supplier quality – one company’s approach

Supplier Quality – One Company’s Approach

January 8, 2013Presenter: Curtis Firstman

Venue: ASQ PDX Monthly Meeting

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Presenter: Curtis Firstman◦ 20 years at Intel Corp, mostly in Q&R technical managerial

roles◦ Lean and Certified Six Sigma Black Belt◦ BA Biological Sciences, BS Electronics Engineering, MBA◦ Married 26 years with 4 adopted children

Currently working for Celestica Corp◦ A Toronto, Canada Company – off shoot of IBM◦ Approx 35K employees with ~33 sites worldwide◦ Contract manufacturing, design, engineering, system

assembly, fulfillment and after market servicing◦ Complex Mechanical Division – PDX, Wuxi China, and Johor,

Malaysia Primarily semi-conductor equipment

A Short Presenter and Company Synopsis

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Product goodness and consistency of good product can make or break a company◦ A defective ¼ cent capacitor from your supplier can

cause a lines down situation Your Company Your Customer End Customer

Some customers demand flawless products◦ Aerospace, silicon fabs, automotive, military, medical….

Some customers demand suppliers and supplier’s suppliers follow a particular protocol = quality◦ e.g. Copy Exactly (CE!) for Intel Corp

Product ‘Cost Downs’ & ‘product margins’ Other reasons – fill in your company’s reasons

Why Drive Supplier Quality?You’re only as

strong as your

weakest link

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Some suppliers are simply not as mature as others with respect to quality tools, processes, company-wide quality culture, top-down commitment to quality

All suppliers have the most wonderful PowerPoint slides that prove that their company is the best in the world◦ Give the impression of a high ‘Wow Factor’ but right below the surface

often lies a BIG ‘Ow Factor’ ‘Head Shaker Events’ - Defects, inconsistent quality, no idea what systemic root

cause is, how to fill out an 8D or an FMEA, what preventive C/A is, etc. etc. etc. If the owner doesn’t mandate quality, your battle is tough!!! And it gets even worse when dealing with suppliers in different

geographic regions like China, Malaysia, Vietnam etc. Getting a handle on your suppliers takes a lot of effort, focus and

follow-up

Not All Suppliers Are Created Equal

Ad-Hoc Defined

Effective Efficient World Class

There is no short cut to successfully managing your suppliers’ quality

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So, How Does Celestica Complex Mechanical Manage Its Suppliers’ Quality?

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You’ve Got to Define What You Measure!

Score OTDDefects

PPM Violations Cost Lead TimeCommitment to

Celestica's Business

Continuous Improvement

Culture

Time Period monthly monthly monthly quarterly quarterly quarterly quarterlyResponsibility Buyer SE SE SM SM SM SE/SM/Buyer

0 = Poor Performance

0 less than 85%Greater than

30,000>1 in previous

12 Months

Not Meeting Cost Roadmap

on any products

PO Driven: >25 days

Will not accommodate

change requests

Consistently missing commitments

1 = Not Meeting Expectations 1 85-95%

Between 30,000 and

Target

1 in previous 12 months

Not Meeting Cost Roadmap on all products

PO Driven: 15-25 days

Responds slowly or frequent rejections

Meeting Commitments but

requires Celestica's Management

2 = Meeting Minimum Expectations

2 95-99% Within 5% of Target

<1 in previous 12 months

Meeting Cost Roadmap

PO Driven: 10-15 days

Generally responds in a

timely fashion and accommodates

requests

Meeting commitments with minimal Celestica

involvement

3 = Good Performance

3 >99% Below Target<1 in previous

24 months

Exceeding Cost Roadmap by

>10%

PO Driven: 0 - 10 days

Consistently responds quickly,

accepts recommendations

Self Managing - Proactive

4 = Benchmark 4 100% Zero Defects<1 in previous

36 months

Exceeding Cost Roadmap by

>20%

Contractual Inventory

Mgmt. Program

Consistently responds quickly,

accepts recommendations and Proactively

proposes improvements

Benchmark Performance

3 Month Rolling Average Sept-Oct-Nov 2012Partner Performance Measures

Performance Ease of Doing Business

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Metric Roll-up w/Balanced Scorecard - 3 Month Rolling Average of Key Suppliers’ Performance

10 20 50 15 10 25 25

Supplier OTD Defects Violations Cost Lead Time Commitment to Celestica CIP Culture Summary

Category 1 Supplier 3 3 3 3 4 4 3 8.06




Category 2 Supplier 4 4 3 2 1 2 2 6.61Category 1 Supplier 2 3 3 3 1 3 2 6.61Category 1 Supplier 4 4 3 2 1 2 2 6.61Category 2 Supplier 1 4 3 2 1 2 3 6.53



Category 1 Supplier 3 3 3 2 1 2 2 6.13Category 2 Supplier 3 3 3 2 1 2 2 6.13Category 1 Supplier 2 3 3 2 1 2 2 5.97












Category Weighting

Best

OK?

BadWhat are the important

categories your company

needs to track?

804/22/2023

Category-2 (25)

COMMENTS:

PORTLAND Monthly Defects Qty~ 0~ 0~ 0~ 0~ 0~ 0~ 0~ 0

Total Defects 0

WUXI Monthly Defects QtySHGH: Non-Functional~Dimension 1

~ 0~ 0~ 0~ 0~ 0~ 0~ 0

Total Defects 1

NO PORTLAND DEFECTS this month

NO WUXI DEFECTS this month

12'11 01'12 02'12 03'12 04'12 05'12 06'12 07'12 08'12 09'12 10'12 11'12 11-R 12'12OTD 99% 100% 98% 100% 16% 98% 100% 100% 98% 100% 83% 89% 89% 67%3M Avg 98% 100% 99% 99% 68% 59% 34% 100% 100% 100% 97% 96% 91% 89%Received 216 2324 1838 2373 2516 337 354 1368 262 2075 399 317 3

89%

89%

70%

75%

80%

85%

90%

95%

100%

OTD

OTD (Celestica PDX & Wuxi)

12'11 01'12 02'12 03'12 04'12 05'12 06'12 07'12 08'12 09'12 10'12 11'12 11-R 12'12DPPM 9259 0 544 843 0 23739 0 731 7634 0 0 3155 3155 3333333M Avg 2248 1570 685 459 446 1914 2495 4371 1512 810 731 358 1052 2782

3155

3155

0

2000

4000

6000

8000

10000

12000

14000

DPP

M

DPPM (Celestica PDX & Wuxi)

A. Description/Issue: OTD scores lowStatus/CA: Brenda sent Sally (Wuxi Buyer) an email requesting her to improve data management ordering from XYZ Company (we have plenty of parts in stock so suspect the wrong messages are being sent to XYZ Company for delivery dates).

History – Major Hitters: Dec - 1u VTM leak at the gate – changed gate but still leaks (RTV), 1u VTM door can’t close by using software (RTV), May - 3u wrong connector standoff used, 2u connector was male but should be female, 2u screw damaged by VAT, 1u vacuum leak, Aug - 1u- Internal Damage, 1u- vacuum not pass

XYZ Company OTD & DPPM Details for a Given Month

904/22/2023

Category-2 (02)

COMMENTS:

A-C

12'11 01'12 02'12 03'12 04'12 05'12 06'12 07'12 08'12 09'12 10'12 11'12 11-R 12'12OTD 87% 99% 94% 99% 99% 99% 99% 99% 99% 99% 98% 98% 98% 95%3M Avg 91% 95% 95% 98% 98% 99% 99% 99% 99% 99% 99% 99% 99% 98%Received 214 812 714 1110 883 656 579 514 508 612 295 245 245 84

98%

98%

80%

82%

84%

86%

88%

90%

92%

94%

96%

98%

100%

OTD

OTD (Celestica PDX & Wuxi)

12'11 01'12 02'12 03'12 04'12 05'12 06'12 07'12 08'12 09'12 10'12 11'12 11-R 12'12DPPM 130841 14778 57423 6306 10193 7622 13817 9728 13780 9804 16949 16327 16327 476193M Avg 85366 53361 46552 22762 21057 7928 10387 10292 12492 11016 12721 13021 14360 20833

16,3

27

16,3

27

0

10000

20000

30000

40000

50000

60000

70000

80000

DPPM

DPPM (Celestica PDX & Wuxi)

PORTLAND Monthly Defects QtyNon-Functional ♦ Leak 1

♦ 0 ♦ 0 ♦ 0 ♦ 0 ♦ 0 ♦ 0 ♦ 0

Total Defects 1

WUXI Monthly Defects QtyNon-Functional ♦ Software 2

Non-Functional ♦ Communication 1 ♦ 0 ♦ 0 ♦ 0 ♦ 0 ♦ 0 ♦ 0

Total Defects 3Avg Eval Time: 2(days) Range: 1~4

Avg Eval Time: 2(days) Range: 2~2

A. Description/Issue: PDX – 1u end effector vacuum leak, Wuxi – 1u robot arm wavering during calibration, 1u controller display abnormal, 1u test station map alarm.Status/CA: PDX – 1u will be sent to ABC Company for FA, Wuxi 1u sensor needed to be adjusted (a trend also in previous monthly fails), 1u wavering robot arm is a trend from previous months too so will address with ABC Company,

History – Major Hitters: Dec - 13u functional fail (gain value of optical fiber sensor <2K), 6u ECO 8840 need to swap out good board for controller PCB with known issues (covered by ABC Company warranty), 5u non functional communication, 4u non functional mechanical. Feb - 32u need AXC boards upgraded in controllers, April – 4u deep track gouges, June - 3u robot track damaged (2u deep impact mark, 1u crate damage and track damage), 1u wrong end effector shipped, 1u manipulator inside the kit was wrong due to incorrect Customer documentation, 3u excessive armset lateral vibration. July - PDX - 3u robot errors displayed, 1u mounting bracket and programming CD missing and need to be shipped by ABC Co. Wuxi – 1u arm conveyer belt broken, 1u robot mapper needs adjustment, Aug - 6u Non-Functional, 1u broken belt, 1u cleanliness, Sept - PDX – 2u missing robot PA cables, 1u end effector has blockage inside arm causing vacuum pressure fail, 1u intermittent robot vacuum failure, 1u need to ASAP replace ‘tool down’ situation Wuxi – 1u FI controller display bad, 1u FI controller not working , Oct - PDX – 1u robot error, 1u controller displaying error code, 1u cable wire exposed, 1u P/A will not rotate wafer while cycling, Wuxi – 2u end effector map issues

ABC Company OTD & DPPM Details for a Given Month

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Weekly phone calls with the supplier to discuss all new ‘supplier fault’ defects as well as progress against previous ‘not yet closed’ defects.

How to Make Defect Data More Leading than Lagging

DMR or RMA Date PQTed Part # Cost Qty Pass/Fail Fault Disposition CoPrimary Fail Category Secondary Fail Category DMR Found At Vendor Customer Part Source Problem PQT Notes MRB Notes Part Description

DMR 117972-1 December 6, 2012 AU-716258B $25 1 Failure confirmed Supplier Return to vendor Not to Print Part Mark/Label ELECTRICAL CIA TECHNOLOGIES INC. R&D TECHNOLOGIES, INC. (MN) Purchased MISSING (TOOL 3) PRINT LABEL. Part is missing silk screen. Return to vendor for repair orreplacement.

PLATE, CONTROL RACK FRONT

DMR 118141-1 December 10, 2012 714-108662-900B $219 1 Failure confirmed Supplier Use as is Not to Print Surface Finish IRI/IQA CIA TECHNOLOGIES INC. Purchased

Found during IRI inspection. Parts came in on MT 844874from CIA TECHNOLOGIES INC. has issue: The finishcolor on this part is little bit darker looks like it over baked,and the readings numbers on the spectrophotometer on thedelta B are 0.98 thru 1.16 this is not acceptable, so per printnote 3 and 4 this parts does not match thespecifications. The delta B should be +-0.60

Confirmed: Part did not matcht he paint coupon and thespectrameter readings were also out of specification.Part is stamped as an A REV. CIA mfg to restamp

PL,BLK OFF,BFR,FACET POS,

DMR 117927-1 December 11, 2012 853-108198-001B $3,600 1 Failure confirmed Supplier Return to vendor Not to Print Dimension MINI ENVIRONMENT CIA TECHNOLOGIES INC. NEW HOPE CORPORATION PurchasedPart # 714-108201-001A is not made to spec. It is possibly asimilar part that was stamped incorrectly.

PN 714-108201-001A from this kit was not built to print.It looks like the bend was done in the wrong place as boththe height and length dimensions are off. Pictures loaded indocuments. Kit will remain on mfg floor but we need toreturn the bracket only for a replacement. This is a shortagepart so if we could get a hot swap that might be best.

ASSY,FR,RIGHT,UPPER RACK,

DMR 117716-1 December 13, 2012 ANA0063C $7,459 1 Failure confirmed Supplier Repair in house Not to Print Dimension WAREHOUSE CIA TECHNOLOGIES INC. OLD FEAR SEMICONDUCTOR EQUIP GMBH

Purchased

Outrigger tube, ANA0089B, are out of spec per currentengineering guidance re verticality of caster all thread screw.Spec is now vertical +/- 1 degree. One side of the leftoutrigger tube is 87.8 degrees and one side of the rightoutrigger tube is 87.9 degrees. This defect was discoveredfrom Jahor build tool on DMR 117245. Swapped out withunit on this frame.

CIA has sent replacement outriggers to cover this problem.Place good outriggers with the frame and return to stock.

HARD STRUCTURE,4W,VARIAN

DMR 117258-1 December 18, 2012 LAA0003D $13,355 1 Failure confirmed Supplier Repair in house Not to Print Assembly MINI ENVIRONMENT CIA TECHNOLOGIES INC. TERRA BUENOA CORPORATION Purchased

there are multiple issues on this frame.1) missing 3 Leveling feet from a previous frame so we endedtaking 3 from this frame.2) set screw on aligner bracket has seize up duringinstallation. possibly from locking heilcoil.3) the bump out panel above aligner is installed incorrectly.4) caster are not the same length. do a comparison on the 2front caster. 5) the right side floor panel is missing #714-065753-001B

1) Leveling feet PN 13LE0052 we have in inventory2) Aligner bracket PN 839-065774-001B had one of the setscrews strip out. Need to order replacement from CIA3) The bump out is installed backwards. I tried to remove itto turn it around but one of the screws is cross threaded.Need to write a fab shop request to see if we can remove thestuck screw. $30 added to cost for Fab Shop time.4) Qty 1 caster PN 35CA0031 we have in inventory5) RHS floor panel, PN 714-065753-001B needs to beordered from CIA.

If fab shop can remove the bump out panel then we need towrite a work order to get replacement parts pulled from stockor ordered from CIA.

MRB approved cost to repair

ASSEMBLY, THIRD LEVEL

DMR 118064-1 December 18, 2012 714-108522-001B $47 1 Failure confirmed Supplier Scrap Not to Print Part Mark/Label MINI ENVIRONMENT CIA TECHNOLOGIES INC. TERRA BUENA CORPORATION Purchased Part number stamp was upsidedown and in the wronglocation.

This part has the part stamp in the incorrect location.Usually this would be repaired in house but there is also ascratch/ dent in the powder coat beyond bare metal. This isa low dollar part and is not cost effective to return for repair.Scrap.

MRB approved scrap due to damage on part

PNL,KVM BOX AND ENCL

DMR 118399-1 December 19, 2012 714-108453-002C $595 3 Failure confirmed Supplier Repair in house Not to Print Missing part MINI ENVIRONMENT CIA TECHNOLOGIES INC. TERRA BUENA CORPORATION Purchased missing qty:4, part #: PF50-M5-1.Quantity 3 of PN 714-108453-002C are missing the 4 pemspart #: PF50-M5-1. Parts will be fixed in fab shop. Notifyvendor of supplier fault failure.

ENCL,UI,TEACH PENDANT

DMR 117928-1 December 19, 2012 853-108190-001A $450 1 Failure confirmed Supplier Return to vendor Not to Print Dimension MINI ENVIRONMENT CIA TECHNOLOGIES INC. TERRA BUENA CORPORATION PurchasedHinge mounting holes are not drilled to spec. Door cannotclose when mounted due to this problem.

Then mounting holes for the hinge are not to spec creating agap when trying to close the door. Return to vendor forreplacement or credit.

ASSY,PNL,R SIDE,ATM,UPPER

DMR 117922-1 December 20, 2012 NNF0061A $3,275 1 Failure confirmed Supplier Return to vendor Workmanship Installation Quality EFEMCELL1 CIA TECHNOLOGIES INC. FLEET FEET INCORPORATED PurchasedNNP0051,coner skin light curtain wing panel won't line upwith the holes on NNF0061A main frame.it appears thatNNF0055A post front left is bowed.

The frame is not square on the front. Both sides bowcausing ~ 1/8- 1/4 gap when checking flatness. Unable toinstall front panel due to this issue. Return to vendor forrepair or replacement.

WELDMENT,FRAME,4W

• Grow your supplier’s maturity• Drive your suppliers to take ownership of their defects• It takes your consistent time & effort to make permanent your supplier’s ‘positive’ habits – no shortcuts

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Best way to stop smoking – never start to smoke. Best way to prevent supplier issues:

◦ Robust pre-selection process ◦ Beyond cost and delivery as the major criteria◦ Quality is a major pillar that can (and should be) a

major ‘show stopper’ Take the warning signs seriously Don’t trivialize the major and minor findings Is this supplier really capable of correcting the gaps? If your honest answer is ‘No’ then do the right thing and

move on to explore another supplier as the one you should do business with

Best Quality Problem Prevention:

I thought I could change my spouse’s habits after I married them but I found out that I could not

Result = DIVORCE

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Perform Annual Audits◦ Track all findings to systemic C/A

Ongoing Supplier ‘self’ internal audits Follow-up on all major & minor audit findings Training on quality tools:

◦ 8D◦ Pareto Analysis◦ FMEA

SPC◦ Six Sigma◦ Kaizen◦ Lean◦ Visual Charts for Accept / Reject◦ More…………

Training on your company’s expectations, spec requirements, process requirements

Do not assume the supplier will understand what you tell them you need them to do You train the trainer at your suppliers and they train their own employees

More………………………

What Else Can You Do?

• No Supplier starts their day saying “I want to be a TERRIBLE supplier”. • Show them and help them to be a GREAT supplier. • Build ‘trust’ and a true partnership’

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Hopefully some of what I have shared with you will be useful at your company

Suppliers come in many levels of maturity and capabilities One size does not fit all – mix and match your approach to a

given supplier to grow them to where you need them to be Monitor key supplier metrics and provide timely feedback to

your suppliers Treat your supplier with respect and establish a trusting

relationship – you’d be surprised what they will do for you if there is trust!!!

Having Good Great suppliers takes time, resources, focused follow-up◦ To be successful, you must be committed for the long haul

Summary

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Thank You!

supplier quality – one company’s approach

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