Supplier Quality – One Company’s Approach

1. Supplier Quality – One Company’s Approach January 8, 2013 Presenter: Curtis Firstman Venue: ASQ PDX Monthly Meeting

2. A Short Presenter and Company Synopsis • 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

3. Why Drive Supplier Quality? You’re only as strong as your weakest link • 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

4. Not All Suppliers Are Created Equal World Class Effective Defined Efficient Ad-Hoc • 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 ‘OwFactor’ • ‘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 There is no short cut to successfully managing your suppliers’ quality

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

6. You’ve Got to Define What You Measure!

7. Metric Roll-up w/Balanced Scorecard - 3 Month Rolling Average of Key Suppliers’ Performance Best OK? What are the important categories your company needs to track? Bad

8. XYZ Company OTD & DPPM Detailsfor a Given Month Category-2 (25) • Description/Issue: OTD scores low • Status/CA: Brendasent 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 COMMENTS:

9. ABC Company OTD & DPPM Details for a Given Month A-C Category-2 (02) • 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 COMMENTS:

10. How to Make Defect Data More Leading than Lagging • Weekly phone calls with the supplier to discuss all new ‘supplier fault’ defects as well as progress against previous ‘not yet closed’ defects. • 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

11. Best Quality Problem Prevention: • 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 I thought I could change my spouse’s habits after I married them but I found out that I could not  Result = DIVORCE

12. What Else Can You Do? • 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 • FMEASPC • 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……………………… • 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’

13. Summary • 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

14. Thank You!