Lean Manufacturing

Lean Manufacturing

Challenges and Benefits of the Techniques in Outsourced Medical Electronics Production

Louise Stump and Joe Davis

Operators are cross trained to handle multiple job duties. A company intranet system provides employees with immediate access to quality policies, job descriptions and work instructions through terminals located in the manufacturing area. Photo courtesy of EPIC Technologies.

Properly implemented, Lean manufacturing principles create efficient production processes by eliminating waste and increasing responsiveness. However, not all Lean implementations achieve the efficiencies promised. What drives large improvements in efficiency vs. small steps forward? Can business models such as those found in the electronics manufacturing services (EMS) industry fully implement Lean processes given the variability of their customer demand? How can original equipment manufacturer (OEM) customers of EMS providers best team with those providers to achieve reductions in costs?

In answering these questions, personnel at EMS provider EPIC Technologies had an interesting business model to study. The company had begun implementing a Synchronous Flow Manufacturing philosophy in 2000 and replicated it in their facilities in Norwalk, OH and Juarez, Mexico. In February 2005, they acquired operations from Siemens EMC, which included a facility in Johnson City, TN (“JoCy”). The JoCy facility had previously implemented some Lean principles and was supporting its customers’ Lean initiatives primarily through finished goods kanban, although the systems fell short of a complete Lean implementation.

Breaking Paradigms

A key challenge in the EMS environment is satisfying the demand of multiple customers, often in different industries (e.g. medical, industrial, automotive, etc.). Most EMS providers have evolved into models which are driven by customer forecasts and include a customer-specified supply base. In addition, most EMS models dedicate a range of equipment to each production line. Finally, most EMS providers still work from fairly departmentalized business models, which can limit how Lean principles are implemented within the organization as a whole.

The end result in the traditional EMS business model is that when demand and forecasts vary, the EMS provider has buffers built into the system that attempt to reconcile the variance. Typically, these contingency measures result in waste and inefficiency in the system. Yet, the nature of continually satisfying the needs of 20-30 customers in different industries drives the assumption that this controlled chaos is a necessary part of the business model even if Lean principles are embraced.

The JoCy facility had begun a typical Lean principle implementation which focused on supporting customer kanban requirements, primarily through ensuring adequate amounts of safety stock. Internally, employee training in Lean principles such as 5S was underway; however, Lean principles were being applied to existing operations without significant change to internal infrastructure. The facility operated six SMT production lines which each had dedicated placement, solder wave, reflow and test equipment. Emphasis was being placed on reducing changeover time by running setups concurrently with production, but production line configuration was not modified. Material was being purchased based on customer forecasts with some level of in-house safety stock and adjusted when demand changed.

Synchronous Flow Model

A different approach was taken to Lean implementation following the acquisition by EPIC. The Synchronous Flow Manufacturing approach emphasizes driving improvements on a larger scale by focusing strategic placement of inputs, increasing transformation velocity during production and aligning outputs to customer demand.

In terms of changes to the JoCy process, that meant:

• Refocusing the supply base and material planning and procurement activities.
• Reconfiguring the production floor to focus on enhanced flexibility and smaller lot sizes.
• Creating visible indicators of production status and a flexible workforce to further facilitate increased transformation velocity.

The end result of that reconfiguration was that instead of aligning with customer needs through safety stock or good contingency planning, the entire system became focused on rapidly transforming material into finished goods compatible with customer needs.

Material Planning

The first step involved supplier education on new procurement practices. Under the old system, material was procured based on MRP and warehoused. As overages or shortages developed based on variations in customer demand, the material planner had to expedite suppliers to resolve material problems.

In the EPIC JoCy facility, material transfers directly from carousels to feeders. Photo courtesy of EPIC Technologies.

Under the new system, MRP is still used to generate the raw material forecast.   Buffer quantities are established, and suppliers submit weekly bond reports which represent their net buffer position over time.   Each part in the bond reports is color-coded green, yellow or red depending on how the future availability levels align with the most recent forecast. Green line items represent material where the buffer quantity is above the minimum required amount.  Yellow items represent parts where the buffer quantity falls less than the required amount, and where the buffer quantity falls to zero the items are coded red.   The net result of this system is to gain an early enough warning to a potential buffer shortage to be able to take effective proactive measures. From a procurement and planning standpoint, internal and supply base personnel have the visibility to address issues proactively well in advance of production interruptions. This can be particularly significant with medical customers because long product life cycles often drive a large mix of components which may include limited quantity legacy products as well as readily available current technology component inventory.

Similar color coding is used to indicate production status and finished goods kanban status, ensuring companywide understanding of where scheduling focus should be placed.

Production Flow

The most visible changes occurred on the production floor. While philosophically both the JoCy and EPIC corporate teams valued Lean principles, the Synchronous Flow Manufacturing focus placed greater emphasis on simplifying production capabilities.

As a result, the entire production floor was reconfigured and four production lines were shipped to other facilities that needed additional production equipment. Total production area floor space dropped from 120,000 square feet to 70,000 square feet, which facilitated improved efficiency in synchronous flow.

Within the synchronous flow philosophy, great emphasis is placed on standardization of production resources. Instead of having several production lines configured to a variety of placement strategies, the emphasis shifted to increasing the flexibility of a finite amount of equipment, while improving throughput by running smaller lots.

In the new model, multiple lines of placement equipment feed into a single wave solder and vapor phase system. These systems have been adapted to allow for continuous product change.

The wave solder equipment instantaneously changes process parameters with zero change over time. The wave solder is linked to the conveyor system with a bar code reader which transmits data to change process parameters dynamically based on each product’s characteristics.

For reflow, the company uses a vapor phase system, which uses an inert Teflon-based fog. Because the high moisture content atmosphere has superior thermal transfer properties compared to traditional IR or convection system, the entire board reaches the same temperature at the same time. This eliminates shadowing effects or hot spots, and allows one “profile to fit all.”

Similarly, test equipment is no longer dedicated to a single line. Instead, all production flows to three spurs of HP testers.

The impact on setup time has been dramatic and both groups have contributed ideas to that improvement. The JoCy team’s earlier focus on setup time reduction by integrating changeover into production flow represented an improvement in EPIC’s synchronous flow model. The concept was relatively simple. Extra feeders were purchased to allow incoming project material to be loaded while another project was finishing on the line. The initial material staging process was modified from a traditional kitting process to a pre-load process where parts stage on a carousel and are then pulled through feeders and moved to the floor as needed.

Standardization of production equipment means that the only major setup element is changing tables. There is no setup time associated with wave solder or reflow and setup time for test is typically only fixture change time. Changeover time averages 7-15 minutes. When combined with a production strategy of shorter runs, this translates to much greater flexibility to fulfill varying customer demand.

Proactive and Reactive

The final element of Lean implementation involved creating visible indicators of production status and a flexible workforce to further facilitate increased transformation velocity.

Production order status is easily visible using simple color-coded card systems. Operators are empowered to prioritize production sequence for each line based on the color-coded pull signal. An intranet supports extended visibility into production status at other facilities.

Real-time material status is tracked via bar code scanners at point of use. Photo courtesy of EPIC Technologies.

Operator training was another area where existing Lean philosophies implemented by the JoCy team complemented the Synchronous Flow philosophy. Cross-training and training on Lean principles were already a strong discipline within JoCy. Jobs were categorized by skill sets and every production employee is trained to do at least three different jobs.

The EPIC vision of operator cross-training takes the concept of a mobile workforce capable of being deployed in whichever area of the factory that  needs resources a step further by ensuring that there is organizational consistency in training, job descriptions and workforce deployment strategies in all facilities.

To achieve this level of consistency, core processes associated with product realization were mapped throughout each facility. All job descriptions were analyzed and then compiled in an intranet computer system accessible on the production floor. Today, any employee in production can pull up a job description that graphically outlines the following:

• Tools/documentation needed to perform the job.
• Other functions with which this job interfaces.
• Input.
• Process(es) used.
• Output.
• Results measurement methodology.
• Critical criteria used to measure quality of output.

Work instructions, quality manuals and other production documentation for every project are available from a central database.

All production operators are cross-trained in several production processes. Operators are certified to a range of skills in the company’s training matrix.

The intranet system ensures reference information is readily available on the production floor.

A Range of Benefits

The biggest benefit of Synchronous Flow Manufacturing philosophy to any customer is improved flexibility.

Within the JoCy facility one production program involved controller boards used in PET and MRI equipment.

The JoCy team’s initial focus on finished goods kanban addressed this customer’s needs for production alignment with its internal Lean initiative.

However, without the flexibility achieved through Synchronous Flow Manufacturing, this project was one of the drivers for six production lines. Boards were large and complex and the original 48 unit lot size consumed a significant amount of production time and resources.

Demand did not require 48 unit lots. By reducing lot size to 24 units, machine time per board type was reduced and the mix of product manufactured in a given day could increase.

Ultimately, this increases flexibility in ability to meet customer variances in demand.     

In this particular customer’s case, an additional benefit of increased flexibility was that a new product line has been introduced into existing production flow with no schedule interruptions.

A next step in the Lean philosophy teaming with this customer will be transitioning from a finished goods kanban within the JoCy facility to a bonded warehouse within the customer’s facility where the customer “buys” the product when it is pulled from consigned inventory.

The customer has the benefit of finished goods inventory staged at point of use without the cost of owning that inventory until it is consumed.

To truly understand the longer-term benefits of that strategy, it is beneficial to look at another medical production program at EPIC’s Norwalk, OH facility, which has been engaged in a multi-year Lean implementation initiative.

Improvements in that program have included:

• Kanban releases with pull signals reduced to two days flexibility and 100% on-time delivery.
• A reduction of more than $10 million in working capital as a result of improved inventory turns.
• Elimination of receiving inspection with corresponding improvements in line yields and dock to stock.
• Implementation of returnable containers with line side usage.

The end result of systemic focus on Lean principles at both the EMS provider and the OEM is a healthier business relationship over time which eliminates hidden costs driven by materials, work-in-process and finished goods caught in wait state due to poorly planned scheduling activities.

Both partners can also benefit from better capital utilization resulting from elimination of excess equipment and unnecessary floor space.

Louise Stump is general manager of EPIC Technologies Johnson City, TN operations. Joe Davis is manager of materials and logistics at EPIC Technologies Johnson City operations.