John Murphy meets the team at OptoSigma, an optical component manufacturer with an emphasis on individual customer care
The world of optics is a kind of high-tech haberdashery, with thousands of large and small components in umpteen variations needed in a different combination for every application. Over the years the industry has created huge catalogues listing the parts, the options and variations in specification, and maybe the price.
The catalogue flops onto the table and you look through. Maybe you have to check the website for the price, maybe you don’t. You ring up, you place an order, and hopefully what you asked for arrives. Whether it is what you need, or not, only time will tell. When you know exactly what you want the catalogues and websites are great, saving all that small talk. If one catalogue doesn’t have what you need, there are plenty more and they might be cheaper anyway.
OptoSigma has a catalogue and website for its range of 5,000 or so products, ranging from optics and precision movement stages to high-tech coatings. But it tries to be different by talking to the customers, finding out what they really need, and then making sure they are happy. There is a lot of competition out there and OptoSigma believes that, unless you make an impression, you may not get the customer back next time. If you talk to customers they start to tell you what they actually want, the company believes, and then you can help them find what they actually need rather than leaving them to browse the shelves. It also has a field sales force that goes out to talk to customers and shows them new things. Maybe this is why it has built up a larger proportion of OEM business than other catalogues.
OptoSigma’s flagship products are its high-performance TSD extended contact stages, used for any precision application, such as positioning components in a laser path. The vacuum-compatible TSD stages, used in ultraclean environments, are vacuum-ready right out of the box. The micrometers have no paint, so they can go straight into a vacuum chamber.
More recently it has developed a custom optical coatings business, using its own class-1000 cleanroom at its base in Santa Ana, California. High performance coatings from 190nm to 3μm are provided in ion-assist deposition chambers and advanced plasma source ion-assist chambers.
It now has plans to expand around the globe, in partnership with its Japanese parent company, and to speak to customers in their own language.
OptoSigma was founded in 1995 by a group of experienced optics industry executives led by former Melles Griot CEO Paul Kendrick. Originally it was a joint venture with the Japanese manufacturer Sigma Koki – which held 51 per cent of the company. It was intended to be a sales company for Sigma Koki’s optical components with value added services, such as coatings, being provided through engineering facilities in the US West Coast. It was designed to be a catalogue shop, but with an emphasis on high levels of service. Kendrick left the company in 1997 and joined Coherent, where he started its own catalogue operation.
Steve McNamee, VP operations and general manager of OptoSigma, says: ‘Sigma Koki had started to supply product into the US and saw this as an opportunity to expand. At the beginning it held a controlling share, but within about 18 months the company needed more capital and we became wholly owned by Sigma Koki. We started doing coatings and some light assembly, but at the beginning we did some grinding and polishing – we don’t do that anymore, as we have concentrated on adding value with sophisticated coatings.’
Sigma Koki has been going for about 30 years and specialised in high-end products that compete with Newport and Melles Griot. Although few of its products were unique, the opportunity arose because many of its products were significantly better than what was then around. McNamee says that people who start using its products rarely go back to their previous supplier. He believes it is not just about the products, it is also how the company treats its customers.
He says: ‘The business model was similar to other companies who offer products through catalogues, but there were some important differences. OptoSigma put its whole catalogue online from the beginning with pricing that was quite radical at the time.
‘Catalogues and websites are great, but talking to a live body who can answer questions is always preferable, for me anyway. We do travel to accounts and bring demo products to accounts, and we try to have an interaction with our customers. People say they have never seen our competitors. I think that maybe dealing directly with customers is not as important to them as it has been to us. We really do like to deal directly with people.
‘That has been our philosophy from the beginning. I kick myself sometimes, but we do offer a 30-day return so long as it comes back usable, because there are a lot of people out there who don’t know what they want. I would much rather spend money serving customers in that way rather than trying to cut prices to the minimum. Customers who want that are just looking for the next person with the lowest price.
‘There is always something you can do on price, but it’s not about whether you buy the cheapest thing that doesn’t work or the most expensive thing that doesn’t work. For us, it’s all about making sure the customer gets something that works. We want our customers to try the product, feel the quality and see that it works before we talk about price.’
McNamee says he has seen many companies come in and try to buy their way into the market, but while they do have some temporary success, many have come and gone. He believes that customers value the way his company does business, although having said that he is also looking to give value for money.
One of the most important factors in guaranteeing quality is that the company, or its Japanese parent company, actually makes all, or almost all, of the products it sells. It is not a distributor that buys in and trades components or that moves around to contract manufacturing.
He says: ‘I would say that 99 per cent of what we sell is made in a factory controlled by Sigma Koki, with all of the quality assurance in place, and it will be consistent. We do have manufacturing capacity in Shanghai, China, making optics, but it is managed by Sigma Koki and the same controls are in place as apply in the factories in Japan. We never have quality issues, because every part is inspected. That helps us, because when customers call us and say they are having problems, we start with the assumption that the part meets the specification. The first question we ask is whether we supplied them with the correct part, and then we look at how the customer is using it.’
In the early days of the company it was the ‘new kid’ and it had to make do with small sales to individual scientists as the mainstay. When OEM customers came knocking, it was usually because there was a problem with the existing supplier. McNamee says: ‘We realised that people were finding us and buying from us as a second source, because their supplier could not supply in time or there was a quality problem. So we went on a marketing drive to these customers, asking them to consider us as the first source. We have some accounts that have moved to us from the competition and now they do call us. We have always focused on the R&D engineering of the customers that we are trying to support. We will have visits by our field sales people that are primarily with the R&D engineers. Yes, we are there for the purchasing and supply people, but we also demonstrate new products and we want them to know that we are there when they are designing new products.’
Winning a new design is certainly an easier way to gain OEM customers than trying to oust an incumbent. There are so many variations in sizes, threads and other parts of the specification, with many dimensions being different in different regions of the world. OEM customers can download drawings and even 3D models for some of its range. McNamee says that in many cases, something that is in the standard catalogue of a competitor may be a customer engineering job for Sigma Koki. He says: ‘Customers have found us when they have had problems getting a part or quality of the part, or even trying to do something about pricing. We cannot compete on price for one or two pieces of some things that are in other catalogues, or even 10 pieces. But of course if there is an OEM customer that is looking to place a volume order then we can compete, so long as we have the specification. Quite often we may be able to do something better – either through the design of the product or the way the products are combined in the application.
‘We need to know why the customer is looking around and we hope that it is not just about price. Sometimes it is just about availability. If we have the parts and we take good care of them, then I hope that they will come to us next time. The buyers need something and they are going to call around. If their existing supplier could fulfil the order then they would not be calling us.
‘The OEM business is very different; they are looking for consistency. They don’t want to change supplier, they only change when they have a need to change. They produce a product that has a lifetime and then they are working on the next product, they are not looking for new suppliers to replace some components in their product. We have only been adding products; we have never deleted a product.’
About 75 per cent of OptoSigma’s revenue comes from OEM business and McNamee believes that is a much higher percentage than any other catalogue. It does not mean that laboratory and small volume customers are not important, and he still wants to actually talk to smaller customers, rather than letting them browse a website on their own.
McNamee says that about 98 per cent of the range is in stock, either in the US base or in Japan. The close relationship with the manufacturer means that if a customer makes a request for a large number that it cannot supply from stock, a call to the Japanese parent company can often get priorities altered in the factory. Often they can help customers with at least part of what they need. He says most customers are aware that no company can have unlimited stock of rarely used components, even if they are manufactured inhouse, but there are many ways of configuring them and many options for coating and finishing.
OptoSigma may be effectively a distributor for its parent company, but that has not stopped it building up its own worldwide distribution network. Its parent Sigma Koki has a sales operation in Japan and parts of Asia, but even some Asian customers, in particular those who have moved manufacturing to Asia, still deal with OptoSigma.
McNamee says: ‘It goes right back to the founding of the company really. Sigma Koki was always more of a manufacturing company and had always left the selling to a lot of reps, even in Asia. Paul Kendrick was British so he had many contacts in Europe from the Melles Griot days. Also Sigma Koki just wanted to hold the inventory for the Asian business, which means that we hold the inventory of Imperial and European Metric standards. At the moment we are using independent distributors in Europe, such as Laser 2000.
‘Is there an opportunity for an OptoSigma base in Europe? Well, maybe one day.’