In a recent interview at APEX 2024, Allison Budvarson, COO and Co-Founder of Out of the Box Manufacturing, recounts the transformative leap from a humble garage startup to a flourishing contract manufacturing powerhouse. Alongside her husband, Allison has not only pioneered a business model that harmonizes the agility of rapid prototyping with the consistency of production for local OEMs, but also steered her firm to become a trusted ally in the aerospace and defense sectors.
Transcription:
Philip Stoten:
Hello, I'm Philip Stoten. I'm on the Koh Young booth at APEX 2024, and I'm joined by Allison from Out of the Box Manufacturing, a contract manufacturer out of the Washington area. Tell me a little bit about the company to start with.
Allison Budvarson:
Sure. Well, Out of the Box Manufacturing is a garage startup. My husband and I started the business in 2008. We actually filed for our business license a month after we got married, but we were small for a very long time and have grown pretty organically throughout the years. So now we've got about 70 employees, three lines, and we're doing a great job, having a lot of fun.
Philip Stoten:
Yeah, that's really exciting. So you got back from your honeymoon and you thought, "What should we do? We'll start an EMS company." Yeah. Crazy. Wow. So tell me a bit about the kind of customers you have, the sectors you're in and the kind of volumes you deal with. You mentioned before that you are 50% prototyping within your business.
Allison Budvarson:
Right. Yeah, so our business model, we strive to have 50% of our revenue come from quick turns and prototypes, and the other half of our revenue come from more established products from local OEMs. So that's great because everybody wants to be involved in prototypes, but it's resource intensive. So the mix allows us to have a little bit of the best of both worlds. We have our AS9100 and ITAR registrations, CMMC, and NIST and all those good things, so we can support the aerospace space and defense industries. We like to say that we do the hard things fast, so even our quick turns, we can do an AS9102 FAIR on turns of three days or less.
Philip Stoten:
Wow, that's really impressive. And you're head of operations, you're chief operating officer within the organization. I have a sense that the last couple of years have been real growth years. This year's maybe slowed a little bit and it's given people a bit of a pause to kind of straighten everything out in operations, especially with inventory flow and work in progress having ballooned so much with supply chain problems. How are you seeing this year and how important is operational excellence within your organization?
Allison Budvarson:
Yeah. So it's definitely something that we spend a lot of time thinking about. I actually had the opportunity yesterday to attend the IPC Leadership Summit, and so that is a really great opportunity to talk to other business owners and you're in this environment where you can actually share a little bit of your struggles and your successes. So had the chance to learn a couple other key KPIs that other CMs are using to track their operations. So I plan on going back to the shop and taking a look at using those metrics, seeing where we are, how close we are, and appreciating the opportunity to maybe get a little bit closer in a new way, something that we haven't thought about before.
Philip Stoten:
And I think when I think about your business, when you're doing 50% in fast turn, that's a lot of new product introduction. The key to your operational excellence and your efficiency must be how quickly you can get stuff on the line and how quickly you can shift from one product to another.
Allison Budvarson:
Absolutely. Yeah. So the schedule is always fluid and we have a really robust planning process, so the intent is to have all of the kinks worked out of the job before the kit hits the floor. Now inevitably that doesn't always happen, but we do our best and I think we've been pretty successful for the most part.
Philip Stoten:
Yeah. Well, it sounds from the growth that like you are succeeding. Let's talk a little bit about some of the megatrends in the industry. We're seeing a bit of a shift to back to the US thanks to geopolitical challenges and some reshoring. Is that impacting your business?
Allison Budvarson:
Yeah, we often will have one of our volume customers come to us and request a quote, and they're trying to understand the pricing differences between having product offshore or reshoring. And it's a mixed bank. The price is still higher to stay on shore, but there's a lot of benefits to that too. You have the safety of your intellectual property. One thing that our customers really like is being close to where their product is manufactured as well. We love to invite our customers into our building and work side by side with us on projects, especially MPIs. So we have some separate work cells that we reserve for that type of activity. So I think that the pricing is still a little bit more expensive to stay on shore, but I have hope that there is momentum to recognize the other benefits and not just focus solely on price.
Philip Stoten:
And absolutely the case that as you concentrate more on operational excellence, that delta will go down, but there is justification for that delta, just the way the expense they have in managing an offshore supply chain is much, much higher. So you're eliminating that cost as well. One of the other things we hear about a lot, talent shortages. How difficult is it in your region to recruit and retain talent?
Allison Budvarson:
It's very difficult and it's actually a topic that I have a personal passion for. Before my husband and I started our business, I was an HR generalist in a manufacturing organization. So I have spent a lot of time in energy investing in the local high schools. Every year we have a great big manufacturing day event, just even to create awareness about the electronics manufacturing industry as a career choice. So eyes light up. When students come into a factory and they see what we do, they get really excited about it, and that's really powerful. It's so much more powerful than trying to go to a job fair or trade fair with students in a different location. So I feel that that engagement early and often is really important. I also see a lot of attention and effort directed towards creating apprenticeship programs for our industry, and I think that's a winning strategy.
Philip Stoten:
Yeah. And I think bringing as much talent into the factory is important because I think there's a real delta between perception and reality. A lot of people think manufacturing jobs are dirty and the environment's unpleasant, and the fact of the matter is that it's not. And there are some really interesting and exciting and sustainable careers in the industry. When you are looking at the recruitment, are you thinking about diversity? Are you thinking, how do we attract more girls and not just guys into the environment?
Allison Budvarson:
Absolutely, and I do see more when we have younger groups, there are more and more girls that are in those robotics clubs and in engineering and STEM type careers. So I think that change is happening slowly, but there's definitely more girls and I think being present too, going to schools, and I'm a woman obviously, so being present and having other young girls see that there's a pathway for them, I think helps. We also have gender parity on our management team, so it's something that we definitely have made a conscious effort at.
Philip Stoten:
Yeah, I'm really interested in that. You mentioned gender parity on your management team and through the different layers of the organization, I think that's really important. We don't see that reported. I'd love to see the larger EMS's... the top 100 EMS's ranked in terms of their diversity performance. Is that something you feel customers really care about or are starting to care about maybe a bit more? Or is it something that it's more important for you to care about so you've got a team for the future?
Allison Budvarson:
Right. Well, I think first it's just the right thing to do and diverse teams are more creative and perform better. As far as the customers caring about it, certainly it may depend on the industry, if you're in defense or you're looking for small business set aside, so that sort of thing, they care a lot and pay attention to that for sure. I haven't seen a conscious effort from more of our customers to ask the question, but it would be really cool if they did.
Philip Stoten:
Yeah, and I think what you're doing with gender parity is as you say, the right thing, but it's not just the right thing for all of those altruistic reasons. It's the right thing for the business because as you say, diverse teams create better solutions, create better products, and it just makes sense. Thanks so much for your time to come and chat to us today. Really appreciate that and we look forward to chatting again soon. Thank you.
Allison Budvarson:
Thank you.
Filmed on location at APEX 2024 via Philip Stoten at Scoop.tv.
