NPI Program management in EMS fields

NPI Program management in EMS fields (I)
PrefaceNPI (New Product Introduction) is becoming more and more important in most manufacturing companies. It is the first step to win customer, confidence on both production capability and business management. Standing as manufacturing service provider, we may focus on followings:· How to get profit from the NPI business· How to manage the NPI business· How to come out a proper NPI report to customer to get customer approval· How to transfer the NPI to factory to implement mass production smoothlyThe electronics manufacturing services industry is a growing and fast-changing field, creating many global EMS heads, even some local small factories. At the same time, the match is getting closer and closer due to market became more and more mature and most customers are prefer to setup strategic partnership with some suppliers who can do each project effectively and honor the commitment. The competitors must continually improve the business skills and production quality, especially should expand the service offering to cover the whole lifecycle on products including design, new product introduction, supply chain management and after-sales services, for example, supply chain profitability, human/facilities resource allocation optimization, and implement best practices and key processes. In customer view, NPI is the first stage of a component’s life cycle since it leads to final design and has a great impact on the final quality of the component.What is customer’s most concern? Let’s divide the whole NPI into 2 processes, the first is supplier, you, EMS provider, the second is the product, himself, the product design. For you, customer would secure your process with respect to a> quality, b> capacity. For product, customer would secure with respect to a> enough training to operators and engineers, b> product requirement are clear and implemented solidly, c> process setup adequately, d> process evaluation is ready.The practice and lesson learnt in NPI phase are most important as customer is prefer to solve all problems which are related to design and system fault at this phase, not mass production phase. “Pro-actively”, this word is often appeared in the mouths of many customer engineers. The reason is customer engineers are very concern about the feedback from manufacturing lines. Working pro-actively means trying to find problems and respective solutions before it occur, before it became a real problem. Therefore, NPI program manager have to closely monitor the whole process and drive team members to work aggressively. Much more money would be cost on an incident at ramp-up phase than what cost at NPI phase.Most EMS companies have the product life cycle chart as below:The most important objectives for NPI process are, to provide value-added in terms of short time-to-volume with parallel ramp-up, lower total cost and easy communication channel. Then, how to implement these wordings?1. Quotation phase:Sometimes, PM need to help sales manager to calculate the manufacturing cost. When the overall quotation finished, PM may also need to be involved into quotation review. The basic information is annual volume. Some indexes are constant (relatively), they are raw material cost, inbound/outbound freight & duty, mark-up coefficient, interest rate and base profit. As for the manufacturing cost, we need experienced engineer to do product and process analysis to get an accurate cost list, especially for whole new product.The engineer can be IE (industrial engineer) or PE (process engineer In my experience, they may calculate wrong at following items:1.1. SMT tooling. Once an engineer forgot stencil. It is a big problem once you also overlooked.1.2. Spare part maintenance. It is serious if no this budget, especially for that used on testing equipment. One RF cable would cost thousands dollars, to top it worst, it has to be changed once 3 months.1.3. Equipment amortization. To get real amortization rate from financial dept.1.4. Process yield and defect cost. Few products are 100% direct passed and no any defect. It must be considered.After quotation report completed, Sales Manager should call related people to do quotation review. Pls. be reminded you may stand in opposite position to this chairman. He would give you pressure to cut down the cost since he need to compete with other EMS providers to catch customer. But, if the cost is lower than the investment, you may lose passion to do this business. Normally, if the quotation is just for NPI product, the price may be higher, for example, 10~20%. Please remember, some business cells can live only on NPI.2. NPI phase:This is my topic, so I have to divide it into steps. 2.1. Pre-study. It is like quotation phase. Sales manager call related people to review the sales offer, forecast, project budget and agreement.2.2. Planning. This phase is very important to whole program. PM should have a detailed list to review one by one to ensure all information are ready and all plan have responsible people and deadline. Once the ECR/ECO process was not defined clearly, when an ECO received, the tooling investment did not been included in the ECO confirmation letter, and then some money was lost.In this phase, we should fix following items:2.2.1. Project milestone.2.2.2. Project organization. PM got the organization from customer and also send ours to customer. Keep right people can contact each other directly. In general, the organization should include all engineering people and office people. Engineering people, are process engineer, SMT engineer, diagnostic engineer, quality engineer and production supervisor. Office people, are Program manager, Sales, Buyer, Planner, PDM (product document manager), Finance, etc.2.2.3. Investment plan. PM or higher hierarchy to define the investment. The investment includes equipment cost, tooling & jig & fixture cost, training cost and renovation cost. Most cost has been put into quotation, but now, we need control it by items.2.2.4. Facility plan. PM should call production manager, WH manager, Facility manager to define the location. Which SMT line can be adequate use? Where to allocate the production line? Where to store the finished goods? Fix them on this meeting. Some peoples may challenge you about the schedule and estimated volume. Please prepare.2.2.5. Material management plan. We need Material Manager to discuss the purchasing plan and delivery plan if consigned material there is. This plan is very serious to make sure there is no material shortage. Shortage is very easy occurred on three cases, a> single source, b> DOS (days of supply) too long, c> bad BOM usage. What is bad BOM usage? The usage of some component is not constant. For this case, we can use safe stock to control.At the same time, prepare a localization plan to them. Pls. be reminded the two plans, quarterly PPV (purchasing price variance) and localization report, are very important to meet the cost reduction requirement from customer at mass production phase.2.2.6. Quality plan. Quality dept should provide quality control plan, sub-supplier management plan, FMEA, environment report (if applicable)2.2.7. Manufacturing plan: Production manager should report the manpower allocation, and the training plan to operators. IE should finished the layout plan and standard time calculation, based on the volume, shift arrangement, operator quantity, line layout, tooling & equipment balance, technical people support, should be all planned OK. Functions should also feedback the running status to PM. We may encounter troubles like tooling & equipment cannot be arrived on time due to customs delay, testing software cannot be installed correctly due to software or hardware problem, one material are not received due to supplier delay, operators are not so skillful so that the output is very lower than target, and so on. I really wish PM can be God, can solve all problems. He has to review all change and the respective impact frequently.2.2.8. Risk management plan: Like the trouble we encountered in 2.2.7., an intelligent Manager won’t get himself into trouble, even they are potential so far. He said, “Hi, Tom, you are testing engineer, pls. have a risk management report on the action once equipment was breakdown or spare part was used up.” “Hi, Jack, you are quality engineer, pls. have the risk management report on the action once serious quality problem occurred or customer raise warning message on bur-in test failure.” Not all potential problems would occur but if occur, some people may going to “death”.2.2.9. ECR/ECO plan: PDM and product engineer should control this plan. Most companies have the procedure document to specify, but PM have to concern about once the engineering change would cause cost change. So, to define an ECR/ECO handling procedure and cost control process are necessary.Now, once these plan are all ready and all actions have deadline, Congratulations, you can success in most subsequent phases.
2.2.9. ECR/ECO plan: PDM and product engineer should control this plan. Most companies have the procedure document to specify, but PM have to concern about once the engineering change would cause cost change. So, to define an ECR/ECO handling procedure and cost control process are necessary.2.2.10. CPM analysis and back-up solution consideration.When all plans were ready, PM should have a review to all these activities as a by-stage come-out. We title the review meeting as “planning review” or “start-up review”. The purpose is to make sure all activities are under control and running as what we expected. Following I list some critical items which need high attention:a> General Information: Customer milestone, capacity, volume and dedicated project personnel. The information were collected and announced to team members.b> Supply chain management: the focus is on procurement management and component coding (or BOM coding Before the meeting, Material people should review the BOM and check out which ones are critical components. The critical component mainly means supplier-controlled market and/or high-value unique component. c> Production line setting: SMT package (Gerber, X-Y, PCN drawing), assembly process, packing requirement (domestic and export), traceability, testing software and hardware, tooling preparation, delivery method, cosmetic specification and checking method, plant layout, operator training and shift arrangement. d> Quality: Control plan and flow chart, environment audit, process audit, GR&R, golden sample, trial run premises, process qualification requirement.e> Other problem. Finance, Logistics, Security, they would raise their concern and hope to get your positive response. 2.3. Execution phase.As soon as customer gives go signal, the NPI is promoted into “executive phase”. I’d call it “documentation phase” also. So far, nobody can ignore the importance of documentation to the operation of a company, so does a project. Not all people can receive customer information directly and as well as to read through customer demand. PM should do a checklist as followings and review with functions concerned to ensure all necessary information was ready:2.3.1. AVL and BOM. In most cases, the NPI BOM is a dummy one. Project assistant should have unique product number and input this number into all relevant systems. From now on, we only discuss this product with this number internally.2.3.2. Production documents, including process flow-chart, WI (Working Instruction, or MI Manufacturing Instruction), Test Instruction, Final inspection instruction, and packing design and instruction.2.3.3. Quality documents, including PFMEA, control plan, GR&R, Capability study and PQP plan.2.3.4. Customer specification and golden sample (if applicable) Make sure the latest quality and product specification was got, and renewal of test software. Quality engineer should transfer the specification into internal format and testing engineer should have a software upgrade list. Different document version may be applied to different product version. Golden sample may include system sample, unit sample and material sample. QA should have the record.2.3.5. Check that approved CapEx is available.The project milestone may be reviewed again according to procurement and engineering prerequisite. In fact, the output of this phase is all manufacturing sources are ready and just waiting for prototype signal, facilities, materials, document, personnel, equipment and so on. Therefore, PM has to review the investment no excess the approved CapEx and follow budget.Sometimes, customer would request to build several samples to do system test as verification. PM should ensure the correct PO# is received and special requirement was declared. The NPI cost was released by either PM or AM. At the same time, engineering team should start the conference meeting with customer engineers to discuss production problems and trouble-shooting solutions. It is based on the project organization PM released in “planning phase”. PM may handle this meeting as start-up, but for long-term, Quality engineer or product engineer should be the owner. The sample requirement also can be discussed in details on this meeting, for instance, the version, marking, component, packing and etc. Project assistant calculate the cost and issue invoice to customer.A special case is, some or all equipment, tooling and material are from customer. The equipment allocation is based on the capacity, PM have to refresh the capacity according to some information got from the sample run, for example, test yield, manufacturing performance, equipment capacity and capability. The capacity can be changed once software upgradeMaterial controller should calculate the inventory accuracy and minimize the scrap cost. Timely inventory adjustment is expected. Together with PM to evaluate scrap level and making cause analyze if needed. He/she is also responsible for creating NPI report and if scrap has been caused by special reason (for example tests, machine evaluations, tool problems etc) the information should be added to the report.2.4 Trial run phase.Customer released formal PO# and confirmed price, we start trial run. The output is trial run report from engineer team. The result is trial run sample approved by customer and give ramp-up signal. One of key jobs here are to re-confirm with customers and target factories (if applicable) about the approval criteria and make an initial plan that covers the schedule from trial run to ramp-up.Quality engineer should draw out quality report with GR&R and actual yield data. GR&R is an evaluation to the measurement system, and allow engineers to know the percentage of variation from error in the measurement, and is a great tool for comparing between measurement devices, operators, fixtures, tooling, etc. It is to ensure that the measurement method, equipment and environment has the adequate precision and stability to meet assign levels regardless of environmental and operator variation. I’d discuss how to do GR&R in details in appendix. For yield, I’d remind you to distinguish what is defect and what is defective (read it from 6-sigma book) and please recall what you learnt from COPQ. All yield problems can be summarized as COPQ problem and also you evaluate what should be included according to COPQ list.The trial run report should cover the processes from SMT to packing and shipment. We should raise action plan for all critical problems and potentials necessarily.After trial run, sample would be sent to customer based on request. The other units should be stored properly and have good identification. Customer may do some design change with the sample they received, so these on held units have to be scraped. In that time, if you cannot find them or shipped them with normal units, your business would be spoiled. Please be careful!In most cases, the whole NPI can be lengthened or shortened due to many factors, and it is also naturally have direct correlation to customer demand. There are 4 basic factors: 1> functionality, 2> complexity, 3> requirement, and 4> predicted volume. So, in exception of general program management knowledge, PM is expected to have specified knowledge. Same product, even have vast difference due to designed for family use and industry use, no matter to mention satellite telecommunication use. In general, we count the quantity of components and their joint to define the complexity, for example, one PCBA unit that has 100 pieces of SMT component and 400 wedding joints, is higher complexity than another PCBA who has 100 pieces of component and 300 wedding joints. As for predicted volume, we cannot reply on customer data only; it can be changed due to many reasons. It is suggested to have information workers to collect more information, for example, what is the tendency for this product, how many the market possession the customer have, how about the confidence level of this customer. It is so essential. Unfortunately, I saw many investment failures from some companies due to poor information collection. Put millions of money on equipment, but the profit is only few million, and then repeat such case again and again.The good idea is to follow these NPI steps one by one, no hopping. For example, don’t overlook any problems encountered in trial run phase, even you should look into every steps to find more potential problems. More problems were found and solid solutions were given, more successful mass production you will have.2.5 Ramp-up phase.The trial run sample was approved by customer and “go-signal” was released, it means we can move to “ramp-up phase” successfully. This is the final phase for NPI. We must check what is lost or need further improvement for factory production. In fact, customer would give updated forecast and MRP plan now. Planner can make production schedule based on that. Now, let’s do a series production that is like mini mass production. Series run for 1 or 2 days (just for example, different product has different requirement), with current production line, document and personnel, record all defect and problems found by each process (working station) in defined intervals verifying stability, capacity, capability, and overall performance. The overall purpose is to verify the throughout manufacturing process is stable and has sufficiently both capability and capacity conforming to the specified requirements.The report consists of following studies:a> Process capability study, on chosen critical process and product parameters. The study includes control charts and stability (predictability), for example, Xbar-R chart for parameters and P-chart or U-chart for process steps, Cpk distribution to parameters also.b> Capacity study, to verify the expected or required capacity through yield contribution. The failure codes in every process step is broken down into a Pareto chart, so does to scrap rate, sorting, rework, and so on. Pls. be reminded this study is to enable an effective process improvement program and to reveal as much process problems as possible up front.c> Action plan must be given to remedy the capability and/or yields that cannot reach the targets. Some customers would assign target before the trial run, also based on this target to assign more for mass production.Internally, we should establish key operational performance indexes and define respective target to ensure the product be successfully introduced to factory:1> Inventory Turnover (ITO) ITO = (Cost of Goods Sold from Stock Sales) / (Average Inventory Investment), higher is better.2> Delivery Accuracy (DA) Measures combine delivery time and quality.3> Yield Yield = (The amount of good units without rework) / (the total amount of units) (%)4> Sales Cycle (The time or process between first contact with the customer to when the sale is made) or (Balance of (Amount payable + Inventory – Accounts receivable) in days

Here I’d add one extra topic that I think very essential, change control. It is mostly happened in NPI phase, even we can have decades of change request from customer or to customer, e.g. changes in the schedule, costs, scope, requirements, resources etc. which may already defined in approved document. PM has to review and follow-up all change like this. In general, PM should pass the change request to his project team and then get common understanding and give analysis what potential effect would be caused.Followings are some tips about the change control:· Please recall the triangle of project management, there are Scope, Cost and Time. If someone of these three items changes, we have to check what must be done with two remaining items.· Well argue the proposals of scope changes and their implications to the project correctly. Approval from the project team is necessary.· Have Product Log to record all the change and make special decision.The most change is in form of ECR/ECO. We can find 1> Scope (product name, unit name, and their revision number, change descrīption, product or unit affected), 2> Schedule (Implementation type, effective date, shipping date), 3> Cost (final cost in currency, merged with material scrap cost, rework cost, tooling cost, material change cost, price change, etc.Some people may don’t understand the “Implementation type”. It means the change cut-in type, in general, there are 6 types with the example of product version change: a> Phase out/phase in: use up all available material for old version and then start up production of new version; b> Implement immediately: start new version immediately and stop production of old version now; c> Fixed number: produce fixed quantity (100 pieces) of old version before producing new version; d> Fixed shipping date (or effective date): start producing new version and ship them on fixed day (Jan-1-2008); e> Parallel production: produce old version and new version together; f> Special delivery, based on customer requirement.The cost includes: a> On-hand material scrap, both finished goods and components, both direct materials and indirect materials; b> Open-purchased material scrap; c> Tooling cost, modification or add; d> Rework cost, labor cost for reworking some finished goods; e> Material change cost, material cost for the rework; f> Price change.2.6. Transfer phase:When customer approved the Ramp-up plan, NPI PM has to call a meeting with factory steering to transfer the project and report to customer about the transfer. Being a responsible Manager, we have to prepare a completed NPI report to factory members to make the transfer successful. Here I list the KPI (Key Performance Indicators KPIs are measures to a NPI project: PM has to review the actual vs target.· Project time schedule· Project budget (from CapEx and Investment plans)· Process performance, e.g. Yield, scrap rate, etc.· Line capacityHas a project folder listed following:· Project management document§ CapEx and Investment plan§ Quotation report§ Project organization and meeting, necessary presentation§ BOM & ECO§ Product log, including all product change· Product information§ Drawing & Specification§ Layout and facility request§ Standard time calculation§ Ramp-up plan · PQP documents§ Control plan, flow chart and PFMEA§ Capability & GR&R report§ Work instructions· Process requirement§ SMT documents, i.e. Gerber, X-Y matrix, stencil, golden sample.§ Assembly documents, i.e. fixture drawing, special requirement, equipment setting.§ Testing document, i.e. hardware and software setup, ICT.§ Traceability requirement§ Packing and shipping requirement· Others.Sometimes NPI team has to give effort to support factory team for 1 months or more to ensure the factory can handover this product completely without wrong. When we can close this NPI formally? The agreement can be defined in transfer phase. Generally speaking, to meet KPI target and run normal production constantly for 3 months, then we can close it. So tough? Yes, it is really a tough job and, patience and aggressive spirit needed. As almost all customers are urged their product can get higher profit with more advanced performance and quicker design-to-market capability, we, EMS participants, also have to continually improve our NPI solution and technologies to meet this high demand. I think there are two principles. Firstly, with more effective systematic way to ensure NPI running mistake-proof. We can shorten some phases but never try to skip. There are many cases that much investment were wasted with poor planning or communication, at the same time, some people write the lesson learnt again and again. I don’t find them can get real learning if no good systematic way. Secondly, a pro-active product team is the prerequisition to final success. A worst case is, you lead a small project that your boss never care due to low profit or other reason, and your team members, assigned by their boss, often occupied by other important issues or works so irresponsible, how to run the program? I can foresee an exhausted future, even you have whatever ambitious and self-motivate thought. Fortunately, being Program Manager, sometimes we can change some resource allocation after negotiating with the management team. Let’s see what key members we need. Program Officer, she communicates with customer for forecast, order, plan, delivery, invoice, cost control (optional), and monitor the order fulfillment status and delivery schedule. Another job is handle claims and repairs. Use delivery accuracy (DA) and customer satisfaction (Survey score) as her measures. Planner, she receives the forecast and order from Program officer, and then release production schedule as well as available resources, including inventory, line capacity, and watch on the daily output. She has to be sensitive to material shortage and line down time. Anyone made negative influence to the output, she’d fight with him. Use delivery accuracy (DA) and works in process (WIP) as measures. Materials Controller, release the material demand plan according to forecast and control ITO and excess/obsolete materials. Her main task is how to optimize material inventory and improve flexibility to customer demand change. So she must be patient and can thought about all details because any carelessness would cause high loss. A fact is, we cannot loss much money on material. Use ITO and excess rate to measure. Product Document Officer, control the product document, create BOM in ERP and eMatrix. Use the cycle time of processing document as measure.Then we talk about engineering group. Product Engineer, be the leader of engineers to the product quality and manufacturing process performance, who transfer customer specification and requirement into internal format and direct the implementation. Being the interface to customer engineers, he is the owner to customer ECR/ECO, is the commander to customer requirement, the director to product manufacturing. Use customer satisfaction, process indexes (yield, scrap, claim), and project transfer successful to measure. Quality Engineer, he build up and maintain the product quality system, set process target and review it regularly, lead external and internal audit, work as the interface to customer complaint. Series run and sample are under his eyes, all quality issues, for example, cosmetic specification, drop test, thermal test, failure analysis, and so on. Use audit findings, RTV, customer satisfaction to measure his performance. Testing Engineer, he does the development, maintenance and improvement of the test hardware and software control. He’d better have a software change record in convenient for future control. Like Mechanical Engineer, he controls the assembly tooling, jigs. SMT Engineer, he receive SMT documents and fulfill the requirement. He may raise question about to add more inspection equipment to improve the yield, AOI (Auto Optic Inspector), X-Ray, and others. OK, let’s use it whatever the volume is low in NPI phase. An important task assigned to ME and SMT Engineer is, continually improve the efficiency and assembly yield. IE, calculate the standard time and update once something changed.The people talked above are not all, but they can deploy all activities to ensure the project run smoothly. For example, Material Control should work with Buyer to purchase kit materials, Program Officer should work with logistic officer to confirm inbound/outbound issues, Product Engineer should work with Diagnose Engineer to do process trouble-shooting, and so on. So we say the organization like a web, you like a spider, please choose best people for your project and treat them well. Likewise, they make their web then.