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Building a Robust High-mix Manufacturing Process
December 31, 1969 |Estimated reading time: 5 minutes
EMS providers have many preferred business models. High mix, variable demand production has become increasingly popular. Evolving from high-volume production to focusing on higher-mix production requires systemic changes.
By Kevin Stone, Kimball Electronics Group
This EMS provider operates facilities in Asia, North America, and Europe. The conversion process discussed in this article focuses primarily on changes made in a U.S. facility. Where applicable, lessons learned were transferred to other facilities. There are high-mix, variable-demand support requirements even in facilities in lower-cost labor markets. The three-tiered production team model will be implemented in Eastern Europe, for example, and eventually move to China and Thailand.
The facility conversion process focused on several areas: culture change and alignment of the company’s existing lean philosophy with higher-mix production; service offering expansion; equipment configuration changes; supply base realignment; and implementation of IT tools to support the new environment.
Lean sigma principles were used in the high-volume segment. However, these core lean values such as minimization of inventory, reduction of work in process (WIP) and reduction of transactions needed to be translated to systems and processes that efficiently address the challenges of a variable demand environment.
Project team composition was adjusted. Originally, the facility used commodity teams. A program manager would coordinate with personnel focused on specific commodities or support functions. The result was that, while the program manager was focused on specific customers, the rest of the team was driven by the highest priority in their set of job responsibilities. The new model used a customer focus team (CFT) structure. Each team includes a buyer/planner, a manufacturing engineering resource, an electronic engineering resource, and a quality resource in addition to the program manager. All members are focused on their team’s customer priorities. Customers work through the program manager as a single point of contact or through individual members of their assigned team.
Support infrastucture was also expanded. The facility now has three production models: rapid prototyping services (RPS), NPI/production, and special product services (SPS). All groups interface with the CFT, but the RPS and SPS production support teams are co-located, with lines optimized for lower-volume production. RPS focuses on quick-turn prototyping projects, while SRS handles ultra-low volume, repair, and end of life (EOL) projects. The NPI/production area handles long-term products with variable demand. This lets specialized production teams handle the unique projects that often bottleneck mainstream production. The program manager is still the central point of contact for that facility. When customers have production in multiple facilities, a local-area business manager serves as the top-level point of contact between their CFTs, although customers can contact individual program managers and CFTs as needed.
Originally, the facility’s equipment was selected to support high-volume production. Principles in creating an equipment standard for high mix included:
- equipment supports quick changeovers between product types;
- equipment must be compatible with in-line AOI capabilities;
- placement machines support technologically complex assembly;
- equipment manufacturers must be willing to provide adequate service and support both in this facility and in any other facility the company would use this configuration strategy in over time;
- NRE on low-volume projects should be minimized;
- and used complementary equipment is adequately available.
To facilitate better planning on production builds, extra feeders were purchased for the SMT lines supporting standard NPI/production. Production planning included forecasting by product family and early kitting. Where possible, feeders were loaded by family and built concurrently. A strategy for switching to a more flexible SMT placement platform was defined. Low-volume equipment was purchased to support the production area shared by RPS and SPS. The RPS group now uses dedicated equipment designed for quick set up and flexibility. Existing thru-hole equipment configurations supported the high-mix NPI/standard production environment. RPS manually solders thru-hole components used on quickturn prototypes.
In the model discussed above, RPS handles early engineering samples, then transition the NPI activity to the CFT. This enables the project to launch on the equipment that would be running the volume production. Since product configuration typically changes between engineering prototypes and the NPI stage, there is little redundant NRE in switching equipment.
Selective soldering is available for thru-hole joints. This drives out non-recurring charges for wave solder pallets and reduces cost in low-volume production.
A major culture change was needed in procurement strategy. In the high-volume production environment, many components were purchased direct from manufacturers. In this model, planners assumed 16–24 weeks leadtime plus 8 weeks of inventory components, kitting, scheduling, and manufacture.
The high-mix environment required significantly shortened pipelines. All major components are now on vendor managed inventory (VMI) stocking agreements. Customers give a rolling 12-month forecast updated weekly through program management. This forecast is sent to distribution monthly and inventories adjusted. Inventory is bonded depending on the component mix and customer requirements. This has driven internal leadtime assumptions to 2 days for procurement and 2 weeks or less to manufacture. The frozen production window has dropped to less than 4 weeks from purchase order release. Bonds are set at 10% of forecasted demand quantity. Program managers analyze customer forecasts against historical demand in determining correct bond size.
A high-mix operation necessitates greater inventory visibility. The company added a supplemental software package to its primary ERP system across its global network of facilities. Distribution partners are given complete visibility into demand, and internal procurement personnel can view pricing and inventory across the company. This tool also automates material purchase pipeline adjustments in reaction to customer push/pull demands. This eliminates many manual hours on a daily basis in the effort of maintaining the lowest possible inventory exposure to both the EMS provider and the customer.
The company has also established a global materials council to drive commonality in a non-common world. This group implemented the software enhancement and sets up VMI agreements globally with large distributors. Each facility still has the ability to procure locally as well.
Conclusion
The result is processes that cost-effectively support the higher flexibility needs of variable demand manufacturing. The lessons learned are now packaged in a way that facilitates transfer to any of the assembler’s other facilities, easing and supporting changes motivated by evolving business mix trends around the world. SMT
REFERENCES:
- Stone, K., “Lessons Learned in Developing a Robust High Mix Manufacturing Process,” Proceedings of the IPC APEX Conference, Las Vegas, NV, 2009.
Kevin Stone is Kimball Electronics Group’s director of business development for Public Safety Solutions. He can be contacted at kevin.stone@kimball.com.