lnterview: Muhammad Irfan, Whizz Systems
Whizz Systems are a small- to medium-sized Original Design Manufacturer based in San Jose, CA run by two brothers, Muhammad Irfan and Manny Karim.
Good morning Muhammad. Tell me a little about the business model for Whizz Systems?
So in our business we basically leverage the time zones and the cost model. Everything that we do here is an extension of the teams we have in Pakistan and Malaysia. Malaysia is supporting the manufacturing we do here in Silicon Valley. Pakistan is our software design center.
Is most of the manufacturing done in Malaysia?
Manufacturing is done here. All engineering and prototypes are all done here in the US. Once any program goes into any sustainable volume production we move it to Malaysia. Even our Malaysian facilities are not gear up for very high volume. We are going to scale-up that factory now because we are signing more and more customers. They want more capacity so we are planning to grow Malaysia as well.
Right now Malaysia is low- to medium-volume builds, that’s the kind of capacity that we have there, and we are scaling it to be able to have some midlevel production there.
It’s an interesting location that you chose in Malaysia. Malaysia is growing quite a lot at the moment, partially because of the US/China trade war that was going on and people want to be in an independent Country. Is that one of the demands that you are hearing from customers?
Definitely, most customers really like our choice of Malaysia. We went to Malaysia for a lot of reasons. IP protection was the main driver and now it’s validated that was the right decision.
What about Pakistan as a choice for software, are they comfortable with that?
Very comfortable. Initially all customers had the name shock because of the media and the perception that built. But it turns out that as far as import/export compliance, Pakistan has the same restrictions as India and China. Any level of encrypted technology cannot be exported to any of these Countries.
What we do out of software design centers in perfectly in compliance with export compliance laws. We have had an office in Pakistan now for 20 years. We have never had to shut down that office, not even for one day, for any reason. We are located in the city – the media perception is very different – once we started dealing with clients like Sun MicroSystems before their acquisition in 2004 the typical response was “Pakistan, you got to be kidding?” then we went thru all the qualifications and everything turned out to be fine and they became very comfortable with us. It was the same thing with Cisco and with many other customers. But once they saw the benefits and the throughput and the quality of work, they were happy. The employee retention is the biggest benefit that we have for being in Pakistan. There we we’re able to retain employees, there’s not a lot of competition where you lose resources to other developers, so we were are able to hire a very good team and retain them for the long term.
That’s very important. That’s obviously an issue here in the Valley because everybody compete with so many other people. What’s the retention like in Malaysia, is it good as well?
In Malaysia we don’t have much of an engineering staff. Retention was a problem there because we would train them and they would go to Singapore. It is mostly a manufacturing factory and throughout the manufacturing industry that’s not a problem you can contain. We’ve been able to retain some good staff and we had some attrition but it’s all lower level line operator type people, but it’s been also very low compared to the industry.
So in terms of your design partners or customers, where’s your sweet spot? Is it communications companies like Cisco and that type of thing?
We service customers across the board that’s our strength. We are in many industries. We grew in the high speed computing and networking world and then wireless came along, then mobile came in, consumer and some medical. We have not done a lot of medical, but generally across the board of high end computing servers communications. Networking, wireless mobile and consumer devices, defense we are across the board. So the way that we work is we have really good infrastructure for carrying out most of the tasks in a product development project. We have integrated very difficult services that you don’t find under one roof; mechanical, thermal, power hardware, FPG design expertise.
Then hardware design; simulation, signal integrity, power integrity and doing board layout. All of these are integrated under one roof. Our internal resources and then once it comes out of here it’s a very well documented BOM, a very well-documented product that’s very manufacturable because we do manufacture as well, so whatever we design we make sure it is cost competitive, has performance balance and we are able to build it and service it and then we move into building our own prototypes here and then send the production to Malaysia. So based on that we kept growing that infrastructure. In every market there is always a need for some specialized expertise. We can offer this up to a certain level internally, then we would bring in a consultant for some specialist aspects. If a customer needs a very high end FCC expertise to FCC review during the design we will get an FCC expert. We will get a magnetic experts. We will get an analog expert if needed. We can get a very high power expert if needed, so it becomes very efficient as a business and it becomes sustainable as well, costs are very sustainable and customers also like it. Sometimes customers have that one area of specific expertise that’s their main expertise so for us to learning in every project that’s what’s makes us very valuable for other customers. We are learning from the best and we deploy best practices not infringing anybody’s IP but best practices that benefit everybody.
You’re learning across a lot of different areas but what are you main transferable skills? What are you really good at, where people say Whizz systems is the place you have to go?
It’s our ability to get the job done. Customer sometimes said wow, that’s a lot of things that you do. What is it that you’re really good at? Our true value-add is we’ve integrated this really efficient system. We are good across this domain and getting the job done timely, where you don’t have to worry about who’s going to hand it off to who and what’s going to be the delay in between. That’s really our value add to the customer, and once you see it, its hard to believe sometimes because there isn’t anybody else setup like that. Our off shore modeling here in the US gives us two significant things: first, all the high-end expertise is here, so customers don’t have to worry about interfacing with offshoring at odd times and weekends. Those groups of customers are welcome to get involved as much as they like but they don’t have to. They are dealing with engineers here in the Bay Area in our time zone and they are issuing a contract to a US company under California laws, so their IP is protected and they just get the benefit of the tremendous throughput that we offer with that combination of local and off shore. Second, is the scalability and sustainability. We have excellent retention because of the off shore model. We have been able to draw on the resources that we grow. We move resources between different centers to cross train and cross pollinate, between all centers the skills sets are very high. And by choice, we have done business with a very high end customer base so we get to learn again from the rest and we are not chasing cheap business. We maintain good margins, we know that in our industry every vendor that we do business with speaks very highly of us and our ability to pay and we are conservative, we don’t take a lot business. That’s why we don’t have any sales, it’s very selective slowly consistent growth but slow growth that we can manage because of all of our resources.
We talked about your staff retention which is good its important but what about your customer retention, how much repeat business can this people come back to?
Excellent. Our top 5 customers have been our customers for over 15 years so that speaks for itself.
What’s the profile of the company now. How many software engineers do you have on staff here and how many manufacturing engineers and how many lines?
Here in Santa Clara we have four lines. In engineering we have a total of about 30 people here in Santa Clara. In our offshore center we have close to about 120 engineers there and very scalable in Pakistan. Malaysia is about another 75 people.
So you are pretty heavily involved in the software side of it developments?
Hardware mostly, software we are slowly growing that side of our business. But hardware and firmware and the ability to develop production test software that’s internally sourced and it’s a very well-oiled machine that works together for many years and we are slowly adding more software capability because software so far customers wanted to keep internal that’s their secret sauce. When they are keeping it internal in that practice they may ask us to give a helping hand with these two modules that we need to develop? So we take on these types of projects, but mostly what we have done internally and we are really good at it is hardware development, hardware and firmware and we can even ship our product to a customer getting certifications done all environmental and regulatory certifications done, so to us it’s a whole package from concept to shippable product. We do everything internally, we do our jobs outside the certification labs just because that’s more efficient for us that way. But everything else internal here.
So is most of the product that you manufacture in Malaysia is that shipped back to the US or is that go globally too?
Both, Some go to Singapore distribution centers to be ship in the regional and worldwide some come back to the US for the customers want it in the US
So let’s talk a little bit about your manufacturing side. Obviously the manufacturing environment is changing at the moment we all talk about smart factories and industry 4.0 all that kind of things. If you harness that properly that gives you the opportunity to make more with less; in other words you don’t need six lanes, you can use four lanes kind. That kind of thing I know you already invested in storage towers. How much did that improve your machine down time? and are your machines up more because you get quicker access to the storage towers?
Yes, definitely, it was a big value add was the human error – its automated now so that chances out parts being placed in the wrong bin. Having very quick access and visibility of the inventory which all translates to increased uptime at the line because everything stops at the line eventually. In the business that we are in it is not so much about the machine type. We have to carry extra capacity by design because we get unpredicted calls. It is not a lot of scheduled planned production business that we do here. There’s a lot of engineering and prototype business as well.
So there’s a lot of prototyping going on and you have a lot of high mix environment?
Very much. Typically on a Wednesday or Thursday we will get a call here that we need five of each of this product and we need then by Sunday. That’s the kind of business that we thrive in.
So your changeover time and becomes critical, so what have you done to improve that?
Actually even before that, the ability to execute, get the parts in place to get the parts thru the system, a lot of people will struggle. It would take them a while to get everything thru MRP then going thru the buyers, the commodity manager and Purchase Manager. In our business we are really good at sourcing of the parts, making sure they are all here; beg, borrow and steal. Getting thru the system, getting the stencil, getting everything done and building quality boards in a very short amount of time where we don’t have a lot of time to experiment, and somebody at the airport is flying over with the boards. We shine in that area, with a short amount of time when a customer says here’s a spec we need this working product. There is a show coming up, we only have 8 weeks from concept to I need a working board. We do these types of things where its taking from design actually completing all aspects of design, mechanical design and running all the simulations, doing all the verification of the design and then building prototypes and debugging with customers and engineers doing this together.
Muhammad, thank you very much for talking with me today.