how to manage a supplier - dragon innovation
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How to Manage a Supplier
Adam Craft VP Manufacturing & Project Management
www.dragoninnovation.com
No Need to Take Notes: http://www.slideshare.net/dragoninnovation/how-to-manage-a-supplier
§ Informal! Please interrupt with questions & comments.
§ Background: Dragon Innovation / Adam
§ Contract / Manufacturing Services Agreement
§ Schedule
§ Testing / Quality
§ Overall Supplier Metrics
§ Other Thoughts
OVERVIEW
PREPARATION SERVICES
Design Review, Cost Estimation & Crowdfunding
Campaign Prep
CROWDFUNDING A home for the best hardware
projects on the planet MANUFACTURING
SERVICES Factory Selection Process & On
Site Project Management
DRAGON INNOVATION HAS HELPED LAUNCH AND SCALE OVER 100 COMPANIES SINCE 2009
WHO WE’VE HELPED
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 Sections / Topics
Manufacturing Services: § Defines who is doing what § Materials: Vendors, procurement, consigned materials § Subcontractor agreement
Forecasts 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”)
Shipments, Samples, Quality Testing: § 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 Acceptance & Warranty: § 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 Sections / Topics
Representations & Covenants: § This is a legal document, no conflicts of interest § Manufacturing in a safe environment, no child labor, ethical, etc.
Intellectual Property Ownership: § Definitions § Who owns what
Confidentiality: § Mutual Non-Disclosure Agreement
Term & Termination: § Defines the term of the agreement § How you terminate the agreement
MSA Sections / Topics
Indemnification & Liability Limitation: § General protection for everyone involved & related procedures
Miscellaneous: § Terms of agreement, use of name § Successors / assignment – new agreement § Controlling law, jurisdiction, venue
MSA Sections / Topics
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
Quiz How long should you budget from supplier selection until
you ship your first production units?
Scheduling Tips
When creating a production schedule, consider the following:
§ 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).
Scheduling Tips
Scheduling considerations (continued):
§ 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
Critical Components
Selection e.g.
Motors Magnetic Encoder Wheel
Life testing…
Oct 2004
Prototype 1st Round
Nov 2005
Jan 2006
2nd Round
Apr 2006
3rd Round
Jun 2006
Finished Prototype
VQP Project Hand Over
Quotation Finished Factory Selected
Aug 2006
First Shot
Dec 2006
Tool Start
Oct 2006
MEP
Jan 2007
EP1
Feb 2007
EP2 A-B
Mar/Apr 2007
FEP
Apr 2007
PP
May 2007
PS
Jun 2007
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 to Production 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
Quiz What sorts of tests do you think you should run during
production?
Production Testing
Printed Circuit Board Assembly Tests: § In-circuit tests (ICT) – bed of nails § Automatic Optical Inspection - AOI § Functional / Built-in tests
Overall / Mechanical Assembly: § Subassembly functional testing § Overall functional / Built-in tests
Ongoing: § Torque / Tension / Drop § HALT / HASS – accelerated life / environmental § Life test
Production Testing / Final Inspection
The design has been verified, and the purpose now is to ensure that it is built correctly.
§ 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 parameters: § 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.
Sampling Plans
Quality Test Plan
Quiz Where are all of these tests and criteria defined?
Quality Test Plan
Important Sections:
§ 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
Quality Test Plan
Important Sections (continued):
§ 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
Documentation Control
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 things you could track, but some key metrics to watch over time could be:
§ Key subassembly test yield(s) § Final functional test yield § Final inspection data / trends § Ongoing life test results § On-time shipment record
Watch for trends, but also watch for stepwise 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 Tracking
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 Points:
§ Test thoroughly Emphasize functionality and robustness
§ Track *all* bugs You can’t afford to even let one slip through
§ Fix everything In 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 Tracking
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
Quiz What is a realistic expected failure rate for a product headed
for retail?
Example: Typical consumer product (vacuum cleaner) § 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
Failure Budgeting
Failure Budgeting
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%
Ques%ons?
Find us at DragonInnovation.com
dragon@dragoninnovation.com
@dragoninnovate /dragoninnovation
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