Oregon Productivity Matrix (OPM) Supplier Briefing. Objectives. At the conclusion of the training, the participant should be able to: Understand the definition of Oregon Productivity Matrix Understand the benefits and concept of OPM Analyze and conduct an OPM event
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Objectives At the conclusion of the training, the participant should be able to: • Understand the definition of Oregon Productivity Matrix • Understand the benefits and concept of OPM • Analyze and conduct an OPM event • Define Supplier Responsibilities • Identify the value and goals of OPM • Understand Supplier Responsibilities regarding the OPM webportal
Defining OPM • Is a single-page view of a supplier’s overall performance – schedule, quality & customer satisfaction • Non-recurring effort up front • OPM uses key metrics / statistical data employed by the supplier • Often already existing company metrics • Referred to as Key Performance Indicators (KPIs) • OPM provides trend-data analysis to predict performance • Can be summarized by program Supplier’s data is not shared with any competitors
OPM Benefits • Outstanding managerial tool • Promotes awareness at all levels • Publish it in the work areas • Often uncovers problems at sub-tiers • Can be adapted to any supplier or company • Identifies problems early allowing for preventive action response • Summarized data in all categories shows highly visible trends • Sublevel data used to define trend root causes • KPIs weighted based on importance and against a scale of 100% Suppliers are not measured against one another, but against their own previous performance
....to Here Process Insight for Predicting Impact to LM Aero SUPPLIER PROCESS MRB& C/A Fix Scrap or RTV Purchase Order Issued REJECT REJECT ACCEPT Inspect Design, Change Review, Planning Supplier Production Process INPUT OUTPUT ACCEPT Final Acceptance To Stock Or Customer OPM provides continuous evaluations of a supplier’s procurement and manufacturing processes. These tools help predict impact to LM and trigger early problem solving. Validation From here...
Is OPM a Customer Report Card? OPM is a report card that summarizes and grades Supplier’s Line of Balance Line of Balance: A visual control of how production is aligned with customer demand and can: • Be used to evaluate work flow • Be a process for collecting and measuring data against a specific plan • Expose process bottlenecks, allowing focus on those points responsible for slippage
Line of Balance Applies to the following key areas: • Material Availability • Measurement of receiving parts/service on time from sub-tier suppliers, processors, or any incoming material. • Manufacturing Performance • Measurements of scheduled vs. actual • Measurements of productivity • Internal Quality • Measurement of internal performance of processes/products meeting customer's requirements • Customer Satisfaction • Measurement of customer’s level of satisfaction with the provided product and/or service
1. Understand the Value Stream (current state reality) 2. Identify KPI’s, build OPM (may require extrapolation from data) 3. Develop Future State & Improvement Plan 4. Execute 5. Manage Supplier Sub Tier Control Supplier Production Control / MRP LM Aero On time work order release Critical Path Cycle Time Scrap Rate Inventory Turns COPQ Sub-tier Delivery Machine Process Capability Efficiency Cust. Complaints DPMO On-time kit release Utilization On-time from Processor QARs Field Returns Sched. Vs, Act Start / Comp. Lead Time % on-time marry-ups SQARs Sub-tier Quality Hours per Unit On-time delivery Rwk Frequency Internal schedule detail Fab Aged work in process (WIP) Shortages First Pass Yield Repair Turn Time First Article Material Availability Manufacturing Performance Internal Quality Customer Satisfaction Value Stream (Flow) Example OPM Chart
Material Availability Do you have material available to meet customer demand? • Do you use outside special processors? • Do you know whether or not you receive raw material or components? • Do they deliver material to the floor in kits? Is kit release on time measurement? Who puts them together? • Will you release kit short? • Is material availability the trigger to start production? • Do they receive material from LM? • Do you receive components from internal fabrication dept.? IS it from a sister facility? • Do you inspect on receipt? • Do have source inspectors at sub-tier? • Is raw material or hardware receipt a problem? How do you know?
Manufacturing Performance (Line Of Balance) Are you releasing build to package and material to meet customer demand? • Are you measuring Work In Process (WIP)? • Are you measuring Shortages? • Are you measuring complete/on-time Build To Package (Eng, tools, job sequence, bill of material)? • Are you measuring on time release of kits? • Are you measuring on time release of Work Orders? • Do you measure actual start vs. scheduled start? How do you know?
Manufacturing Performance (Line Of Balance) Are you meeting your planned schedule? • Are you measuring complete/on-time Build To Package (Eng, Are you measuring WIP (aged WIP))? • Are you measuring Inventory Turns? • Are you measuring Machine/Process Capability? • Are you measuring Cycle times (planned vs. actual)? • Are you measuring Takt time? • Are you measuring kanban performance? • Are you measuring hours/unit? • Are you measuring productivity/realization/efficiency/utilization/std vs. actual hrs? • Are you measuring sub-assy on-time completion (% on time)? How do you know?
Quality Are your internal processes capable of meeting internal customer quality requirements? • Are you measuring First Pass Yield (FPY)? • What is your Cost of Poor Quality (COPQ)? • What is your Scrap rate? • What is your Repair hours per unit? • What is your Defects Per Million Opportunities (DPMO)? • Do you have SPC data? • How do you measure internal defects? • Do you measure process capability? • Do you measure Rework frequency? How do you know?
Customer Satisfaction Are your customers satisfied? • Do you know your Repair turn around time (TAT)? • Do you measure customer returns? • Are you measuring customer complaints? • Are you measuring response time to customer (CARS, quote)? • Are you measuring Delivery/quality rating for all customers? How do you know?
Examples of Key Performance Indicators (KPIs) • Hours per Unit • % on-time marry-ups • Takt Time Internal Quality • First Article • Final Acceptance Yield • First Pass Yield • Rework Frequency • Defects per Million Opportunities • Production Scrap Rate • SQARs • Site Rejections (QARs) Customer Satisfaction • Customer Complaints / Field Service Return • Training Requirements Fulfilled • RTV Repair Turnaround Time Material Availability • Sub-tier QA Rating • Sub-tier Delivery Rating • Shortages (including raw material) • On-time back from Processor Manufacturing Performance • Actual vs. Planned Production • Start • Completion • Cycle Time • In-house detail Fab schedule • Machine/Process Capability • Lead Time • Inventory Turns • On time work order release • On-time kit release • On-time delivery to internal customer • Aged work in process (WIP)
How is PQA Going to React to the Data? • It is in PQA’s best interest to not over react!!! • Data and charts are indicators • PQA is interested in supplier acting on trends • Individual product non-conformances will continue to be handled under currently established methods • We will provide help if poor performance causes product level performance issues We are looking to see that the supplier is using OPM as a preventive tool and reacting to the data appropriately
OPM Event Methodology Typical Team composition will include • Supplier QA • Supplier Program Management • Supplier Manufacturing • Supplier Contracts • LM SQE(s) • LM Procurement Typically a one totwo day event at the supplier’s facility
OPM Implementation Event The following activities occur as a joint PQA and Supplier Team • Map the ‘typical’ manufacturing process if necessary for KPI determination • Identify metrics already collected • Jointly determine KPIs • Develop OPM • Review the selected metrics and OPM chart with management for adjustment and weighting • Develop Bar Charts for three months past history if data available
Construction of an OPM Steps • Identify the KPIs and their grouping • Establish the Baseline • Set Goals • Calculate Increments • Weight the KPIs
Identify the KPIs The most important step in the construction of an OPM is the identification and selection of the 5 to 10 KPIs. • Early or predictive measures are emphasized • PQA/Supplier mutually agree on KPIs • Data selection for the KPIs may come from existing supplier data however the data shall provide a complete predictive flow and line of balance • Must be quantitative • Use of statistical data preferred • Initially chosen KPIs not “locked in” • Fewer criteria focuses energy and resources better
Categories and Grouping of KPIs Grouping KPIs
Creating a Baseline at a Score of 3 Average of 3 to 6 months data equals baseline performance
Setting Stretch Goal at a Score of 10 • Stretch goal is a long-term goal • 2 to 3 years out (Not a goal to be reached within the first quarter or this year) • Stretch goal is to be set at a level which drives continuous improvement
Setting Goals at a Score of 10 Stretch Goals
Establishing the Increments (Hurdles) • Once we’ve determined where we are --- and where we are going (Baseline and Stretch Goal) • We then establish intermediate hurdles or mini-objectives by filling in the rest of matrix from 0 to 10. • Allows for 7 levels of achievement to be measured en-route to stretch goal (focuses on improvements) • Providing several declining increments allows for occasional underperforming periods and helps to show any inverse relationships between metrics
Establishing the Increments (Hurdles) KPI Hurdles: Even increments for Scores 0 through 10 are established using the Baseline and Stretch Goal inputs. For this KPI, Supplier Quality Index, the increment between hurdles was calculated using the difference between the Stretch Goal (Score of 10) and the Baseline (Score of 3) and dividing by 7 (the number of steps between Score 3 and Score 10). Increment = (100 – 98.54) / 7 = 0.21. Therefore, each successive hurdle for this KPI is 0.21% greater than its predecessor.
Weighting the KPIs • Weighting based on 100% scale • In effect, weighting defines the mission. It establishes the importance of each KPI and has a direct impact on the score and trend. • Methods for determining weights • Emotional • Decision matrix • Critical to have upper management buy-in for weights
Weighting the KPIs Weight
Measure Current Performance The chart is basically built and can now be used to measure current months performance: • Enter current months data for each KPI • Score the data • Determine the value for each KPI • Determine the overall OPM value
Measure Current Performance Current Month’s Performance
Score the Data KPI Score: The current month's performance for this KPI is 98.56%. This clears the KPI hurdle of 98.54% (Score of 3), but does not clear the KPI Hurdle of 98.75% (Score of 4). Therefore, the KPI Score for the Supplier Quality Rating metric is 3 for this reporting period.
Determine the Value for Each KPI KPI Value: Determined by multiplying the KPI Score by the KPI Weight input. Calculation: 3 x 3 = 9
Determine the Overall OPM Value Overall Value: Calculated by summing the individual KPI Values. Calculation: 9 + 21 + 130 + 64 + 0 + 0 + 15 + 52 + 84 + 44 = 419
Trend Analysis for OPM • Bar charts provide quick visual of performance trends • Helps focus resources on areas requiring Root Cause Analysis and Corrective Action • Useful for senior management review • Reveals impact of functionally grouped metrics on overall score, for example: • Material Availability • Manufacturing Performance • Internal Quality • Customer Satisfaction • Measures individual supplier trends; not a comparison tool
KPI Grouping and Group Actuals Grouping Metric Group Actual Total Value: This is the actual total value of all KPIs in a metric group during the reporting month. In this example the metric group Material Availability is made up of two KPIs: Supplier Quality Index and Supplier On-time Delivery. The actual total value for these KPIs is the sum of their individual calculated values. Calculation: 9 + 21 = 30
Bar Chart for KPI Group Metric Group Bar Charts: This bar chart plot actual values for the KPI metric groups. The third bar on the Material Availability chart represents this month's actual value of 30. The y-axis range for this bar chart should be ranged from zero to the metric group stretch goal value (100 for this metric group).
Overall OPM Bar Chart Overall Value Bar Chart: This bar chart plots overall matrix values. The third bar on this chart represents this month's actual value of 419. The y-axis range for this bar chart should be ranged from zero to the overall stretch goal of 1000. The blue line represents the baseline score of 300.
Internal Quality-Focused OPM • This OPM is to focus specifically Quality Performance Indicators and will roll-up to the high level OPM chart • Example KPIs: • First Article • Final Acceptance Yield • First Pass Yield • Rework Frequency • Defects per Million Opportunities • Production Scrap Rate • SQARs • Site Rejections (QARs) • Sub-tier supplier (X) QA Rating • Cost of Poor Quality
Top Level Internal Quality OPM Internal Quality Focused Sub OPM
Does Implementation of OPM Cost Money? • You already use metrics to measure yourselves • Remember, existing supplier metrics are typically used to develop summary matrix • OPM implementation involves a non-recurring up-front effort • Recurring costs offset by decreased LM Aero oversight Tailoring existing supplier metrics to OPM format is virtually cost free
Does OPM Provide Value? • Provides concise trend metrics data which reports performance • OPM can help identify small, insidious problems before they become major cost problems • OPM provides an effective and efficient tool for data collection and decision making • Resulting process improvements can increase competitive edge • OPM can be used at multiple levels • Lower level charts roll up as a Top Management tool Positive or negative performance in OPM metrics impact your bottom line
Why should the Supplier employ OPM? • The evolving aerospace supply chain demands just in time methodology • Flexibility • Continuous flow • Today’s competitive environment requires a new way of thinking and managing…OPM can provide this edge • OPM provides quantitative method of validating cost reduction initiatives and can highlight new opportunities for further improvement • Tools learned under contract requirements translate to more competitive bids to your other customers
Supplier’s Commitment • Cross functional team for a one to two day event. • Facilities for the event • Availability to existing data • Management commitment to attend an out brief • Commitment to provide monthly inputs to LM Aero by the 15th of every month. • Commitment to review the OPM and take appropriate action. Provide comments for negative trends (a 3-month decline in OPM categories, a decrease in 3 or more scores in from the prior month, and KPI below baseline performance). Comments should include, as a minimum, root cause, corrective action and a recovery ECD.
Goals of Implementing OPM • Reducing Supplier Non-Conformances • Increasing Process Stability and Predictability • Limiting PQA End-Item Acceptance Activity OPM is a living document that can and should be adjusted based on supplier performance, improvements, declines, process changes, product additions, etc. to assure their complete value to our customer.