Quality and Cost Management: Methods and Results
- 1. + Tim Rodgers Methods and Results
- 2. + Method: Design for Low Cost The design is what it is, we’re stuck with it Typical approach, design is the constraint • Lower cost materials • Lower cost suppliers There are other designs that • Lower cost factories meet customer requirements at lower cost Re-design, challenging the assumptions: • DFX: manufacturability, sourcing, reliability, support • Integration: one part or subsystem doing multiple jobs • Simplify, remove low-use / low-value features • Reduce size and weight for lower shipping cost per unit
- 3. + Method: DFM for Printed Circuits Designer interviews re: common tradeoffs DFM Manual Tools that enable circuit designers to choose options based on the relative cost in materials and processing Production cost & yield data Example More circuit layers (material cost) Smaller conductors (yield loss)
- 4. + 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
- 5. + 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
- 6. + 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
- 7. + Results: Lower Cost SW Testing Before • Many test cases, routinely repeated for each SW release without regard to the causes of call rates and warranty cost • No test design process focused on high-risk modules and interfaces • US-based test execution, low job satisfaction, high turnover Actions • US-based team trained and reassigned to test case development and project management • Test development based on collaboration with design team and feedback from customers • Test execution outsourced to offshore service providers Benefits • 80% lower test cost per development project as a result of offshore testing and fewer (but focused) tests • 30% lower customer call rates as a result of test engineering • Higher job satisfaction, lower turnover
- 8. + Results: Lower Support Cost Prevention Rapid Deployment Field performance and internal verification prior to release Sustaining engineering managed as separate projects Warranty cost reduced by $300K per year Prioritization Design for Support Focus sustaining engineering on the leading contributors Modular design with a minimum number of unique configurations
- 9. + Method: Support for Quality Assess the competitive environment Determine the risk to future business Measure the cost of quality Crossfunctional support for quality initiatives > Internal = scrap, rework, hours spent managing quality issues > External = warranty cost, field repair
- 10. + Method: 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. + Method: 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
- 12. + Method: SW Development & Test Checkpoint Development Priorities Role of Testing Invention & investigation New features & capabilities Rapid, focused evaluation of new functionality “Does this work?” Design improvements Additional robustness Broad and deep: many use cases and configurations “Find defects so we can fix them” Optimize for final release Emphasis on defect fixes Rapid, focused regression to verify defect fixes “Did we fix it without breaking something else?” Functionally Complete Code Freeze Final Release
- 13. Results: Rework from China Factory 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
- 14. + Results: Software Install Time Original SW installation process Focused design effort to shorten time and eliminate defects Up to 30 minutes to install on a single system 25% Confusing process including specific manual steps that must be executed in sequence 20% Many opportunities for the user to interrupt the process, requiring a lengthy phone call to customer support 40 35 30 25 15% 20 10% 15 10 5% Customer less likely to use the SW after installation, negative impact to revenue and loyalty Call rate 5 0% 0 Before After Average length of call (min)
- 15. 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
- 16. 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
- 17. + Method: Process Investigations Process is not being used (people problem) 1. Do they know there is a process? Inform them Process is inefficient or ineffective (process problem) 2. Do they know how to use the process? Train them Does the process take too long? 3. Do they ignore the process? Apply Theory of Constraints Explain to them (identify and manage the bottleneck) 4. Do they have a better way? Learn from them Does the process fail to deliver expected results? Check output from each step Does the process deliver inconsistent results? Determine the causes of variability and eliminate
- 18. + Method: Process Convergence Switching cost Cost to support multiple versions of the process Cost due to incompatibility Clearly articulate expected benefits Change management Communicate value of convergence Determine value of local configurations
- 19. + Results: Factory Line-Down Process Describe Current Situation (Is / Is Not) Propose Solutions 4 Propose Possible Root Causes Test Solutions Define Problem Integrate and Monitor Change Test Root Causes 100% 80% 3 60% 2 40% 1 20% 0 0% Before After Cycle Time (hr) Recurrence (%) After: Systematic approach Longer process, but highly effective Lower overall cost
- 20. + Results: Design Change Process Situation: Part design changes to reduce material cost or address field quality issues hampered by a slow and ineffective process Slow approval & implementation through the supply chain Lack of coordination Rapid deployment to realize cost and quality benefits Removed unnecessary steps Blocked “jumping” over required steps Added auto notification for steps taking longer than standard time Improved software tracking tool
- 21. + 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
- 22. + 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
- 23. + Method: 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
- 24. + Method: Driving Quality Upstream Product characteristic (e.g., functionally critical dimension) Production process parameter (leading indicator) Process capability to consistently meet specification Process control to reduce variability It’s not about preventing bad parts from being shipped … It’s about preventing bad parts from being built in the first place
- 25. + Method: 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)
- 26. + Results: 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)
- 27. Results: 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.
- 28. + Results: Gold 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.
- 29. + Method: Rapid Time-To-Market Invention & investigation Experiments, feasibility studies Evaluate concepts vs. requirements Converge on a product design Execution 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)
- 30. + Method: Re-Use and Leverage Product Development Model Advantages Limitations Single product: Development of a single product, feature set and price point: one-at-atime to respond to the market Laser-focus, enabling design to achieve minimum cost for that feature set without being constrained by earlier choices Limited design re-use, possibly lengthening the development time; design costs, tooling and parts not amortized across a larger number of units Platform: Development of a fixed core or foundation that becomes the leveraged, common basis for follow-on derivative products Initial design and tooling investment is leveraged to subsequent derivatives or extensions with rapid time-tomarket The initial platform design limits derivative product design options, reducing flexibility and market responsiveness Architecture: Development of a set of interchangeable modules or assets with welldefined interfaces that are designed to enable forecasted product options to meet anticipated needs High level of design flexibility; initial investment enables lower product development cost for later products; leveraged tooling and faster time-to-market; can easily shift to other development models Modules are optimized for leverage and re-use, not necessarily for absolute minimum cost
- 31. + Method: Development Phase Gates • Is the design capable and stable? • Indicators: critical performance requirements met; design turmoil; open issues from FMEA and other risk analysis; prototype defects Design Gate attributed to design; design margin study complete Process Gate Production Gate • Are the production processes (including the supply chain) capable and stable? • Indicators: production and test yields; prototype defects attributed to WMS and material; changes to tools, fixtures & work instructions • Is the factory ready to build at full production volume? • Indicators: no open waivers (all resolved or closed); all tools & fixtures meeting GRR requirements; functionally critical dimensions and parameters meeting process capability requirements
- 32. + Method: SW Development Checkpoints Traditional “waterfall” software delivery model Test & Defect Fixing Development Fixed release date o Testing begins after development is “complete” o Scramble to find and fix high priority defects o Quality usually sacrificed to meet schedule Phased “prototype” model based on hardware design Development Modular architecture, core functionality verified by design team before check-in Functionally complete checkpoint System Testing Final Test Code freeze checkpoint Defect fixing, additional noncritical enhancements added and verified Lower cost development, better quality Later replaced by agile/scrum with staged development & testing
- 33. Method: Time to Achieve Quality Target Quality + Failure to meet quality target at start of production #1 #2 #3 Prototype builds Start of production Additional cost and loss of production capacity
- 34. Results: 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
- 35. + Results: Software Program Tracking Metrics for tracking status: Requirements verified by testing Code turmoil (new or changed LOC) Remaining open defects (weighted) Defect find/fix rate 100% 80% 60% 40% 20% 0% Tests passed Tests failed Tests not run Tests blocked Clear understanding of work remaining to trade schedule vs. scope vs. quality Predictable outcomes that meet business objectives
- 36. + Method: Metrics Alignment Performance measures Link business objectives to individual/team objectives and performance measures Considerations: Control over outcomes and improvement Behaviors that are encouraged Department & Team Objectives Business Objectives
- 37. + Method: 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
- 38. + Method: SW Product KPIs Product Development Objectives Key Performance Indicator (KPI) Key processes and behaviors Value-added: new features that meet customer needs Incremental revenue dollar contribution as a result of the new features Better understanding of customer needs to target high-value features On-time delivery Actual checkpoints vs. plan Disciplined development processes, an architecture that supports design of incremental features, and high quality to ensure customer rapid qualification Deployment Penetration, percentage of the installed base using the new features Tight collaboration with sales and field support to drive new orders and installations Quality Escapes, defects reported by customers, especially those that prevent the customer from qualifying and deploying value-added features Dedication to zero defects and reduction of variability
- 39. + 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
- 40. + Results: Factory Quality Team Function Primary Responsibilities Key Performance Indicators (KPIs) Quality program management Quality issue management, primary customer contact window, data reporting 1. 2. 3. On-time and accurate data reporting Rapid response and closure of quality issues Effectiveness of issue management New product quality Quality plan development and implementation for new products 1. 2. Time-to-quality after production ramp NPI Product Quality Scorecard Manufacturing test Software support, script development, implementation and maintenance 1. 2. False positive or negatives due to test script Rapid ramp to required level of engineering capability and independence Contribution to productivity and COQ 3. Document control BOM and change request management, other document control processes 1. Quality engineering Proactive opportunities for yield, quality and COQ improvement 1. Measurable yield, outbound quality, or COQ improvement Quality assurance Inspection, testing and data reporting for production lines 1. 2. Escapes found by subsequent audits Contribution to productivity Supplier quality management IQC inspection, management of corrective action with suppliers, proactive monitoring of part quality 1. 2. 3. COQ for IQC Percent of suppliers achieving favored status Escapes and line-downs due to part quality 2. 3. BOM accurate and up-to-date, all partners informed about changes and revisions No mistakes due to incorrect PN revisions Cycle time for change process, from initial request to approval and implementation What’s important is that each function has independent control over their KPIs
- 41. + Results: R&D Department Aligned Every activity should contribute, or why do it? New feature Sales, revenue Improved performance Operating expense Improved cost or quality Productivity, throughput Improved infrastructure Gross margin / R&D expense
- 42. + Results: SW Testing Effectiveness Offshore software testing service engaged as a partner With encouragement from the customer, the supplier invested in training to improve testing and increase the percentage of defect reports that resulted to a code change (defect fix) The improved quality of service contributed to the steady reduction in support call rates for each software release 80% 60% 40% Reported Defects Fixed 20% Call Rate 0% A B C D E F G H J SW release
- 43. + Method: 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