Quality of supply chain components suffering from Japan Earthquake

Although there has been much talk about (and some hype perhaps) on the recent affect of the Japan earthquake on the electronic supply chain, it hit home for me when I was visiting an OEM Electronic Manufacturer this past June.  They talked about how some of their components like oscillators and capacitors etc which were normally sourced from Japan manufacturers were now needing to be sourced from secondary and tertiary suppliers.  Although of the same general specification, these parts turned out to be of inferior quality, causing failures when cycled over temperature or under corner conditions of testing. This has forced this customer to focus on more extensive testing and qualification of supplier components.

Maybe if the OEM customer received the quality data on those incoming parts, they could do their own analysis of where things are breaking down between incoming quality and what they are actually testing. An interesting article on the effect of supply chain components from the Japan Earthquake is here: http://www.ebnonline.com/author.asp?section_id=1096&doc_id=207372&itc=ebnonline_gnews

Transparency is Coming: Are You prepared to give full transparency to your OEMs today?

Transparency is Coming: Are You prepared to give full transparency to your OEMs today?

As Original Equipment Manufacturers (OEMs) seek closer ties with their Contract Manufacturers (CMs) in order to more fully control their supply chain during this uncertain economic climate, expectations on those contract manufacturers are evolving.  OEMs are purchasing or implementing solutions that will allow greater visibility of their manufacturing and test results, combining the data from in-house and outsourced manufacturing.

Many large CMs already offer these types of tools to their OEMs; however, integration of software often requires significant time and expense, and few CMs can afford the cost.  When these tools are in place, the transparency can lead to yield improvements and faster detection of issues and root causes.

We discuss this issue over at a LinkedIn discussion group here.  We encourage anyone who reads our blog to join that group and contribute to that (and other) test data management discussions.

Contract Manufacturing Tools and Practices: What’s Your Take?

Contract Manufacturing Tools and Practices: What's Your Take?

Supplier Quality

The last couple of weeks we’ve been blogging about the issues and challenges OEMs face when dealing with contract manufacturing.  One particular problem we hear again and again from OEMs is how difficult and time-consuming it is to obtain a true record of test data from contract manufacturers (and forget trying to get real-time data).  Conversely, we’ve heard from CMs that they want a better way to manage and report their manufacturing data, especially if they’re producing components for multiple OEMs.  Particularly if the CM’s contract dictates that they eat rework and scrap costs, they’ve been interested in refining their processes as efficiently as possible, but this is especially difficult without real-time, accurate manufacturing data.

With upcoming software releases from IntraStage we will be implementing additional Supply Chain module features which will help to solve what we observe to be critical problems facing both OEMs and CMs.  But the best way to solve these problems is to get feedback from our customers who are people deeply involved in this area. So please, let us know about your experiences good or bad. We would love to hear them.

Scorecarding Contract Manufacturers: Preventing Chargebacks Before They Happen

Trust But Verify

OEMs which work with contract manufacturers have to follow the old adage: trust but verify.  We all carefully vet and work with prospective partners so we can know that we’re working with entities whom we can trust to perform to our expectations. In the case of the OEM and CM relationship a major piece of this trust  is visibility and transparency on manufactured product quality.

However, it’s difficult for some OEMs to gain comprehensive insight into the manufacturing processes of their partners and dig into critical details such as SPC, Yield Failures, etc.  Even the contract manufacturer might not have the capability to fully calculate the impact of quality on their own operations.

One method to handle this is through “Supplier Chargebacks”. This is a punitive process, which  are monetary penalties charged by OEM Manufacturers back to Contract Manufacturers for  non-conforming material or products.  The charges can include  not only the costs for the low-quality product, but also for:

  • Eventual disassembly of the part
  • Quality department handling
  • Handling by the planner to get a new part
  • Communications with the supplier – what shall be done with the part?
  • Attention from engineers

Standard best practices from OEM’s now incorporate these metrics into a “scorecard” format which are given to the Contract Manufacturers as part of their Continuous Improvement initiatives in the supply chain.

A critical overriding metric in these scorecards are concepts such as “PPM (Parts Per Million) or “DPU (Defects Per Unit)”.   This is a threshold number which the OEM sets on incoming defective  units into their facilities. For example a score of  50PPM would mean that the CM would have to provide less than 50  units which have failed out of 1 million.

A more proactive versus punitive method of handling such PPM or scorecard processes, would be to have the CM understand the quality of their product before shipping even begins. Such methodologies as SPC or RealTime SPC would give the CM that edge to win on the metric.  A collaborative process such as this could well save both the OEM  AND CM money, time and resources.

How Contract Manufacturers Can Manage Counterfeit Components

The definition of a counterfeit electronic part is one which has had its deliberately misrepresented by the supplier. ‘Identity’ includes such things as manufacturer, cage code, part number, date and lot code, reliability level, testing, inspection etc.

One surprising statistic that was thrown around is that up to 40% of electronic components going into manufacturing OEMs like Apple can be counterfeit.   Depending upon how the components are screened, this can lead to defective, out-of-specification or completely not working end products (ie…an Ipod).  The impact of this can be large, not only from the loss of money from purchasing the counterfeit parts but also downstream from the manufacturing cost, to the testing cost to the eventual rework and discovery of the issue.

Bill Cardoso (Creative Electron Inc), who spoke at the May 2011 Del Mar Electronicstradeshow seminar “Counterfeit Electronic Components Workshop” talked about how some 3rd party companies help OEMs catch such counterfeits through techniques such as x-ray, visual inspection, Encapsulation and Electronic Testing. Unfortunately in some cases, the counterfeit can be subtle in that resistor/capacitor/inductor values or even older generation (but functionally the same) IC parts have been misrepresented in order to get them out of someone’s inventory and sold to an OEM.   In this case, the functionality of the end product may still be there but the performance may have been degraded due to these subtle value differences.

In the case of aerospace, space or medical applications which need very tight performances on critical parameters, another methodology to catch possible counterfeit components is to monitor measurement trends.  The chart below shows a measurement trend (y axis=RF power, X axis=date range of serials tested). As you can see on 8/09 something happened with the measurement which shows that perhaps some component value had changed. Was this a counterfeit component that caused this variation or was it normal?  By looking at trend charts like this, at least the investigation can start.