Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.
+

Subcontracting Quality
Tim Rodgers
March 18, 2014
+

Creating a Culture of Quality

Internal Production

External Suppliers

Directly measure and
monitor the process

Produ...
+

Levels of Supplier Engagement
Catalog Part

Custom Part

Subassembly or fullyassembled unit

Design input

Define funct...
+

How We Measure Supplier Quality
Field failures or
customer reported
incidents are trailing
indicators

Incoming inspect...
+

Typical Improvement Cycle
10
8

6
4
2

Improvement Plan

Owner

Date

0

Pareto of Root Causes

1.
2.
3.
4.

12
10
8
6
...
Results: Part Quality Improvement
4000

3500

Leadership of kaizen projects
at this critical supplier reduced
inspection a...
+

Results: Lower Cost Production

Monthly

Net Yield
Target

Jun-2010

Jul-2010

Aug-2010

Sep-2010 Oct-2010

Nov-2010

D...
+

The Goal is Prevention


Regardless, these are all report cards to show how you’re
doing, identify what to work on aft...
+

Quality Maturity Model
Prevention based on proactive
analysis of the design

Increasing Cost
Effectiveness

Control par...
+

Driving Quality Upstream
Upstream in the product development process
Design-in quality and verify before ramp

Design
F...
+

What the Design Team is
Accountable For

Maximum level of
quality as
determined by
the capability of
the process

Maxim...
+

What the Supplier is Accountable
For

Operators

Jigs/fixtures/tools/molds

Incoming materials

Process variables

All
...
+

Not All Sources of Variability Are
Equally Important
Product characteristic
(e.g., functionally critical
dimension)
FAI...
Example: China Factory Rework

Problem:
Excessive rework on
subassemblies from China
factory
Rework cost

Possible solutio...
Example: Molded Plastic Supplier
Supplier provided large quantities of
injection molded plastic parts
Problem: inability t...
+

Example: Plating Thickness
Supplier provided gold plated contacts for
printed circuits.

Problem: gold thickness varied...
+

In-Process Tests and Measures for
Subassemblies

Don’t wait for
EOL test
results

Identify high-risk
processes
(FMEA, P...
Time to Achieve Quality
Target

Quality

+

Failure to meet
quality target at
start of
production

#1

#2

#3

Prototype b...
Stable Design at Ramp
100

100
99.5

98

99

96
94
92

Target = 95%

90
88

Net EOL Yield (%)

Net EOL Yield (%)

+

98.5
...
+

Business Side of the Relationship


All of this gives you a better basis for measuring and managing
the performance of...
+

Method: Supplier Audit Program

Competitive
quote from
RFQ

First articles
pass
inspection

Is the supplier capable of
...
+

Assessing Supplier’s Commitment
Do they have an ongoing
program of quality
improvement, or do they
wait until you compl...
+

Supplier’s Perspective


Margins are small, suppliers are looking for any opportunity to
cut costs and will try to get...
+

Foxconn’sLonghua Facility


Guangdong Province, north of Shenzhen, approximately 45
minutes from the Hong Kong border
...
+

Contract Manufacturing
Management Models at Foxconn
$$$$

Apple
• Full-time employees on-site
• CM provides production ...
+

Quality Culture Transformation
FROM
 Passive reporting of quality
issues
 Waiting to react to customer
escalations
 ...
+

Supplier Quality Maturity
DFM feedback from
understanding of
design requirements
Proactive warning of
supply issues

Pr...
+

Benefits of Partnership
Advertised relationship with well-known customer
(especially valuable for small suppliers)
Pred...
+

Favored Supplier Program

Favored suppliers (based on quality performance)
Favorable pricing and payment terms
Low inve...
+

Method: Analyzing Cost of Quality
Field repair, customer
support, and other warranty
costs

Design failure:
Design does...
+

Results: Lower Cost Factory Test
Top-Level Assembly

100% end-of-line
testing

Rework

Improved yield
Fewer tests and c...
Results: Eliminating Inspection
100
99.8
Net EOL Yield (%)

+

99.6
99.4
99.2
99
98.8

Target = 98.5%

Stable platform con...
+

Method: WW Supplier Experience
Germany
France
UK
Ireland
Spain
Hungary
Czech
Rep.

US
Canada
Mexico

Brazil

China

Jap...
+

Results: Cost Based Metrics
Shifting to a cost measure
focuses attention on the
opportunity for savings

The data is ac...
Upcoming SlideShare
Loading in …5
×

Subcontracting Quality: Extending Your Quality System to the Supply Chain

1,844 views

Published on

Overview of principles and tactics for measuring quality at suppliers, assessing their commitment to quality, and establishing a culture of quality that better represents your interests

Published in: Business
  • Be the first to comment

Subcontracting Quality: Extending Your Quality System to the Supply Chain

  1. 1. + Subcontracting Quality Tim Rodgers March 18, 2014
  2. 2. + Creating a Culture of Quality Internal Production External Suppliers Directly measure and monitor the process Production processes are off-site, control is indirect Technical supplier quality management: what to measure Raise awareness and provide incentives through performance measures Supplier not necessarily aligned with your success Business supplier management: how to provide incentives
  3. 3. + Levels of Supplier Engagement Catalog Part Custom Part Subassembly or fullyassembled unit Design input Define functional requirements Create complete part drawing with detailed specs Define assembly processes, tests, critical functions Supply chain management Match with standard parts available from leading suppliers Provide drawings and specs, obtain quotes In-depth supplier qualification Quality tools Test/measure samples vs. published specs First article inspection (FAI) vs. critical performance characteristics (CPCs) FAI, DFM, FMEA, on-site process audits
  4. 4. + How We Measure Supplier Quality Field failures or customer reported incidents are trailing indicators Incoming inspection is resource-intensive and limited (< 100%) Test results at supplier Production yields (RTY, FPY) and EOL tests/audits are a proxy, but requires good test design Outbound inspection Incoming inspection Outbound inspection only slightly better (not your resources) Test results at receiver Field failures
  5. 5. + Typical Improvement Cycle 10 8 6 4 2 Improvement Plan Owner Date 0 Pareto of Root Causes 1. 2. 3. 4. 12 10 8 6 4 2 0 A B C D E F Measure performance Identify negative trends Determine root causes Develop improvement plans to address leading causes 5. Hold owners accountable for improvement 6. Measure, verify, repeat
  6. 6. Results: Part Quality Improvement 4000 3500 Leadership of kaizen projects at this critical supplier reduced inspection and rework costs by 45% 3000 Defect PPM + 2500 2000 1500 1000 500 0 Goal
  7. 7. + Results: Lower Cost Production Monthly Net Yield Target Jun-2010 Jul-2010 Aug-2010 Sep-2010 Oct-2010 Nov-2010 Dec-2010 Jan-2011 88.02% 91.80% 92.87% 93.18% 94.81% 95.49% 96.65% 97.01% 96.95% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% 95.00% yield Net Yi el d 98.00% 94.81% 96.00% 92.87% 94.00% 95.49% 96.65% 97.01% 91.80% Design change to provide greater assembly tolerance 90.00% 88.02% 86.00% 84.00% Mfg process change to reduce defects for critical subassembly 82.00% Tar get 93.18% 92.00% 88.00% Feb-2011 Assembly jigs to reduce variability during part installation 96.95% Better ESD protection for critical PCAs, eliminating accidental discharge during assembly Increased production capacity by 10% Reduced operating expenses per line Estimated savings = US$1.1M per year 80.00% Jun-2010 Jul-2010 Aug-2010 Sep-2010 Oct-2010 Nov-2010 Dec-2010 Jan-2011 Feb-2011
  8. 8. + The Goal is Prevention  Regardless, these are all report cards to show how you’re doing, identify what to work on after it’s happened  How do you prevent quality issues?  It’s not about preventing bad parts from being shipped …  It’s about preventing bad parts from being built in the first place
  9. 9. + Quality Maturity Model Prevention based on proactive analysis of the design Increasing Cost Effectiveness Control parameters that are critical to product performance, out-of-box quality, and reliability Analyze failures to understand causes Improve design, part quality, and production processes to make failures less likely Internal failures Improve test & inspection Corrective action External failures Corrective action
  10. 10. + Driving Quality Upstream Upstream in the product development process Design-in quality and verify before ramp Design Factory Product Suppliers Upstream in the value delivery system Hold suppliers accountable for quality Cost to address quality issues
  11. 11. + What the Design Team is Accountable For Maximum level of quality as determined by the capability of the process Maximum level of quality determined by the design Actual quality due to process variability “Improving quality” by relaxing the spec limits Improving quality by reducing process variability
  12. 12. + What the Supplier is Accountable For Operators Jigs/fixtures/tools/molds Incoming materials Process variables All sources of production variability Environmental conditions
  13. 13. + Not All Sources of Variability Are Equally Important Product characteristic (e.g., functionally critical dimension) FAI approval: “You showed that you can build one …” “… but can you build many?” Production process parameter (leading indicator) Process capability to consistently meet specification Process control to reduce variability
  14. 14. Example: China Factory Rework Problem: Excessive rework on subassemblies from China factory Rework cost Possible solution: Outbound inspection $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 W17 W18 W19 W20 W21 W22 W23 W24 W25 W26 W27 W28 W29 W30 W31 W32 W33 W34 W35 W36 W37 W38 W39 W40 + Better solution:  Raising awareness of costs with local managers  Training  Team incentives  Work instructions in local language instead of English
  15. 15. Example: Molded Plastic Supplier Supplier provided large quantities of injection molded plastic parts Problem: inability to consistently meet critical dimensions and cosmetic requirements Flash Pressure + Shorts Melt temperature Optimum temperature and pressure had been defined for the part, but the supplier had failed to conduct a window study to determine the allowed ranges, or account for mold wear and cavity variations Performance improved after the supplier established process control limits and regular sampling from cavities with support from the customer.
  16. 16. + Example: Plating Thickness Supplier provided gold plated contacts for printed circuits. Problem: gold thickness varied outside the spec limits Control chart for gold thickness indicated a process that varied outside 3 sigma limits. Concentration of gold in the plating tank was not monitored regularly and chemical additions were made based on rough estimates. With support from the customer, the supplier implemented a regular laboratory analysis and strict controls on chemical additions.
  17. 17. + In-Process Tests and Measures for Subassemblies Don’t wait for EOL test results Identify high-risk processes (FMEA, PFMEA) Need intermediate tests or in-process measures
  18. 18. Time to Achieve Quality Target Quality + Failure to meet quality target at start of production #1 #2 #3 Prototype builds Start of production Design verification: Production system verification: Can you build one unit that meets requirements? (rapid prototyping) Can you build many units that meet requirements? (early engagement with supply chain) Additional cost and loss of production capacity
  19. 19. Stable Design at Ramp 100 100 99.5 98 99 96 94 92 Target = 95% 90 88 Net EOL Yield (%) Net EOL Yield (%) + 98.5 98 97.5 Target = 98.5% 97 96.5 96 95.5 95 Insufficient attention to DFM and quality during development  Improvement after ramp required repeated problem solving to determine root causes and successfully eliminate them  Higher cost and delayed product introduction until issues resolved  Emphasis on design stability  No design changes permitted after last manufacturing readiness build  Steady reduction in design-related defects throughout the development phase  Zero open waivers at ramp  Daily tracking of yield and defects during prototype builds
  20. 20. + Business Side of the Relationship  All of this gives you a better basis for measuring and managing the performance of a supplier, but also need to address the business side of the relationship  Assess the supplier’s commitment to quality (they should be, but may not be to the the level that you need)  Providing incentives (carrot and stick) to represent your interests
  21. 21. + Method: Supplier Audit Program Competitive quote from RFQ First articles pass inspection Is the supplier capable of sustaining performance? Routine Audit: • Management commitment • Statistical process control • Problem solving • Incoming inspection • Training, work instructions • Preventive maintenance, calibration • Specifications and document control • Internal audits • Record keeping • Shop floor control & 5S
  22. 22. + Assessing Supplier’s Commitment Do they have an ongoing program of quality improvement, or do they wait until you complain? Do they have an understanding of the sources of variability in their value stream? Do they accept responsibility for misunderstandings regarding specifications and requirements? Do you find defects when you inspect first articles or samples from their first shipment? Has the supplier warned you of a potential quality problem discovered on their side? Does the supplier suggest or contribute to DFM improvements?
  23. 23. + Supplier’s Perspective  Margins are small, suppliers are looking for any opportunity to cut costs and will try to get away with it while you’re not looking  Recent examples of replacing parts and changing the design to save money
  24. 24. + Foxconn’sLonghua Facility  Guangdong Province, north of Shenzhen, approximately 45 minutes from the Hong Kong border  At its peak, 400k employees, over 50 factory buildings.  Major customers: Apple, Cisco, Dell, Nokia, Microsoft, Acer  Molded plastic, sheet metal, PCAs, top-level assembly
  25. 25. + Contract Manufacturing Management Models at Foxconn $$$$ Apple • Full-time employees on-site • CM provides production labor only Microsoft (Xbox) • No on-site employees (except proto builds) • Real-time, remote monitoring of factory metrics Hewlett-Packard (printers) • No on-site employees (except proto builds) • Weekly phone conferences
  26. 26. + Quality Culture Transformation FROM  Passive reporting of quality issues  Waiting to react to customer escalations  Corrective action to fix the problem  Issue closed when plan is implemented  End-of-line quality measures based on testing and inspection  IQC, sorting, testing, audits, inspection  Quality metrics required by the customer  Test plans developed and provided by the customer  Quality is the responsibility of the Quality department TO  Leadership to closequality issues  Proactivequality improvements based on understanding  Understand and eliminateroot cause  Issue closed when improvements are measured  In-process measures as early indicators(SPC)  Drive quality upstream(design and parts)  Cost of quality (COQ)and other internal metrics  Quality plans developed with the customer in mind  Quality culture in the entire organization
  27. 27. + Supplier Quality Maturity DFM feedback from understanding of design requirements Proactive warning of supply issues Preventive action to eliminate root cause Process management and control Less testing & inspection Basic performance Meets requirements Rapid corrective action as issues are reported
  28. 28. + Benefits of Partnership Advertised relationship with well-known customer (especially valuable for small suppliers) Predictable demand for better asset utilization Contractual commitment to fixed capacity Technical capabilities that can be leveraged to other customers Unique market that provides balanced portfolio Loss of business (balanced by customer’s switching costs)
  29. 29. + Favored Supplier Program Favored suppliers (based on quality performance) Favorable pricing and payment terms Low inventory, ship-to-stock Accelerated qualification of new part numbers Audit inspection of incoming lots Other suppliers Incoming inspection charges reverted (First article failures, defective parts found on the line)
  30. 30. + Method: Analyzing Cost of Quality Field repair, customer support, and other warranty costs Design failure: Design doesn’t meet requirements or isn’t robust under a range of operating conditions (often appears as a part failure) Tolerance failure: Design fails to account for natural variation in part characteristics and assembly processes Part design System design Internal yield loss, scrap, and rework Production process design Production process failure: Improperly assembled from good parts, or damaged prior to shipment Work instructions & training Part failure: Part did not meet the performance required by the design Supplier performance
  31. 31. + Results: Lower Cost Factory Test Top-Level Assembly 100% end-of-line testing Rework Improved yield Fewer tests and consumables Product quality & reliability audit testing Packaging and outbound audit Reduced sampling for audits Eliminated rework stations Lower operating expenses Faster throughput
  32. 32. Results: Eliminating Inspection 100 99.8 Net EOL Yield (%) + 99.6 99.4 99.2 99 98.8 Target = 98.5% Stable platform consistently exceeding customer’s quality goals 98.6 98.4 98.2 98 Excessive inspection reduced margins  Eliminated all in-process inspection, saving 5 people per shift  Reduced incoming part sampling rate for most parts, and reverted cost of remaining incoming inspection to suppliers, saving 8 people per shift  Implemented SPC on critical factory processes to provide earlier detection of quality issues and control
  33. 33. + Method: WW Supplier Experience Germany France UK Ireland Spain Hungary Czech Rep. US Canada Mexico Brazil China Japan S. Korea Taiwan India Singapore Malaysia Thailand Indonesia
  34. 34. + Results: Cost Based Metrics Shifting to a cost measure focuses attention on the opportunity for savings The data is accurate, but doesn’t inspire action Production Yield 85% 80% 75% 70% 65% 60% 55% 50% Cost of Quality $6,000 $5,000 Jan Feb Mar Apr May Jun $4,000 $3,000 Defects per Unit Scrap cost Rework cost $2,000 1.00 0.80 $1,000 0.60 $0 Jan Feb Mar Apr May Jun 0.40 0.20 0.00 Jan Feb Mar Apr May Jun

×