Sunburst Electronics
A typical strategy to gain maximum earnings from capital investment is to run equipment as close to 24/7 as possible. But doing only that has never been the philosophy at Sunburst Electronics. “We have a very large amount of competition,” explains Kevin McDonough, vice president of sales and marketing. “Many companies with under-utilized manufacturing operations for building their product have tried to improve their margins and expand their offerings to include contract manufacturing.
As a result, competition is pretty fierce. There are probably 60 to 70 companies offering contract electronic manufacturing services within western Pennsylvania, western New York and northeast Ohio. One of our key competitive differentiators is our certifications. We have invested a great deal of time and effort into gaining ISO certifications critical to the market segments we service. I don’t think there is anybody in our direct territory that has both the ISO 13485 medical and the AS9100:2004 aerospace certification.”
Sunburst Electronics, which was founded in 1976, has had John Cline as its CEO since 2006. Since then, the company has concentrated on its Sunburst Quality Management (SQM) system and on obtaining additional certifications. These now include certification to ISO 9001:2008, AS9100:2004 and the medical additive ISO 13485:2003.
“Compared to the article run in Manufacturing Today four years ago, one look at Sunburst today and you can see that we’ve really expanded the quality and have broadened our stretch in terms of the customers we support,” McDonough notes. “Oil and gas has always been a very big market for us, and we continue to support that industry very aggressively. By adding the medical and aerospace certifications, there’s been this major expansion of the types of market segments we now target and support on a regular basis.
“These certifications in most cases are a requirement to do business in these particular industries,” he emphasizes. “You don’t come by them easily. They take a total commitment and buy-in from every team member, including management and direct labor personnel.”
“The biggest story for us is definitely the certifications and how far we have come in four short years,” McDonough continues.
“We’re of a belief that you make good decisions with good data. SQM allows us to not only gather good data at critical verification points, but also to use the data we have gathered to fuel our continuous improvement initiatives. The cornerstone of SQM is having relevant data at our disposal in order to constantly improve our process. We feel that this is a clear competitive differentiator.”
For example, SQM data may reveal that a test failure of a circuit board relates to difficulty soldering a particular component. Frank Anderson, Sunburst’s director of quality explains, “The data and how we slice and dice it gives us the guidance we’re looking for in order to make sure we are making the right decision for true improvement, and not just deploying a treatment of the symptom. Using several built-in guidelines, such as the five whys method, we can determine if the failure is driven by process, component, or a bad design. After we accurately determine what it is that is causing the failure, we can aggressively correct it.”
Higher Complexity
Although the region around Erie, Pa., Sunburst’s headquarters, is known for contract manufacturers, other companies focus more of their efforts on higher volumes. “We’re completely different,” McDonough declares. “Our value-add is high complexity and low- to medium-volume manufacturing.
“From a manufacturing perspective, we do everything from printed circuit board assembly all the way up to some very complex, full-system assemblies,” he continues. “We build all of our own cable and wire harnessing in-house, so we’re vertically integrated that way. Another competitive differentiator is that along with our repetitive manufacturing capabilities, we also run a full models and options program. This allows us to support our customers with configuration to order, distribution and consignment models.
“As an example, annually we will build between 250 to 300 different part numbers for one of the customers we support,” McDonough reports. “This occurs across nine different product families. We may ship only one or two of a particular part number over a one-year period. We also ship some in the hundreds or thousands per year. So that gives you an idea of the spread – from the sublime to the ridiculous in the kinds of volumes we see.”
Sunburst Electronics manufactures products for industries including energy, aerospace and aeronautics, the military, medical devices, process controls and instrumentation, industrial equipment, measurement systems and transportation. Products range from simple electronic circuit cards to multi-axis motion simulators for flight training systems that may measure 8 feet by 7 feet by 4 feet.
The devices it manufactures may be used in the production or extraction of oil or the measurement of gasoline or other kinds of liquid or gas flow control. They may be used in exploration, transportation and measurement. McDonough estimates 50 percent of Sunburst Electronics’ revenue is from printed circuit board assembly and 50 percent from system level manufacturing.
Keeping It Lean
Sunburst Electronics relies on lean manufacturing and purchasing. “We really prescribe quite significantly to process simplification techniques,” McDonough notes. “Our goal in manufacturing is to simplify the process, and in that way, everybody gets it right all the time.”
The same is true in purchasing. “Over 70 percent of all the material we buy is bought using electronic data interchange with our top suppliers,” he continues. “We’re giving them a forecast of six months’ demand, and telling them what we need this week.
“They send it to Sunburst within seven days of request, and also maintain a 30-day inventory and 30-day bond according to our forecast,” McDonough maintains.
“This allows us to offer our customers lower cost and faster turnaround, greater availability, superior reaction to upside requirements, and a higher level of quality.”
The company also offers its customers circuit and product design as well as printed circuit board layout and schematic capture. Its headquarters facility in Erie has 31,000 square feet of manufacturing and is expandable up to 60,000 square feet. Offshore manufacturing also is available through Sunburst Asia, consisting of manufacturing locations in Singapore, Malaysia and India.
“Typically, offshore manufacturing is done as a derivative of cost,” McDonough says. “It’s normally due to margin pressures that our customer’s product may be under. If margin erosion has taken a big toll on their profitability, that’s where the offshore option comes into play.
“We never make the decision to go offshore with a customer’s product – it’s exclusively the decision of our customer for one of their products to be built offshore,” he adds. “We offer offshore manufacturing services to our customers because we understand the kinds of pressure that they are under to preserve margins. However, we will always prefer to build that product in Erie, as long as it is commercially or economically viable to do so.”
That loyalty to the region is part of the reason that Sunburst Electronics has prospered. “We are among the top-five manufacturers in this territory,” McDonough contends.
“That’s not only based on size but on capabilities,” McDonough adds. “That’s how manufacturers should truly be measured – what are they capable of doing, and what is the size of their value proposition?”