Lucent Technologies. “The Solectron Production System, which we have embraced as our culture, is what separates us from our competition,” says Petta. “It really doesn’t matter the types of product we get. Our value-add is the process in which we build products, whatever those products are.” The Solectron Production System is modeled on the Toyota Production System, the archetype of lean manufacturing, and Solectron has enlisted the support of some of the most respected lean experts in the world to develop it. “We use Shingijutsu,” explains Petta, referring to the world-renowned lean consulting group whose founder and president, Chichiro Nakao-San, was a star pupil of TPS creator Taiichi Ohno. “They are the best in the world at teaching the Toyota Production System,” he says. “We’ve had Shingijutsu senseis here leading some of our kaizen events. So whether it’s a hundred plus rack computer storage system or a small kiosk, or a server, the process is exactly the same.” Jim Womack, founder of the Lean Enterprise Institute and co-author of the acclaimed Lean Thinking and The Machine That Changed the World, has also worked with Solectron, touring plants, teaching management and providing insight into new ways to transform the way the company operates. The culture change required by lean programs often finds resistance in the workforce, but not at Solectron. “It is a survival tool for us and our people embrace it very well,” says Petta. “I can go out to any of my lines right now and they’re all 5S, and they maintain 5S. It’s not me that goes out there and says ‘why is this cart in the wrong place?’ The people who work in that area are the ones who constantly 5S it. It’s very Lead story May 07 Businessexcellence 7 the contract manufacturer’s margins are much less than the OEM’s. “To make it work, you have to be able to manufacture better than your customers were able to, but you also have to be so much better that it leaves you some margin yourself.” On top of that, he explains, the contract manufacturer does not own the design. You might be able to influence it (and when you get to be the size and reputation of Solectron you undoubtedly will, but more of this later). And when you take a contract from a new customer you are given an AVL (approved vendor list) which tells you which suppliers you have to use for components. So, initially, a new contract might mean taking over production of something that used to be made by the OEM, making it more efficiently than they did to save them money, making it quicker, so the OEM can reach the market before its competition, and achieving a quality that will keep the OEM’s customers coming back for more; and also making it to their design, using their preferred suppliers. That’s not possible, is it? “As a contract manufacturer with small margins, we have to be incredibly efficient,” says Petta, “and the only way to do that is through the Solectron Production System.” [Again, more later]. Electronic Contract Manufacturing (ECM) became a recognized industry sector in its own right when IBM entered the PC market in the 1980s and decided to contract the assembly of the motherboards to SCI, an unknown manufacturing company in Huntsville, Alabama. Sanmina- SCI, as it is now known, along with Solectron, has since grown to global proportions on the back of a trend to outsource complex components that were considered outside core competence for the OEMs, affording the expanding ECMs the opportunity to gain economies of scale. As the ECMs gained critical mass, OEMs began to divest their own production facilities to them, including, in 1997, the sale of seven Swedish production plants by telecommunications manufacturer Ericsson, to Flextronics and Solectron. Aggressive acquisition strategies have since consolidated the industry into a handful of global corporations. The Solectron facility in West Columbia, South Carolina, now managed by John Petta, was itself acquired from NCR in 1998, along with other NCR manufacturing facilities in Atlanta, Georgia, and Dublin, Ireland. As the ECMs grew, so they broadened their portfolios to become what are now known as EMS (Electronic Manufacturing Service) companies, offering a broader spectrum of services in addition to manufacturing. Solectron’s offerings now include new-product design and introduction services, materials management, product manufacturing, product warranty and end-of-life support. The South Carolina facility is mainly a BTO/CTO site (build to order, configure to order), says Petta. “The products we have here are quite diverse and getting more so. Our legacy products are servers, computer storage systems, internet switches and routers but we’re expanding very quickly into industrial products, kiosks, ATMs and medical equipment. “With that diversity you can imagine the different types of customers we have,” he continues. “We deal very often with the end customer, that is our customer’s customer.” The plant’s major OEM customers include NCR, Nortel Networks, Stratus, Teradyne, and
much a part of our culture now.” The South Carolina plant specializes in computing, networking and data storage equipment, but even in this relatively narrow niche, the product range runs into hundreds. You can’t have a dedicated line for every one of those. “We have mixed product lines so there are many more products than there are lines,” explains Petta. This creates some issues, he says, because not every design or confi guration lends itself to a mixed model line. “You have to be creative. When we win a new contract with multiple confi gurations, more often than not we choose the high runners, put those on a line, then we may have a separate line for the fi ve or ten percent of the high confi guration, low volume variations. “We 5S every line, and every line is single piece fl ow,” he continues. Furthermore, every line is subject to process failure mode and effects analysis (PFMEA), and after that, he says, “we poka-yoke as much as we can,” [the process of mistakeproofi ng, see panel]. If a mistake does occur, an alarm goes off to halt the process so that defects are not passed down the line. That is known as jidoka, literally ‘automation with a human touch’. “We have jidoka on every line,” says Petta. “I have the production teams, quality, materials, production control, test and engineering all located on or by the line so when the jidoka light goes on or the horn sounds and the line stops, they’re out there right away.” For every stoppage, two time elements are measured; how long did it take for someone to come to the operator’s assistance, and how long did it take to get the issue resolved and the line back up and running? “Many places do lean for years before they tackle jidoka,” says Petta, “and we have it now.” Processes like this are undertaken by shop-fl oor workers, but they require management and monitoring. On Thursday mornings Petta and his managers make a lean tour, visiting every line to go over their metrics; customer satisfaction, productivity, quality yield, fi rst pass yield, out of box audit, how many jidoka occurrences happened in the last week, response times and how long they took to resolve. “That’s myself and my staff walking each of the lines and having the production teams themselves present that data to us on the line.” It’s very helpful, he says, because if there are any remaining issues, there is always someone present who is responsible for that particular function, who can make sure it is resolved. “It leads to an incredible amount of productivity improvement and the line smoothes out over time. Production to takt Businessexcellence May 07 8 “It really doesn’t matter the types of product we get. Our value-add is the process in which we build products, whatever those products are” Poka-yoke Pronounced poh-kah yoh-kay, poka-yoke is Japanese for fail-safi ng or mistake-proofi ng. A poka-yoke mechanism avoids errors becoming defects by either preventing a mistake from being made or making the mistake obvious at a glance so that it can be corrected immediately. Poka-yoke devices limit how an operation can be performed in order to force the correct completion of the operation. A good example of poka-yoke is the mechanism that prevents a car key being removed from the ignition switch of an automobile unless the automatic transmission is in the “park” position, so the car cannot be left in an unsafe condition.