Editor's Note: This article originally appeared in the February 2012 issue of SMT Magazine.

As the EMS industry bids farewell to 2011 and the challenges it brought, some issues continue to linger, including demand volatility as customers look for more stability and predictability in their end markets. Paul Blom, Executive Vice President, Operations, for SMTC Manufacturing Corporation, discusses the 2011 highlights for his company and sounds off on how the year ahead is shaping up, especially for the EMS industry.

SMT Magazine: Give us a brief overview of 2011. What were the key milestones achieved during the past year?

Blom: The year 2011, overall, was very choppy for most players in the EMS industry, as OEMs struggled with the level of variability and unpredictability in end-customer demand. This was particularly true within the industrial and capital equipment segments, which take their cue from performance of the broader economy. At SMTC, we saw this unfolding throughout the first three quarters, with the fourth quarter showing some more favorable gains.

In terms of milestones: First, we made several key new customer wins in the second half of 2011, which contributed in 2011 and look good for 2012; second, we implemented excellent Lean supply chain changes to the inbound supply chain for our Chihuahua, Mexico facility, including two major in-plant stores and a new line-side stocking solution for higher velocity programs; and, third, investments in capital equipment and front-end engineering support capabilities for our customers.

SMT: What were the biggest issues faced in 2011? What strategies did you implement to overcome them?

Blom: Demand volatility throughout 2011 was a real challenge. Many of our customers let us know early last year that they expected to have higher than normal levels of demand volatility and, for some product lines, end-market demand would be perishable if not filled within certain cycle times. To deal with this we stepped up the frequency of reviews, the level of supply chain support, and, with several customers, we conducted demand management Kaizen workshops to get at improvements in the demand management and supply chain execution processes.

SMT: How has the electronics manufacturing industry changed in the last three to five years? What developments would you say have greatly impacted the industry?

Blom: The pressure to do more, faster, and at lowest total cost of ownership (TCO) continues as in prior years. This is positive for SMTC as it sets up the opportunity for us to increase the level of value-add in the broader supply chain and business process with our customers.

One specific business challenge stands out: The need for SMTC to help customers capture perishable demand. Where OEM customers are selling products with moderate to high risk of competitive substitution, SMTC has had to respond very rapidly to upside demand changes or mix changes to help some of our customers capture specific orders or capture market share. Our supply chain partnerships, inventory positioning and use of demand simulation capabilities within Kinaxis helped enormously in this area. OEM customer feedback here was excellent.