Managing Outsourcing Risks

Transcription

1 1 Managing Outsourcing Risks Webinar 9:00AM PST Technical Support:

2 2 Few Notes Mute your phones us Shrink GoToWebinar window Send your questions via Chat

3 2 Today s Speakers Bijan Dastmalchi Symphony Consulting info@symphonyconsult.com Mike Silverman OpsAlaCarte info@opsalacarte.com Al Alaverdi SigmaQuest info@sigmaquest.com

4 4 Agenda Building Quality Provisions into Your Contracts Symphony Consulting Quality Risks OpsAlaCarte KPIs For Early Detection SigmaQuest Q&A

5 Building Quality Provisions into Your Contracts Bijan Dastmalchi Symphony Consulting

6 4 Symphony s Areas of Practice Supply Chain Excellence Lean implementation in an outsourcing environment Demand forecasting and management Establishing an efficient supply chain Manufacturing Outsourcing EMS qualification, selection, and audit Cost modeling and EMS negotiations Contract creation and negotiations Transition from internal to outsourced manufacturing Offshore vs. on-shore sourcing analysis On-the-ground resources in Asia for US OEMs Procurement Strategy development IT (indirect) hardware, software, services

7 Why you need contracts (external) Sarbanes-Oxley Forecasts Inventory Pricing Environmental directives RoHS EU China California Etc. WEEE REACH Major changes (product or company) NPI / Obsolescence / ECO Mergers and acquisitions Global supply chain and manufacturing 5

8 6 Why you need contracts (Internal) An outline of terms and conditions discussed and agreed to between the customer and supplier which serves four fundamental purposes: Sets expectations for how business is conducted Serves as a reference tool for what-if conditions Provides a doctrine for dispute resolution Forces senior level management involvement and interaction Bottom Line: Places your company s financial projections on a solid foundation

9 7 Common Strategic Mistakes Contract negotiation follows the award of business Cookie-cutter approach on all contracts not tied to specific business conditions Executive management hands-off approach until late stages

10 Important terms and conditions: Quality touch points Liabilities Design Services Pricing Limitation of Liability Delivery Supply Agreements Indemnities Warranty Termination RMA Services Change Mgmt Impacted by Quality 8

11 9 Quality Provisions Transparency: PPM, first-pass yield, etc. Real-time access to information Visibility to what you can expect in the field Impact of yield on pricing Unexpected price increases due to poor yields Service level agreements pass through obligations Late delivery provisions imposed by your customers End user imposed quality targets

12 10 Quality Provisions Environmental compliance Obligations of manufacturer vs. OEM Warranty terms Early failure detection through RMA process Epidemic failures Recall campaigns Resource commitment Corrective actions Quality improvement Product change management AVL updates Process & component changes

13 11 Quality Provisions Key Message: Quality performance touches many of your contractual obligations. Your financial exposure is drastically reduced if you catch problems on the line rather than in the field.

14 12 Contact Information For more information visit: Contact Information: Bijan Dastmalchi

15 37 Manufacturing Outsourcing Forum April 30, 2008: What OEMs Must Control in Manufacturing Outsourcing Discount for SigmaQuest customers and prospects (use promotion code SIGMA430)

16 Quality Risks Mike Silverman/Bob MacLevey OpsAlaCarte

17 17 assists clients in developing and executing any and all elements of Reliability through the Product Life Cycle. has the unique ability to assess a product and understand the key reliability elements necessary to measure/improve product performance and customer satisfaction. pioneered Reliability Integration using multiple tools in conjunction throughout each client s organization to greatly increase the power and value of any Reliability Program.

18 Situation 18 Today, more and more companies are outsourcing their manufacturing. Whether we are going to China, India, Mexico, or Eastern Europe, the fact remains that as we outsource our manufacturing, we are outsourcing our quality.

19 Call to Action 19 But this doesn t mean that we have to lose our ability to control our quality. It just means we have to use new and innovative methods to assure good quality. And we need to stay on top of the situation.

20 Outsourcing: Risk to Quality 20 Here are some of the risks and how we can control these risks Lack of control over manufacturing process Lack of visibility into the testing process Correlation of Field Failures to production failures Driving changes in production to improve quality

21 Outsourcing: Risk to Quality 21 Lack of control over manufacturing process Identifying the Process Capabilities What is the inherent failure rate of the production line? Are failures induced by the production line? Quick and timely identification of inferior material Inventory control Ability to quarantine suspect material

22 Outsourcing: Risk to Quality 22 Lack of visibility into the testing process Quick and accurate data reporting & analysis First pass yields Analysis performed on failures Depth of analysis performed Rework No Fault Found Dogpile

23 Outsourcing: Risk to Quality 23 Correlation of Field Failures to production failures Test escapees? Production generated failures? Intermittent failures?

24 Outsourcing: Risk to Quality 24 Driving changes in production to improve quality Do you have control to do this? Correlating the effects of change

25 Conclusion 25 Managing your outsourcing means you must take an active role with your suppliers and build a trust relationship It does NOT mean jumping around to find the lowest price It will be more expensive at first but it will pay off once you establish the process

26 Support Provided 26 Often times companies don t have the technical expertise or the bandwidth to manage the quality of an overseas supplier That s where Ops A La Carte can help!

27 20 Contact Information For more information visit: Contact Information: Mike Silverman / Bob MacLevey (408) mikes@opsalacarte.com/robertm@opsalacarte.com

28 Measuring KPIs For Early Detection Al Alaverdi SigmaQuest

29 22 Product Quality Ecosystem Remote Diagnostics, Field Service Mfg Insight Engr Lab/Design for Quality RMA/Reverse Logistics Insight Supplier Quality Insight

30 23 Eliminate Data Fragmentation Single View of Truth

31 24 Quality Management - From Creation To Consumption Component Quality Genealogy Test Rework Component Engineering Supplier Quality Manufacturing Quality Reliability Manufacturing Engineering Service & Support Risk Detection Complaints FA & Repair Root Cause & Corrective Action Verification (ECO Effectiveness)

32 25 40% of customers Customers File Incident Ticket RMA Receipt Oracle Call Home SAP 0.5% 99.5% RCA Pass/Fail Data 3PL-1 (Module) 3PL-2 (Module) Typical Scenario - Data, Data Everywhere IFS / Stars / Tars XML (7C6) Detailed Test Data Part A Test & Repair Oracle Quality DW Legend Home Grown Repository (OEM) ERP / CRM software (OEM) Supplier Repository Other Reports Screening / Failure Analysis Centers Repair Centers / sub-tiers 3PL-1 (System) Internal RMA (System) Repair-1 (Component) Repair-2 (Component) Repair/ FA data Repair/ FA data Test Data Part B Partial Data Test database Dept. Database Supplier Root Cause FA data Desktop Database Engineering Feedback Corporate Reliability Reports SQE FA Reports

33 40% of customers Customers File Incident Ticket RMA Receipt Oracle Call Home SAP 0.5% 99.5% RCA Pass/Fail Data Typical Scenario - Data, Data Everywhere IFS / Stars / Tars XML (7C6) Test & Repair 3PL-1 (Module) Fragmentation 3PL-2 Test (Module) Data Part B Oracle Quality DW Legend Home Grown Repository (OEM) ERP / CRM software (OEM) Supplier Repository Other Reports 26 Screening / Failure Analysis Centers Repair Centers / sub-tiers 3PL-1 (System) > 15 Data Sources Test Internal database RMA Test Data (System) Part B Repair-1 (Component) Repair-2 (Component) Repair/ FA data Repair/ FA data Partial Data Dept. Database Supplier Root Cause FA data Desktop Database Engineering Feedback Corporate Reliability Reports SQE FA Reports

34 40% of customers Customers File Incident Ticket RMA Receipt Oracle Call Home SAP 0.5% 99.5% RCA 3PL-1 (Module) 3PL-2 (Module) Pass/Fail Data Typical Scenario - Data, Data Everywhere IFS / Stars / Tars Latency XML (7C6) Test Data Part B Test & Repair Oracle Quality DW Legend Home Grown Repository (OEM) ERP / CRM software (OEM) Supplier Repository Other Reports 27 Screening / Failure Analysis Centers Repair Centers / sub-tiers 3PL-1 (System) Internal RMA (System) Repair-1 (Component) Repair-2 (Component) 30 days Repair/ FA data Repair/ FA data Test Data Part B Partial Data Test database Dept. Database Supplier Root Cause FA data Desktop Database Engineering Feedback Corporate Reliability Reports SQE FA Reports

35 Commitment to Clean Data 28

36 29 Data Acquisition Challenges Political Engineering, Ops, Service, Quality Component Suppliers, CMs, Repair Centers >> Build win-win relationships << Data Quality Accuracy, Granularity, Latency Consistency (Part #, Serial #, Version, Revision) IT Application, Large volumes of data, Support

37 Measuring Leading Risk Indicators 30

38 31 Leading Risk Indicators What happened? Why? - What is the root cause - Is it a Design, Process or Supplier Issue? - How do I prevent it from happening again

39 32 Design Early Warning Indicators Increasing Bone pile Unexpected parametric shifts Unusual test times High component failure rates Decrease in Test Confidence Increase in False failure rates High retest rates

40 33 Process / Component Early Warning Indicators Low yields Increasing bone piles Wide Station & Fixture variances Skipped tests Repeating Process defects High Component fall out rates

41 34 Field & Factory Correlations Do reworked boards fail more often in the field Do Field NTFs have a higher failure rate than repaired ones Looks for failure patterns in Factory & the Field

42 Demo 35

43 36 Benefits of Early Warning Systems Cultivate holistic thinking for greater visibility. Invest in Early Warning best practices across your supply chain Empower intellectual resources to make better decisions, sooner - including your CMs & Component Suppliers

44 37 Contact Information For more information visit: Contact Information: Al Alaverdi

45 38 Question & Answer Thank you for attending for more information: For more information visit: For more information visit: For more information visit: Contact Information: Bijan Dastmalchi Contact Information: Mike Silverman Contact Information: Al Alaverdi