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Bridge OEM/CM Barriers with the Internet
December 31, 1969 |Estimated reading time: 10 minutes
By Kevin Sauer and Edwin Smith
Using the Internet as a business tool to communicate with customers can lead to a positive return on investment for CMs.
Contract manufacturers (CM) can use the Internet to communicate through the entire business cycle, from order entry to post-fulfillment service. Quality, work in process (WIP) and other production-related information also can be shared. This level of communication brings the CM and its customers into a closer relationship, even if separated by oceans and continents. Today's CM customer-service-oriented environment requires "overcommunication," which is only possible through automated systems using the Internet as a medium. CMs no longer compete only on price and process, but also on service offerings. More OEMs are demanding Web-based customer service and support, meaning CMs must implement an Internet-based solution to communicate with its customers.
Business Process Communication
The Internet has made possible the automated exchange of business information between the OEM and CM. The information exchange begins with the transfer of the bills of material (BOM), assembly drawings, computer-aided design (CAD) data and schematics associated with a product. This transfer can be made via FTP, business-to-business portal, e-mail or other means. Once the CM has received the product documentation, an intranet allows rapid dispersal of the information to the various groups (materials, engineering, production planning, etc.) so adequate preparation can be made to integrate the new product into the manufacturing scheme. When using electronic forms for these processes, data can be typed on the form and e-mailed, eliminating the need for hard copies.
Once the product has been readied for manufacture, the OEM will place orders. The electronic distribution industry pioneered the model for Internet automation of this portion of the business process. Larger distributors have used the Internet for several years, allowing their customers to load entire BOMs for purchase, and load forecasts and hard orders for configurable final assemblies. For example, using a desktop browser, the buyer is able to place orders for configurable network hubs (Figure 1). The browser allows full specification of all possible configuration options. Once the OEM buyer has completed specifying the network hub, the Internet automation software reports on the item's lead time and price. Advanced systems allow the OEM buyer to perform "what-if" scenarios, manipulating the desired configuration to observe changes in lead time, price and shipment schedules.
After the OEM buyer has placed an order with the CM, the buyer will want to track its status. Once again, the Internet allows WIP and finished-goods tracking from the browser. Today's systems allow the buyer to watch the progress of their product as it moves from location to location on the factory floor. It is also possible to maintain a constant watch on finished-goods stores. This visibility greatly assists the buyer in filling "hot" upside orders. Advance shipping notices, required by QS-9000 for companies serving the automotive industry, also can be sent automatically.
End-of-life services are now offered by many CMs. The Internet can be used to enrich the information flow for this stage of the manufacturing cycle. OEMs and CMs currently use shared, secured databases to automatically assign return authorization numbers, show the product status as it moves through the repair/upgrade cycle and communicate failure analysis data. This robust communication allows for rapid feedback to the manufacturing area to ensure the process remains in control.
Manufacturing Data
Today's OEM desires a wide range of reports, and expects the report to be available at any moment with real-time information. The Internet makes this reporting capability possible. Customers can review many useful items, including:
- CM personnel assigned to their account, with their e-mail addresses and telephone numbers (Figure 2)
- Assembly methods used to build the product (Figure 3).
Assembly methods are step-by-step procedures that explain the assembly process of a particular product in detail. A CM will develop these procedures so the product can be assembled in the same manner every time. The customer can review these procedures via the Internet and feel secure that the CM is building a quality product to specification.
Figure 1. Using a common browser, OEMs can check the status of entire BOMs, as well as verify the availability of a single part.
Machine maintenance is another concern to the CM customer. Daily, weekly, monthly and yearly preventative maintenance, as well as day-to-day repair, is very important to the quality of product being produced. Without a proper database in place, the CM cannot adequately track equipment condition or the level of spare parts. Not knowing this type of information can be detrimental to survival in this industry. Interactive databases allow the OEM and CM to share manufacturing equipment status information. When this also includes items such as SMT mispicks and machine errors, it allows the OEM to gain insight on which types of components cause problems for the CM.
Engineering Change Notices
An example of effective communication systems in action is a CM that employs electronic engineering change notice (ECN) and documentation systems. Electronic documentation systems that facilitate engineering change allow for near real-time assessment of material and labor impacts of requested changes, as well as the avoidance of using nonconforming material. Using paper systems to communicate ECNs is inherently slow and cumbersome.
Research is required from the engineering team writing and implementing the change time that may result in the manufacture of nonconforming product or contribute to costly downtime. Electronic ECN systems increase the throughput of a manufacturing organization by minimizing the time that valuable resources are spent communicating and dispositioning ECNs. The personnel responsible for implementation in an electronic ECN environment have more energy to pursue constructive activities such as line balancing, machine optimization, new process development or monitoring the general scope of business.
Keep in mind that throughput essentially is how quickly an organization can sale its end item. A CM's end item is service and quality. Electronic ECN systems facilitate both.
Quality Information: Meeting Demands
Customers in today's global OEM market can demand more from their CM suppliers because of fierce competition from many sources. Over the years, many customers have become more quality conscious and require a formal Quality Management System (QMS) to be implemented by their suppliers and certified by third parties. Standards such as ISO 9001, QS-9000 (automotive), AS9000 (aerospace) and TL 9000 (telecommunications) have been developed to help standardize the requirements for these systems. It is common to find requirements in multimillion-dollar contracts to be certified to one or more of these standards. Most companies strive to implement a cost-efficient QMS that will ensure good product is shipped and the customer is satisfied. Failure to do this will result in a QMS that will be static, stale and unused by everyone from top management to floor workers. Some common signs of this are:
- A quality manual that has not been revised in many years
- A quality manual that sits on a shelf, collects dust and is only read on the day of an audit
- A quality system that is only used by the quality department.
The Internet is part of the solution for the problem of implementing a value-added QMS.
Quality Manual
One method of allowing employees greater access to procedures and work instructions is to convert the company's quality manual to HTML format and place it on an intranet. This allows employees to access it from any computer connected to the network. A greater advantage is realized when a CM has multiple sites. Procedures can be standardized to cover all sites within an organization regardless of location, provided they are connected to the company's intranet system. Revising the quality manual becomes very easy as well. Once a revision is complete, an e-mail can be sent to all affected sites to communicate the changes. This process takes minutes to complete, whereas a typical hard-copy quality manual requires multiple signatures to be obtained and many copies to be updated. By using the intranet as the tool for communicating system requirements, more employees will use it. By making the quality manual available to the customer via the Internet, the OEM and CM can work more closely to forge a quality-oriented partnership.
Interactive Databases
Another value-added tool for managing a QMS is the use of interactive databases. Multiple methods are available to achieve this, including active server pages or cold fusion markup language (CFML). These software packages allow a Web browser to communicate with a database by designing the page to allow information to be entered into and retrieved from a database. A new Web page is then automatically created as a result of the query. This software also will communicate with an e-mail server to allow e-mails to be generated automatically.
Figure 2. From this Web page, an OEM can obtain the list of CM personnel assigned to its account, as well as other useful information.
One of the more difficult processes to manage in a QMS is the corrective and preventive action system. When using a paper system, an employee is required to find the latest copy of the corrective action report (CAR), fill it out, and find a mail slot or supervisor to give it to. A copy of the CAR typically is sent to the person or team assigned to work on the systemic problem; the original copy is kept in a file or binder. Keeping up with how many CARs have been issued (both internally and to suppliers), how many are past due, how many require follow-up to verify effectiveness and how many are closed can be a very cumbersome process. This is especially true if the system encompasses many sites and is managed by a corporate office.
Figure 3. Displayed here is one method used by a CM to build an OEM's product. Information such as this can be shared over the Internet.
An interactive database can manage the corrective and preventive action system. Instead of looking for a hard copy of a CAR form, an employee can go to any computer in the company to initiate a CAR via the intranet. After filling out the required information, the employee clicks on the "submit" button and the CAR immediately is entered into the system. By using an interactive database on the intranet, an e-mail is automatically launched to the appropriate people. All corrective action responses and follow-up information can be entered directly into any computer, as well. If security on certain Web pages is required, the system can prompt for a user name and password. The system also can monitor the database for CARs that are about to become, or are already, past due and automatically send e-mail reminders to the appropriate people.
Interactive databases add value to the internal quality audit system. Audits can be scheduled and planned, and reports automatically generated, using the intranet. If an employee is sent to off-site training, a certificate usually is retrieved and filed away in a "qualified auditor" binder. These certificates can be scanned and linked from the appropriate Web page using an intranet so the information is readily available from any computer. Nonconforming notices generated during the audit can be entered into a system similar to this CAR system.
Updating, maintaining and retrieving training records is a labor-intensive task. Typically, training records are maintained by the human resources department and filed away in an employee's personnel file. The record is not easily accessible by the employee or supervisor. By using an interactive database to manage training records, an employee or supervisor can view or update the training record from any computer in the company. By placing the public portions of the training files on the Internet, the OEM can review the training records of the people actually building its product.
Conclusion
Effective manufacturing information systems and customer communication of that information are essential to the success of an electronics manufacturing organization. Communication systems that seamlessly integrate manufacturing activities with customer requirements are paramount. In short, the goal of any manufacturing organization is to make money. The only way to achieve that is to maintain the scope of business by simultaneously increasing throughput or sales, minimizing inventory or WIP, and decreasing overhead or operational expenses.1 Both the OEM and CM benefit by widening the channels of communication from the shop floor to the customer.
REFERENCES
- E. Goldratt, The Goal: A Process of Ongoing Improvement, 2nd revised edition, North River Press Inc., 1992.
- Erin Callaway, "Web-based Customer Service Provides Competitive Edge," Managing Automation, November 1999, p. 41-47.
KEVIN SAUER is senior director of corporate quality, and EDWIN SMITH is senior director of operations, at K*TEC Electronics Corp., 1111 Gillingham Lane, Sugar Land, TX 77478; (281) 243-5674 or (281) 243-5993; Fax: (281) 243-5574 or (281) 243-5893; E-mail: sauerk@ktecelec.com or smithe@ktecelec.com; Web site: www.ktecelec.com.