Accelerating Supply Chain Performance

Operational Excellence Case Study

1

SEA 2011 All Rights Reserved

Kenny Heifner VP, Quality and Organizational Development, SMS Technologies

In the past few years Kenny has led two organizations to

ISO 9001:2000 registration and three organizations to ISO/TS 16949:2002 registration. Of these 5

organizations, Total Electronics went on to become one of seven National Finalists for the American Association

for Manufacturing Excellence (AME) award in October of

2005. Master of Business Administration, MBA from Anderson University, a Master of Arts in Education, MAE

from Ball State University, and a Bachelor of Science, BS from Purdue University.

SMS Technologies, Inc.

2009 Supplier Excellence Alliance

Supply Chain Innovation Winner�

And

2010 Supplier Excellence Alliance

Operational Excellence Winner�

Workforce Development Finalist�

Employees - 100 in San Diego

Low volume / high mix EMS - Electronic Manufacturing Services including Design, Layout, Rapid Proto-Typing, DFM & DFT, RF Technology, Supply Chain Management

AS9100, ISO/TS 16949, ISO 9001 & 13485

Aerospace & Military Customers:

SMS Technologies, Inc.

Results of USAF Implementation�

Customer-Focused Process Approach

Workforce

Development

Operational

Excellence

ISO/TS 16949:2002

Customer-

Oriented

Process

Approach

AS9100C:2009

Customer-

Oriented

Process

Approach

Leadership

And

Culture

Build Quality In With APQP (Advanced Product Quality Planning)

Process Flow

Diagram

Process Failure Mode

Effects Analysis

Work Instruction Qualification Control Plan

Customer

Requirements

Special / Key

Product

Characteristics ( )

Launch Lean With 3P

Note: Each color represents a different operator’s work cycle

Production Preparation Process

VSM From Raw Material to USAF

CUSTOMER LOCATIONS

LONG - LEAD ITEMS USAF

RAW

ALUMINUM

SUPPLIER

CUSTOMER LOCATIONS SEI

CUSTOMER LOCATIONS SMS

CUSTOMER LOCATIONS ADC

SHIPPED AS AS NEEDED

SHIPPED AS 1x DAY

SHIPPED AS 1x DAY

FINISHED GOODS

SHIPPED AS WEEKLY

ADC�PRODUCTION

CONTROL

SEI�SALES ORDER

BANK

SMS�PRODUCTION

CONTROL

100 Day 100 Day 100 Day

Results of NSA Implementation�

Trouble In The Beginning�

NSA business was acquired by SMS in 2007

Volume was 260 sets (13-PCBAs) per month

Many of the key components were obsolete

Consigned material was furnished sporadically by our Tier 1 customer

Low incoming yield from a key directed-source resulted in quality problems throughout

Material handling costs were left out of the quote

SMS was losing >175% of the quoted margin�

The 1st SMS Current State Map

Prod. Ctrl.

Final Insp. & Pack-out

Coating

Outside

Supplier

Source Inspection

Wash 2nd Assy & Wave

Wash SMT & Test

Shipping

Tier 1

Weekly

Boards &

Components

5-days .5 day 1 day .25 day .5 day

5 1 40 1 40 20 20

LT ~8 days

VA =127 min. 1

9 – Operators 1st Shift

1 – Inspector 1st Shift

1 – Operator 2nd Shift

Weekly

SMS WH

.25 day .25 day .25 day

No Clean In-Circuit

Test

Lead Time ~ 8 Days

VA Time = 127 Minutes

The NSA Customer-Focused Team�

Program Manager

Manufacturing / Quality Engineer

Test Engineer

Value-Stream Manager

Production Planner

Procurement Specialist

Cell Leads

The Turn-A-Round Begins�

Our customer agreed to let SMS manage the supply chain including obsolete components

SMS qualified a second source to provide key flex cables & helped them improve the process

Quality improved significantly throughout the entire value-stream as a result (98.4% SMS)

The SMS Customer-Focused Team conducted a Kaizen event to develop a mixed-model cell around the wave soldering process

The Team built every PCBA every week

The NSA Cell Lay-out�

The New SMS Current State Map

Prod. Ctrl.

Conformal Coating

No Clean In-Circuit

Test

Wash 2nd Assy & Wave

Wash SMT & Test

Final Assy Pack-out &

Shipping

Tier 1

Weekly

Boards &

Components

.3 hrs.

5 1 40 1 40 20

LT ~8 hrs.

VA =107 min.

5 – Operators 1st Shift

1 – Inspector 1st Shift

Weekly

SMS WH

4.4 hrs. .5 hrs.

max. 10

pcs.

FIFO FIFO

max. 6

pcs.

FIFO FIFO

max. 6

pcs.

FIFO FIFO

max. 6

pcs.

FIFO FIFO

max. 6

pcs.

FIFO FIFO

.3 hrs. .3 hrs. .3 hrs.

Lead Time ~ 8 Hours

VA Time = 107 Minutes

LIFE, Quality & Margin Improves�

The New SMS Future State Map

Prod. Ctrl.

SMT, Test & Wash

Tier 1

Twice Weekly

Boards &

Components

5 min. 90 min.

LT <4 hrs.

VA = 95 min.

4 – Operators 1st Shift Twice Weekly

SMS WH

2.2 hrs.

2nd Assy., Wave, Test, Conformal Coating, Pack-out & Ship

Combine 2nd Assembly Combine

Lead Time < 4 Hours

VA Time = 95 Minutes

NSA Current-State Value Stream Map 2-19-10

0145

Final Insp.

& Rpt. 120s

0140

Battery Cover

Dust C. 600s

0135

QAA ATP

& Rpt.

45min

0125

2nd INSP

& Rpt.

180s

0115

2nd ATP

& Rpt.

45min

0100-10

Open Insp. Close 720s

0075

45min

0070

Close Unit

45s

0065

INSP V/M #1

& Rpt. 135s

0060

PWAs Rec. SNs 120s

0055

INSP & Rpt.

60s

0050

Back Plane

Rec SN 240s

0045

120s

0040

Install Shield

240s

0035

120s

0020-30

Black & Red PWAs 660s

V/M #3

0095

Burn In

72 hrs.

0085

Vib- ration

2700s

c/o 1hr. c/o 1hr. (Between Batches)

(Between Products)

~95% up

~90% up

2 per 2 per 2 per

1st ATP

& Rpt.

INSP & Rpt.

INSP & Rpt.

27 25 14 6 35

6 18

9

3 10

0145

QAA INSP.

120s

0015

INSP. Labels / Travele

r 900s

0010

Pull Kit & Print Docs. 900s

0150 Stock

30-day Sample

Tests 1-60-day

0155-75

0180-85

Pack Ship

Final

Various NSA Locations

250

60-65 Units Per Week

SMS Technologies

<400 Units / 2 - Months

Production Control 400 Units /

2 - Months 200 Units Per Month

Work Orders 400 Units /

2 - Months

660s 240s 240s 120s 45s 1350s 720s 1350s 1350s 600s VA=121min

LT=21.7days

13 – People 1-10-Hour Shift 4:30 AM – 3:00

PM ½-Hour Lunch 2-15 Minute

Breaks 15 Minutes Set-up Total 9.25

Hours

2.7d 2.5d 1.4d .6d 3.5d 6.6d .3d 1.0d

- max 36 units

0095

120s

0090

Knobs &

Screws 240s

0080

120s

0075

60s

0070

60s

0060

Install Key-

board

180s

Interface PWA

INSP & Rpt.

Install Shield

INSP & Rpt.

5 11 10

VA=10min

LT=2.6d

Lead Time = 21.7 Days

VA Time = 121 Minutes

~1500 Square Feet �

NSA Future-State Value Stream Map 2-26-10

0140-0145

Install Battery, Dust Cover &

Final Inspection 720s

0135

QAA ATP

& Rpt. 45min

0125

2nd INSP

& Rpt. 180s

0115

2nd ATP

& Rpt. 45min

0100-10

Open Insp. Close 720s

0075

45min

0020-0070

Build, Inspect & Close Unit

1740s

V/M #3

0095

Burn In

72 hrs.

0085

Vib- ration

2700s

c/o 1hr. c/o 1hr. (Between Batches)

(Between Products)

~95% up

~90% up

2 per 2 per 2 per

1st ATP

& Rpt.

0145

QAA INSP.

120s

0015

INSP. Labels / Travele

r 900s

0010

Pull Kit & Print Docs. 900s

0150 Stock

30-day Sample

Tests 1-60-day

0155-75

0180-85

Pack Ship

Final

Various NSA Locations

50

50 Units Per Week

SMS Technologies

<400 Units / 2 - Months

Production Control 400 Units /

2 - Months 200 Units Per Month

Work Orders

400 Units / 2 - Months

1305s 1350s 720s 1350s 1350s 600s VA=121min

LT=3.2days

max 19

units

- Empty Daily

- max 36 units

Week-end

Buffer

7 – People 1-10-Hour Shift 4:30 AM – 3:00

PM ½-Hour Lunch 2-15 Minute

Breaks 15 Minutes Set-up Total 9.25

Hours

55 1

3.1d .1d

721-1 0060-0095

Build / Inspect Panel Assembly

780s

- Trouble-Shooter / Rework

- Also help with Rework

VA=10min

LT=13min

Lead Time = 3.2 Days

VA Time = 121 Minutes

020-030

035-040

055-060

Repaired

Failed

065-070

045-050

080

120

125

130

140

145

Failed

3rd ATP 2nd ATP 1st ATP

Finished Units

Rework ATP

Failed

100-115

To Vibration

Return From

Burn-In To

Finished Goods

Start

Panel Assembly060-095

Trouble-Shooter / Rework -

Also help with Rework -

Projected LIFE Improvements�

Actual LIFE Improvements�

Pitfalls to Improvement�

The power of a disciplined lean culture should not be underestimated

Workforce development is also a critical component of a successful lean transformation

Independent inspection requirements forced us to continuously move operators from station to station

The customer shut down SMS operations for 4 weeks after the event to use up excess inventory

The assembly process lacked enough burn-in capacity to keep pace with the projected rate

The burn-in chamber is a monument

12 / Day In 12 / Day Out

36 Unit Max.

Maximum 84 Unit Throughput in 7 Days (24/7)

20 Unit Max.

Overflow

Overflow FIFO Overflow Out

Bottlenecks / Constraints�

Potential Future Improvements�

Combine inspections steps

Combine functional test operations

Pack-out at the end of the cell

Locate all assembly & test in one place

Ship to NSA every month vs. 2 months

Add more visual controls

Develop returnable shipping kanbans

Make milk-runs twice a week

KANBAN Box 1 Full Board Set

with Front Cover

Daily, Weekly & Monthly Output (For 10 & 12-hour Shifts)

Lessons Learned�

The significance of lean culture and workforce development on the ease of implementation

The power of the SEA Roadmap

Removing the blinders and “learning to see”

Having faith when it is not easy to see the way

Supply chain partners can team-up to turn a losing proposition into a sustaining asset

Operational Excellence is multiplied many times over when it is applied to the entire value stream

VSM From Raw Material to NSA

CUSTOMER LOCATIONS

LONG - LEAD ITEMS NSA

RAW

FLEX CABLE

SUPPLIER

CUSTOMER LOCATIONS Customer

CUSTOMER LOCATIONS SMS

CUSTOMER LOCATIONS Supplier

SHIPPED AS AS NEEDED

SHIPPED AS 1x Week

SHIPPED AS 1x Week

FINISHED GOODS

SHIPPED AS WEEKLY

Supplier�PRODUCTION

CONTROL

Customer�SALES ORDER

BANK

SMS�PRODUCTION

CONTROL

</= 260 Mo </= 260 Mo </= 260 Mo