How to Manage a Supplier - MakerCon 2014 - May 13, 2014

DRAGON INNOVATION, INC.

How to Manage a Supplier

MAY 13, 2014MAKERCON 2014 | ???

ADAM CRAFT | VP MANUFACTURING | @DRAGONINNOVATE | www.dragoninnovation.com

No Need t o Take Not es:ht t p: //www. sl i deshare. net /dragoni nnovat i on

/how- t o- manage- a- suppl i er

Adam’s Background Contract / Manufacturing Services Agreement Schedule Testing / Quality Overall Supplier Metrics Other Thoughts

OVERVIEW

The Contract

Protecting yourself

The contract, sometimes known as the Manufacturing Services Agreement (MSA), is a legal document spelling out the details of the arrangement with your supplier.

Manufacturing Services Agreement

Quiz What do you think is important to have in this document?

MSA Sect i ons / Topi cs

Manuf act uri ng Servi ces: Defines who is doing what Materials: Vendors, procurement, consigned materials Subcontractor agreement

Forecast s and Purchase Orders: Forecast planning PO procedures, lead times, cancellation

Fees and Payment : Pricing (what’s included / not – VAT, taxes, fees, etc.) Margins / Markup (standard vs. consigned vs. “special”)

Shi pment s, Sampl es, Qual i t y Test i ng: Shipping requirements, schedule Samples: quantity, timing, who pays Quality Testing: Who does it, who pays for it, how it is done Epidemic failures Audit: Record keeping Final Inspection

Product Accept ance & Warrant y: You can return product that doesn’t meet the specified warranties Warranties: Professionally made, original work, tested as specified,

manufactured as specified You’re allowed to visit and audit at any time

MSA Sect i ons / Topi cs

Represent at i ons & Covenant s: This is a legal document, no conflicts of interest Manufacturing in a safe environment, no child labor, ethical, etc.

Int el l ect ual Propert y Ownershi p: Definitions Who owns what

Conf i dent i al i t y: Mutual Non-Disclosure Agreement

Term & Termi nat i on: Defines the term of the agreement How you terminate the agreement

MSA Sect i ons / Topi cs

Indemni f i cat i on & Li abi l i t y Li mi t at i on: General protection for everyone involved & related procedures

Mi scel l aneous: Terms of agreement, use of name Successors / assignment – new agreement Controlling law, jurisdiction, venue

MSA Sect i ons / Topi cs

Schedule

How long does it really take?

You have a working prototype and you’ve chosen a factory. Now you “just” have to start making thousands of identical and robust production versions of your prototype. What could possibly go wrong?

Production Schedule

QuizHow long should you budget from supplier selection until you

ship your first production units?

Schedul i ng Ti ps

When creat i ng a product i on schedul e, consi der t he f ol l owi ng:

Many consumer schedules are driven by Christmas, which doesn’t move. However, you need to be realistic.

Plan contingency in your schedule. Things never go according to plan.

Allow several prototype cycles and allow enough time between prototype cycles so you can fix issues that are found during testing.

Your manufacturing partner is unlikely to be as optimistic or aggressive as you (and this is good).

Schedul i ng Ti ps

Schedul i ng consi derat i ons ( cont i nued) :

Have an onsite presence in the factory.

Track schedule closely and take corrective actions early. Don’t expect to make up the time in the end.

In almost all cases, shipping known bad product is worse than shipping late product. Large numbers of returns can kill your business and reputation.

Avoid: “There’s never enough time to do it right the first time, but always enough time to do it again.”

8 wks 8 wks 8 wks 2 wks 2 mths 1.5 mths

DFM / Mold Drawing

6 -10wks

1st OBS

1 wks 2 wks 2-5 wks*

2-5 wks*

* Depends on Complexity

2-5wks* 2-5 wks*

1 year

CriticalComponents

Selectione.g.

MotorsMagnetic Encoder Wheel

Life testing…

Oct2004

Prototype1st Round

Nov2005

Jan2006

2nd Round

Apr2006

3rd Round

Jun2006

Finished Prototype

VQP Project Hand Over

Quotation Finished Factory Selected

Aug2006

First Shot

Dec2006

Tool Start

Oct2006

MEP

Jan2007

EP1

Feb2007

EP2 A-B

Mar/Apr2007

FEP

Apr2007

PP

May2007

PS

Jun2007

2-5wks*

* Product Complexity Lead Time Between Each Milestone

New Accessory 2 weeks

New Version with some minor changes 3 weeks

New Generation or Simpler New Product 4 weeks

New Product Line – Complicated 4-5 weeks

New Product Line – Very Complicated 5 weeks

The Road t o Product i on

Reference example: Roomba 3

Testing / Quality

How do know what you’re shipping is good?

Manufacturing quality can only live up to design quality, but not beyond. What you design is as good as the product will ever be.

It’s “easy” to make one widget. Making 100K widgets that perform similarly is another story….

Quality / Testing in Production

QuizWhat sorts of tests do you think you should run during

production?

Product i on Test i ng

Pri nt ed Ci rcui t Board Assembl y Test s : In-circuit tests (ICT) – bed of nails Automatic Optical Inspection - AOI Functional / Built-in tests

Overal l / Mechani cal Assembl y: Subassembly functional testing Overall functional / Built-in tests

Ongoi ng: Torque / Tension / Drop HALT / HASS – accelerated life / environmental Life test

Product i on Test i ng / Fi nal Inspect i on

The desi gn has been veri f i ed, and t he purpose now i s t o ensure t hat i t i s bui l t correct l y.

The object is that as much testing as possible is performed on 100% of the product. Normal function testing can usually be tested 100% Abnormal function testing sometimes can and sometimes cannot. Abuse testing cannot.

When testing damages the product so it cannot be shipped, then it must be tested on a sample basis.

Resources: MIL-STD-105E – Officially canceled, but still widely in use in industry. Officially replaced by MIL-STD-1916 for military use and ANSI/ASQ Z1.4

for civilian use. Still used throughout industry, especially in China.

Key paramet ers: Acceptable Quality Level (AQL)

Largest allowable defect rate in inspected product Lot Size

Typically not a matter of choice – determined by other factors. A shipment of goods to one customer may be a lot, as could production from one shift or day, or a batch of parts delivered from a vendor.

Sampl i ng Pl ans

Quality Test Plan

QuizWhere are all of these tests and criteria defined?

Qual i t y Test Pl an

Import ant Sect i ons: Mold qualification process / criteria Pre-Control of Production Process (SPC)

Variable sample inspection: Molded parts, Incoming parts, Critical parts Attribute inspection (interim production)

Static Discharge Test Aging Test Humidity Exposure Test Environmental Test Life Test Regulatory and Safety Requirements

Qual i t y Test Pl an

Import ant Sect i ons ( cont i nued) : Final Inspection

Sampling plan Defect Definition (Critical , Major, Minor) Date Code Transportation Test Aesthetic Inspection Functional Test Disassembly Check Critical Measurements Drop Test Torque / Tension Test Compression Test Paint Abrasion Test

Document at i on Cont rol

THIS IS VERY IMPORTANT! ! !

How: Use ECN’s for every change Tie to date code / production revision

Why: You need to know what you’re building Sometimes required by regulatory agencies (FDA) Helps tie production and/or field failures with potential causes

Overall Supplier Metrics

How do know your supplier is doing a good job?

There are many t hi ngs you coul d t rack, but some key met ri cs t o wat ch over t i me coul d be:

Key subassembly test yield(s) Final functional test yield Final inspection data / trends Ongoing life test results On-time shipment record

Wat ch f or t rends, but al so wat ch f or st epwi se changes.

What should I track?

Other things to watch:Customer returns

Defective vs. non-defective Specific failure analysis – design issue or production issue?

PO lead time

Long lead parts – shortening lead times can help with inventory management / production forecast shifts

Keep an eye out for component substitutions, vendor changes, and worker changes. All could be approved, but may have unexpected results.

What should I track?

Other Thoughts

Bug Tracki ng

In the course of development of any complex project, the number of bugs that will be found will be a large number.

The iRobot Scooba had to eliminate > 1,100 bugs in the last six weeks before production start.

If you miss even one significant bug, then you can fail to meet your quality requirements, and could cause a significant safety problem

Key Poi nt s : Test thoroughly

Emphasize functionality and robustness

Track *all* bugsYou can’t afford to even let one slip through

Fix everythingIn the vast majority of cases, any test you can afford to do (as constrained by cost and time), will generate a short enough list of bugs that you have to fix all of them in order to meet your targets.

Bug Tracki ng

No product is perfect, and you will have failures before and after the product is in the field.

Allocate allowed failure rates to different components and systems, within economic and safety constraints.Allow for unanticipated failures.

Tangent: Failure Budgeting

QuizWhat is a realistic expected failure rate for a product headed for

retail?

Exampl e: Typi cal consumer product ( vacuum cl eaner)

The allowed rate of retail returns is 4% - how is this broken down? Non-defective returns are estimated to be 2.4% (60%) Defective returns are estimated to be 1.6% (40%)

0.55% is budgeted for unanticipated problems 0.65% is budgeted for factory quality, per AQL levels

0.40% is left over for actual defects that occur during the warranty

Fai l ure Budget i ng

Fai l ure Budget i ng

Component Budgeted Warranty Failure Rate

Suction Motor 0.05%Brush Motor 0.10%Belt 0.05%AC Cord 0.10%Switch 0.05%Hose 0.05%Total 0.40%

Questions?

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