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Has Smiths Interconnect made a risky decision to drop well known brand names?

Brand loyalty is one of the most important things a company can develop, so when an organisation decides to ‘pension off’ such well-known names as Hypertac, Sabritec and TRAK, in favour of the single brand of Smiths Interconnect, you might think this is a risky move. Could Smiths Interconnect be running the risk of weakening its market position?

“We searched our souls, it was such a difficult decision to make,” said Roland Carter, president of the division. “But we recognised that, if we put the right structures in and took things at a measured pace, then we’d be in a better position to make the changes we want.”

According to Carter, there were several reasons for this transition. “It’s all about better serving the customers,” he explained. “By streamlining the number of brands, we are bringing formerly separate business units closer together.”

Along with the rebranding, Smiths Interconnect is making some fundamental changes to the structure of the organisation.

The first step, according to Carter, was identifying key accounts and putting a key account management programme in place. Smiths Interconnect has identified two principal types of customer: the technology partner and the technology seeker.

“Technology partners are people who want to work with us to co-develop their products,” said Carter. “Technology seekers don’t necessarily want to commit so much resource, but need the type of technology that we have; they appreciate the technology, but don’t want to co-develop it.”

To provide the best support to these key clients, Smiths Interconnect is working with customers to understand what technologies they will need in the next 5 to 20 years, but also to understand how that technology can be operationalised and integrated into products.

“Customers appreciate the fact we are matching technologies to their product road maps and know they can take full advantage of our technology and industry knowhow and the logistics we can provide,” Carter added.

Smiths Interconnect spends 5 to 6% of sales on R&D, to make the simulation and design process more efficient. Other areas in which it has been investing include 3D printing. “We’ve invested in simulation software to avoid having to go through that cycle time of prototype, check it, prototype, check it, with all its inefficiencies.”

Carter believes most customers don’t want to focus on component or subsystems design. “So that’s where we’re retaining the expertise and making sure we’ve got the right talents.”

He noted the division has spent a lot of time working out what it does well and refocusing its energy on certain core competencies. “We’ve had a good hard look at ourselves and that allows us to buy the right test and production equipment, and not spread ourselves too thinly. For example, you won’t see much plating in our organisation because we believe other people are better platers; we prefer to benefit from our supply base’s expertise. We’ve invested in high speed milling machines, however, because we believe that’s a differentiation.”

The division has also reduced its number of intermediaries – representatives and distributors – by half. “We will work with these intermediaries much more closely, and it means the smaller accounts can be better served while we concentrate on the larger tech seeker/partner accounts. This reorganisation will hopefully remove layers that do not add any value and will bring the people within the organisation much closer to the customer,” said Carter.

Where previously the manufacturer had component distributors, subsystems distributors and connector distributors, it hopes to replace these with more streamlined intermediaries.

Another restructuring step is to pull the separate communities – including sales, marketing and engineering – within each brand together. As many of the customers used several of the former brands, offering a single point of contact seemed simpler and more efficient.

In addition, as components become more integrated, different engineering disciplines are being brought together. “Previously, customers might have bought the components separately and done the assembly themselves. Now, we make integrated supercomponents and assemblies,” Carter stated. “As we see our customers wanting our engineering knowhow consolidated, we’ve decided to bring all these engineering communities together.”

Smiths Interconnect is looking to build larger, multidisciplinary centres for mechanical, electrical, RF and semiconductor engineers, amongst others, which it believes will allow it to develop more innovative products.

“It’s to make sure we are more creative and exchange ideas, bring together the critical mass that we’ve got but never really used as fully as we should have done,” enthused Carter.

To help in this exchange and collaboration of data and ideas, the company has been investing in product data management, which allows it to move designs from one part of the world to another.

The division has been working on an internal two-path approach to encourage engineers looking to move up the ladder in their career to stay in engineering. Whereas the typical advancing of engineers to manager and then director often leads to them leaving engineering, the new approach is said to offer senior engineers the title of fellow as an incentive to continue their research.

Looking to the future, Carter believes there will be more demand for high reliability electronic components and subsystems as the trend continues towards connected devices.

“I think our work is going to stop being so individualistic and become more communal, with more joint venture partnerships, as soon pretty much everyone is going to live in a city.

“Expanding cities means more processing power will be needed which means making semiconductors smaller and more cost effective, and a move to 3D chips. Frequencies will be pushed higher and higher – we are currently working on millimetre wave areas. High speed and high acceleration rail will be another area of interest,” he concluded.

Author
Peggy Lee

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