Optimal cost management means material prepped for production needs real-time monitoring on the factory floor.  

Manufacturers deploy various manufacturing systems that provide necessary controls, enable data collection, support cost-saving initiatives, provide a means for compliance, and help decrease time to market. Yet most remain as islands of information, and provide the value intrinsic within their own confined systems. How can real-time material management manage costs and improve inventory turns? What are the benefits of having a quality system talk to a traceability and material management system? Can we optimize overall equipment effectiveness by enhancing links between material flow, quality and surface mount technology programming, and monitoring data? How can we increase revenue?

The typical organization likely has purchased and deployed various manufacturing systems, either based on customer requirements or internal process improvement initiatives. Those systems have been painfully deployed, causing all kinds of havoc to existing operating processes and risks to quality. Now that the tough deployment is done, and systems seem to be running fine, how is this leveraged to improve business? Can the organization better compete in the EMS manufacturing world using these manufacturing systems?

Let’s review the systems typically deployed at EMS and vertically integrated manufacturing companies. A quality management system (QMS) ensures that product quality is collected and monitored through the assembly process. At key inspection points in the factory, operators visually review a board, scan or enter board identifiers (serial numbers or barcodes), and a defect code that reflects the issue with that board. Those data are collected for each board and pushed into a database for mining later. The value of those data depends on the capabilities and limitations of the solution, the creativity of the team, and how those data are mined. Good business intelligence solutions are most effective at this point, and should not be confused with manufacturing intelligence (focus on overall manufacturing visibility of key aggregated data/metrics for upper management).

The main goals of QMS are yield rates (first pass, order, absolute); defects per million opportunities (DPMO); DPM per assembly, order, and functional area on the production floor; storing historical data for trend analysis and post-mortem root cause analysis; ensuring on-time shipments (no production stops due to rework); performing preventative and corrective actions; maintaining and ensuring conformance and compliance, and providing statistics for OEE.

Manufacturing operations management (MOM) systems control and ensure boards move in a predefined path on the factory floor and at each of these locations. Board information is recorded to ensure work in process is registered and monitored. A shop-floor system answers the following questions: Was the correct SMT line used? Was it handed off to the right manual insertion line or stations? How many boards of a specific work order are in test or final QA? How long did it take? How much inventory was used, and when? Did the product go down a RoHS-compliant line?

Some systems also include traceability. Which part numbers are placed on a board is added to the information and used to create a build record for that order and/or assembly.

Enterprise resource planning systems are complex systems that handle purchasing, order management and planning functionality within manufacturing companies. The ERP provides the information on what needs to be built (work order), the quantity to be built, and the parts to use (bill of materials, company-specific part numbered lists). ERP systems also manage available inventory to ensure the correct amount purchased, and, at production order completion, that the customer is shipped to, invoiced or billed.

You’ve implemented a QMS, an ERP and even a shop-floor system or full MOM. Now what?

Interoperating to Manage Cost

Cost management is tied to factory management. Key cost contributors in most factories include material use, rework, returns and overstock.

Interoperating systems that “talk to each other” help manage costs. The largest variable cost in manufacturing is the material. Purchsed raw material (components) sitting in stock depreciates in value. Material sitting on the factory floor costs money and goes into a void, where only regular inventory counts, or manual material counts, bring them back into view – typically, too late to make any adjustments before diminishing inventory turns.

You can completely eliminate the problem of material shortages on the production floor. What if you knew exactly how much material is needed? The average factory sees about five material shortages per line per week, according to a study by the Aberdeen Group (Table 1). While that material is being pulled, production is stopped, adding to the opportunity cost.

To truly achieve cost management, material pulled out of stock, kitted and prepared for production, needs to be monitored real-time on the factory floor. As feeder errors, nozzle rejects, and drops add to the consumption of the material issued, the stock room needs to be alerted and advised of materials needed (like part numbers), and the stock and delivery location (line and machine).

Only if an SMT monitoring system is interoperating with a material management solution in real-time (which polls the consumption and generates these material pull instructions) can this be achieved. Knowing that a part will be out is not enough. An alert when material is out in a machine or feeder provides no additional value. In most cases, that’s the status quo. If the monitoring system provides low-level warnings that a part will be out after five or 10 additional boards, then we truly can react in time to provide material: This is a predictive solution.

Material management is complex and essential, with several factors to consider. Material availability rules can be modeled in a cost methodology. It may be more expensive to pull some parts from stock over others. Pulling inventory should be done using a first-in-first-out approach, so oldest parts are pulled first; older parts are cheaper. Inventory issued to production that sits in floor stock is cheaper than inventory in a main warehouse. Moisture-sensitive parts sitting in dry ovens or dry storage locations must be considered. If they are not ready to be pulled from storage, they are not available. This costing model must be part of the material management system, interoperable with the SMT monitoring system to effectively pull the right parts to the right locations just in time.

How best to execute this process of costing? Will the warehouse or material handlers know what to do, when and to where? A communication mechanism must be created to eliminate errors and maintain process quality. The material management system should poll the SMT monitoring system at regular intervals and generate a picklist. Polling can be configured based on production rates, production line size and the frequency of expected material requirements, so the consumption data are queried and a picklist is generated when needed. This picklist will alert the material handler to pull the appropriate material from their stock locations (production floor stock, raw material warehouse, etc.) by generating a barcoded or paper picklist used to fullfill the order.

Once material is ordered, it is routed to the production floor for use. For high-volume continuous production, picklists and material arrivals can be done at regular intervals to ensure production lines are never starved for material. Production stoppage due to material shortage is no longer an issue.

For vertically integrated manufacturers or EMS companies that produce high-mix with high volume, the challenge is to ensure material is ready and constantly available, and between work orders (with 75% similarity in parts), plus minimize the changover downtime.

Changeover is the process of preparing an assembly line for a new production order. In most cases, this means changing conveyors, NC programs, documentation, active order selection and material. Typically, variant products are built on the same line so they can avoid changing the conveyors, thus replacing only the materials and programs associated. However, this poses a new problem: how to change all the materials (feeders, reels, bins, trays) efficiently. The answer: interoperability between material management and SMT monitoring.

The SMT monitoring system (machine vendor or third-party) has knowledge of part number location (or where they need to be located), and at which slot/feeder on the machine. It contains the program information, which program is active, and defines which one is next. Knowing this and pulling the information ordered by the picklist generator, changeover instructions can be created easily. The only way to ensure the right changeover instruction is generated is by using the actuals on the machines (Figure 1), rather than planned by engineering.

Real-time changes happen all the time in factories. To achieve efficient changeover, correct material must be available, and only the changes should be done; excess material or time spent is waste.

Knowing where all material is at any time increases productivity and cost efficiencies. Pulling material as it is needed, and not over-pulling, adds additional efficiency into the process. Reduction of WIP and faster material movement increase productivity and inventory turns. This focuses manpower on productive tasks, further managing costs.

Managing Rework and Quality

After implementing the material manager solution, the material handling, inventory and changeover efficiency issues are handled. But there are other places where costs are hidden: quality returns and rework. Rejected boards from in-circuit testers, flying problem testers, functional test units, even manual inpection stations: All need further troubleshooting and fixing. If an unexpected rework has been identified, and the volume increases, it puts stress on the whole ecosystem. Are there enough replacement components to rework those boards? Is certified manpower available to perform that rework? Will we hit the due date for that customer order?

QMS should be able to alert management if accceptable quality levels are not met in real-time. It is too late if AQL breaches are found in post-mortem analysis. Alerts should be set up as escalation of notifications for many of the following: the number of repair loops met (e.g., three test and repair loops maximum per board); AQL; first-pass yield percentage; consecutive failure of the same type.

If QMS and material manager are interoperating, evaluating the inventory of the required components and pulling the required material to the rework stations as needed can be done. In post-mortem analysis, if the QMS identifies a high failure or defect count on a specific component location on an assembly, that information can be tied to the material manager to find the specific vendor, part number, and lot for additional supply-chain quality analysis.

Using the QMS and material manager to identify quality problems during production is the most efficient way of managing costs before the costs occur.

Overall equipment effectiveness is determined by the availability, performance and quality percentage parameters. As material is delivered to production equipment and stations as needed, the performance metric is greatly improved due to the lack of stoppage from starvation. As QMS interoperates with SMT monitoring and shop-floor systems, quality defects found in inspection stations (automated and manual) can be traced back to their source assembly machines, and further analysis of the root causes can be performed. Some examples of these include nozzle problems, high feeder errors or machine uptime issues.

Most manufacturing plants have deployed manufacturing systems. When those manufacturing systems talk to each other, much higher value can be realized. If a completely integrated manufacturing system solution is available, the benefits described of managing costs and improving customer satisfaction can be realized out of the box.

Jay Gorajia is the support manager for the Mentor Graphics Valor Division; This email address is being protected from spambots. You need JavaScript enabled to view it..