumer product

recently went through an NPI process at

SigmaTron. The product did not have

good accessibility and SigmaTron Inter-

national’s test engineering team put

together a proposal on enhancing the

test strategy. Following review of the

CAD data, SigmaTron’s team met with

the customer’s PCB layout designer and

gave him recommendations for modifi-

cations to the layout that included rec-

ommendations for test point accessibility

and corrections to circuitry routing issues.

The team also found that while the

boundary scan tool the designer used

(Continued on page 4)

UC Test Team Helps with DFT

Spitfire Controls Gives

Page 3

UC Team Focused on Improving Quality and Efficiency

Multi-Facility

transfer that makes it seem as though

they were working with a single facto-

ry. They have the cost reduction bene-

fits of proximity to both of their manu-

facturing sites and none of the down-

side that can occur with multiple pro-

duction sites. It is a win-win all around,”

said Jim Barnes, V.P. Operations at

SigmaTron’s Elk Grove Village facility.

into components/materials usage at both

facilities and makes it easier to leverage

purchases on the total customer spend.

Valor is used for design for manufactura-

bility/testability (DFM/DFT) recommen-

dations. The team at Elk Grove Village

did the upfront DFM/DFT recommenda-

tions and built prototypes. Then it trans-

ferred a portion of that production to

Union City.

SigmaTron’s proprietary SCORE customer

portal gives the customer visibility into

project status in both facilities. Through

SCORE the customer’s program team can:

Track product through the manufac-

turing process with order, manufac-

turing, and shipping status available

24/7

View data real-time to see changes

as they happen

(Continued from page 1)

View an order notes feature that gives

them visibility into any information Sig-

maTron’s team adds

See all the details of shipped orders

with just one click.

“We’ve created a system that meets our

customer’s needs for support of two facilities

with a level of visibility and ease of product

SigmaTron’s systems ensure 24/7 production status visibility both in-plant and via secure web access.

The SigmaTron International’s Union City,

California facility routinely looks for

ways to enhance quality and efficiency in

the products it builds. When possible, the

facility’s engineering team provides de-

sign for manufacturability and testability

recommendations but in some case rede-

sign isn’t an option.

“Our focus in optimizing each project is to

find ways to work smarter. In some cases,

strategic equipment investments that

we’ve made are helping us address chal-

lenging fine pitch technology. In other

cases, our manufacturing engineering

team is coming up with approaches that

eliminate non-value added activity,” said

Raj Upadhyaya, SigmaTron Interna-

tional’s Executive Vice President, West

Coast Operations.

redesign was not an option. The Union

(Continued on page 4)

For example, a printed circuit board assem-

bly (PCBA) used in satellites had 0201 com-

ponents placed too closely together and

The facility’s Fuji AIMEX production line supports the superior placement accuracy required by today’s

small, densely-packed PCBAs.

The

Efficiency

Page 4

A test technician checks the results of a flying probe test.

had not ensured a proper JTAG connec-

tion. As a result, no power line was con-

nected to the JTAG. Once the PCBA was

re-laidout, the test engineering team

rechecked the layout and validated that

all issues were corrected. This improved

test accessibility from 45 percent to 98

percent.

First articles were tested using a combi-

nation of ICT, AOI and 5DX X-ray to

expand test coverage. The program has

(Continued from page 2) successfully ramped and is

in volume production.

“Early identification of the

test issues made it easy to

have the design respun

without significantly impact-

ing the NPI schedule. The

earlier our team can get

involved, the more options

we will have to optimize

test strategy and the faster

we can resolve critical is-

sues,” Andrew added.

TJ Facility Launches New Box Build Project

City production team was able address

this challenge by running it on a line

which included Fuji AIMEX equipment. The

Fuji AIMEX machines were able to place

accurately in spite of the tight spacing

and 100% yield was achieved on the

project.

In another case, a PCBA used in an agri-

(Continued from page 3) cultural product was experiencing quali-

ty issues when components were placed

using Fuji CP5 and IP-III equipment. The

project was migrated to a line where

larger components were placed using a

Fuji CP6 and smaller components were

place using the Fuji AIMEX machines. The

change in placement strategy also re-

duced production flow from two lines to

one, which reduced handling and

transport time. Rework was entirely elimi-

nated.

“The improvement was so dramatic that

the customer actually questioned whether

or not we were manipulating the data.

Matching PCBA complexity with machine

placement accuracy is critical with dense

PCBA designs,” added Raj.

Quality/Efficiency

DFT

SigmaTron’s Tijuana facility was recently

awarded a box build project for a con-

sumer product. The project launch process

started with the team performing design

for manufacturability/testability (DFM/

DFT).

“There is no room to make mistakes in

consumer products and our goal has

been to work with the customer in elimi-

nating potential causes of defects in both

the design and the production process,”

said Raj Upadhyaya, SigmaTron Interna-

tional’s Executive Vice President, West

Coast Operations.

The production process utilizes as much

automation as possible to minimize varia-

bility and handling. The process is de-

signed with a cycle time of one day or

less in the factory. System build uses a

paced conveyor belt to ensure cycle time

goals are achieved.

“Quality and productivity don’t need to

be expensive. Our printed circuit

board assembly (PCBA) production

and test processes are highly automat-

ed. The system build process is well

defined and simplified to point where

only entry level production operators

are required. The goal is to provide

our customer with competitive cost, a

scalable production model that can

grow as their demand grows and the

superior quality needed to grow mar-

ket share,” added Raj.

Copyright © 2015 SigmaTron International, Inc. All Rights Reserved.

Have a suggestion or article idea?

Contact Curtis Campbell, VP Sales, West Coast Operations

Phone: 510-477-5004

Email: curtis.campbell@sigmatronintl.com

case, no customer deliveries were expe-

dited nor were air shipments of raw ma-

terials or customer products to the U.S.

necessary. There was a need for air ship-

ment of some U.S. produced raw materi-

als to Asia.

Elements of SigmaTron International’s

business model supply chain strategy that

mitigated the impact of the port slow-

down included:

Real-time systems visibility that in-

cluded access to customer demand

trends, raw material status, inventory

status and production status

A practice of maintaining two-to-four

weeks of consigned finished goods

inventory near major customer facili-

ties

Enough trends visibility to be able to

increase production to replenish fin-

ished goods kanbans as inventory

levels started dropping

Supply chain support for increased

raw materials inventory levels

Excellent systems linkage among

purchasing teams in Asia and the U.S.

Strong relationships with both custom-

ers and suppliers that enabled a

team approach to addressing chal-

lenges created by the slowdown.

(Continued from page 1) On average, shipments were slowed

down by two-to-four weeks. In some

cases, shipments were delayed by as

much as five weeks.

The initial warning sign that the supply

chain management team would need to

change ordering patterns to mitigate the

impact of the slowdown was a drop in

consigned finished goods inventories at

larger customer locations. In SigmaTron’s

case there were three points of supply

“pipeline” impact. First, finished products

shipping from its factories in Asia to

North American customers via west coast

ports were impacted. Second, shipments

of material from Asia to its North Ameri-

ca factories were impacted. Finally,

shipments of raw material or subassem-

blies from the U.S. to its Asian factories

were impacted.

In considering alternatives, the team

looked at re-routing shipments to alter-

nate ports in Mexico or Canada, or

through the Panama Canal. In all evalu-

ated cases, a choice to re-route was

either limited by overland transportation

options or would add additional cost

plus two-to-three weeks to the shipping

process, which negated any benefits

from re-routing. As a result, the team

decided to opt to pull in production and

increased inventories of raw materials

and finished goods to ensure buffer

stock to cover delays. Where possible,

the Company’s IPO and factory-based

purchasing teams identified local, alter-

nate sources for critical materials.

While the choice to increase both raw ma-

terials and finished goods inventories in-

creased costs during the slowdown, it also

prevented missed deliveries and eliminat-

ed the need to expedite materials or

product via air freight, except in isolated

situations. The company-wide systems visi-

bility provided by the combination of

iScore and the ERP system enabled the

supply chain management team to have

real-time visibility into consumption trends

related to the added inventory. Systems

linkages with customer forecasts provided

visibility into future demand trends and

systems linkages with suppliers enabled

rapid adjustments as forecasts and inven-

tories changed.

All that said, the human factor was also

key in successfully mitigating impact. Both

customers and suppliers were willing to

work outside of standard contractual ar-

rangement to address the issues caused by

the slowdown. While the word, “partner” is

often used lightly to describe relationships

that are anything but partnerships, in this

situation true partnerships were in play.

Another factor was SigmaTron’s relatively

lean management organizational structure,

which allowed for executive decisions re-

lated to changes in business model to be

quickly evaluated and approved.

Supply Chain