- Email: [email protected]
EDC and the Supply Chain
CHAPTER
14
EDC and the Supply Chain Contents Supply Chain is Broken Purchase Order e CM Boilerplate ECO Sent to Supplier Supply Chain Analysis Supplier’s Relationship with the Customer Supplier BOM Purchased Proprietary Assembly Changes Customer Review and Approval of Changes Change Approval Default Clause
326 329 330 330 331 331 332 332 333
Much is written about the supply chain in magazines and journals. Software programs are proliferating. They tout the benefits of their product. The internet is filled with supply chain buzz. Yet something seems to be missing. The supplier’s perspective is sometimes missing. More important, although they often mention the “design,” it seems to be an important thing that is “just there.” Little is said about the design document, the design change, related information, and their importance to the chain. The planner–buyer, the supplier, receiving, receiving inspection, the warehouse (if used), and the use-point all depend upon the design documents. Much of what this analyst reads about the “supply chain” seems to have the same unwritten assumptions – the right drawing or specification is at the right place at the right time and that whatever problems exist in the supply chain process, a new software application(s) can solve them. This author thinks these two issues are a basic fallacy in the supply chain software buzz. The supply chain is also a two-way street. You not only have suppliers, but also customers. You are a supplier to your customer. That relationship, on both ends, needs to be examined carefully. On both ends, the right document must be at the right place at the right time, by the right process or the supply chain breaks. Engineering Documentation Control Handbook ISBN 978-1-4557-7860-7, Doi:10.1016/B978-1-4557-7860-7.00014-4
Ó 2012 Elsevier Inc. All rights reserved.
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SUPPLY CHAIN IS BROKEN The supply chain may get broken at any link. Not necessarily by the supply chain people but nevertheless, broken. The following lists real-world broken links – followed by the avoidance action: • The engineer takes a drawing directly to a supplier to obtain prototype items without the buyer involved. The supplier chosen may not be offering the best price/quality producer known to the buyer. This issue also holds with pilot items. – Release and change standards must include purchasing. • A drawing is delivered to the supplier with a purchase order that is of the same rev level the supplier already has – but the design has changed. The supplier may or may not check/compare the two. The consequences are obvious and have been discussed earlier. – Only CM should assign revs. • The supplier is not consulted on the design of an OEM proprietary item they will manufacture. Best price forgone. – Include the supplier in team action. • The single supplier is referenced on the design document. Buyer negotiates from jail and the best price is forgone. – Get supplier off the drawings and specs and on the approved manufacturers list. • No specification control drawing exists for an off-the-shelf item to be purchased – the supplier’s part number is specified. The supplier can make changes without apparent restraint. Will they all be interchangeable in all your applications? – Write spec control drawings for critical items. • How well do you understand your product and service part interchangeability issues in your customer’s product when you are making design changes? – See Chapter 4. • An item is released without team involvement. Will it be producible using best manufacturing practice yielding best price? – Use teams per Chapter 6. • The phase that an item is valid for is not specified on the document and/or in the system. Buyers unwittingly buy parts in production quantities that are only for prototype or pilot. The design changes and there are unusable parts on the dock. – Institute release standards that include status coding. • Separate part numbers are assigned to each supplier of an interchangeable item. Worst price, multiplicity of storage locations, and service parts results. Dropping or changing suppliers requires an ECO. Time wasted.
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• An approved manufacturers list does not exist. The buyer may buy from manufacturers whose part has not been tested. Failures result. – Institute a company AML. • The same/interchangeable item is assigned several different part numbers by engineering. Worst price, multiplicity of storage locations, and service parts result, often without being obvious to anyone. – Institute a class coding standard. • The new rev level document is sent to the supplier but not the ECO. The supplier must compare old rev to new rev to figure out for themselves what changes occurred. Errors result in bad parts on the dock. – Send the ECO to your suppliers. • The engineer marks up a document at the supplier’s factory. The team has been by-passed. Best practices are not present. Errors result in bad parts on the dock. – A cultural issue wherein the chief engineer needs to “get in the face” of that engineer. • Suppliers are sometimes certified by “the wand” with no receiving inspection performed – more bad parts on the dock. – Policy must require a testing method for all parts promoted to production status. • The incorrect rev drawing is in receiving/inspection. – See tech support for point of use. • What marking is required? Part numbering and rev level of every part is very expensive. Will your suppliers have to purchase expensive tools/ equipment to meet your marking requirements? How about “bag and tag?” – Re-examine part marking policy. • Has the effectivity of the change been properly communicated to both the supplier and to receiving inspection. When do we expect the new designed part to cross our dock? – See change standards and point of use. • Are supplier-requested changes processed quickly or will more bad parts, missed schedules, waivers, or added costs result? – Measure the supplier request turnaround time. • Are bad/non-conforming parts investigated as to the root cause and the proper corrections made? Or will the same problem occur again and again? – Institute a meaningful deviation standard. • Suppliers for proprietary designed assemblies are not told how to identify or trace internal changes. Rev level is not adequate. The change content of the assembly and thus your product is unknown. – Put trace policy in the PO boilerplate.
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• The buyer is often buying from a different BOM than the engineering BOM. Differences, reconciliation, and errors result. – One BOM database needed. • No method is specified for suppliers to request changes. The result is that some requests are lost in the process. – Another requirement for PO boilerplate. • Will we share the savings resulting from a supplier-requested cost reduction change? – Company policy should share supplier cost savings. • Bad parts are often not identified on the dock but rather in assembly, test, burn-in, or even in the field. At what cost – the rule of tens applies. – Audit supplier test methods, institute inspection method, and release for production must require test method in place. • Do we expect approval or review of any supplier changes to their proprietary designed item? – Put interchangeability standard on suppliers for their end item and any parts spared. • Are the units of measure specified compatible with your manufacturing system and with the supplier? – One BOM with one unit of measure as purchased. • On the other end of the supply chain, field failures are not always followed up to find the root cause. Failures continue and trust declines. – Standardize and measure the failure reporting process. The worst case this author experienced was a client company where the engineering folks were not aware that the purchasing folks were not giving ECOs to suppliers if the PN didn’t change. As discovered during consultation, they considered them unimportant! This is certainly not a list of all the potential supply chain breaks. Some of the “breaks” are not even very visible to the supply chain folks. Most of the problems are not with the supplier. The OEMs must take the responsibility for getting the right drawing to the right place (supplier) at the right time. The list, however, does establish that the vast majority of breaks in the chain are EDC/CM issues. The supply chain requires the right document, at the right place, at the right time, and by the right process. Many of these issues can be duplicated in your relationship with your customer. They may not understand best-in-class EDC/CM and you both pay the piper. These and other issues constitute a “hidden” reason why the EDC/CM discipline is so important to the supply chain and management. They also are compelling reasons for supply chain folks to be present on the teams in the CM processes – which they often are not.
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This analyst believes that the number one reason for bad parts/nonconforming material in the supply chain is lack of good EDC/Configuration Management.
PURCHASE ORDER – CM BOILERPLATE It has become obvious that certain CM issues need to be addressed in every purchase order. So let’s take a shot at same: • Our company interchangeability standard shall be applicable to the purchased item and any serviced parts thereof. (Let the supplier know your rules.) • Our company part number change standard shall be applicable to the purchased item and any serviced parts thereof. (Let the supplier know your rules.) • Our company traceability standard or an equivalent standard shall apply to the non-interchangeable part number changes to assemblies of our design. (ECO specifies those changes.) • If a new drawing or spec is furnished without a revision level or part number change the supplier will immediately contact the buyer and make no parts. • Supplier request for change of design or document shall be sent to the buyer via email with a copy to CM. • Upon any change to our designed purchased item an ECO delineating the exact changes shall be included with the revised PO. If missing, the supplier shall notify the buyer immediately. • Effectivity of changes to purchased items are the dates the new designed parts are expected to cross our receiving dock. • Item marking with our part number or revision level is not required unless specified on the drawing or specification. • Our company representatives are not allowed to mark up drawings or specifications at your location for items coded on the PO as “S” or “P” or on the document revision block as numeric or alpha revision level. If this occurs notify the buyer via email with a copy to CM. • Our assembly designs must be made only with parts made by manufacturers specified on our AML (furnished). If the supply chain is to furnish the right parts to the right place at the right time, by the right process, the purchase order must put such CM requirements on our suppliers.
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ECO SENT TO SUPPLIER Why must the changes be precisely described in the ECO? Put yourself in the shoes of the document customer. Given a revision D drawing and a revision E drawing is not your first question going to be “what is different?” The several users of the documents are going to get neck strain comparing the documents. Your suppliers will often have a light table to overlay both copies in order to identify the differences. Your document customers will spend a lot more time if changes are not precisely described – and make errors which will come back in the form of bad parts or higher prices. The time spent by your document customers (including the suppliers) will far exceed the time required to precisely describe the changes. Do not just send the supplier the new revision drawing, send them the ECO which includes a marked print or precise description of the change. The ECO should also carry the effectivity – probably the date you expect the revised item to cross your dock.
SUPPLY CHAIN ANALYSIS There is a crying need for facts in the CM–supply chain arena. Much data gathering and analysis needs to be done in most companies. The effort invested will pay dividends for the company. Here are some of the items that should stand analysis: • Supplier Change Requests – Regardless of the form. • Material Rejections – At receiving or in receiving inspection. • Deviation Authorizations – Internal or initiated by the supplier. • Material In Process Rejections/MRB – Assembly, test, burn-in. • Customer Returns Field Failures – Bad part or product. • Customer Change Requests – Regardless of the form. • Customer Change Approval Time – And percent rejected. Careful root cause analysis should be done, starting with a list of probable causes and refined as you go along. Careful root cause analysis is needed. This may require two views, the supplier view and the company view. Start with a list of possible causes, and refine it as you go. In the end, we would be able to quantify all problems found, and then put the CM portion into proper corrective CM action. These are things that some QA departments may already do/partially do. The CM manager needs to analyze the data and relate it to the CM processes; Example: Parts made from wrong rev drawing is the QA identified cause/fact.
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Analysis: It needs to be asked, why was the wrong rev drawing used? Was the effectivity not clear, not communicated to the supplier, not sent to the supplier, or what? If no root cause analysis exists, make higher management aware of that deficiency.
SUPPLIER’S RELATIONSHIP WITH THE CUSTOMER Engineering interaction with suppliers should always be done with the buyer’s knowledge. This is as much a cultural issue as a CM one. The management must expect all communications with a supplier to be done with the buyer’s involvement. The customer should have a specified method of requesting changes which applies to all suppliers. When a supplier has ideas for changes to your proprietary designed items they are generally cost reductions. The benefit should, when practical, be shared. If the idea will save 20 cents an item, expect a 10 cent price reduction. On the supplier-designed items (off the shelf), change approval should be shunned in favor of applying good interchangeability rules. Your spec control drawing is the basis for such rules, just as your product specification is the basis for this relationship with your customer. The same attitude should be expected of your suppliers that you would hope your customer would expect of you.
SUPPLIER BOM This discussion is about the purchased item that is our proprietary design and is for our production phase needs. When an assembly of our design is purchased with a company assembly drawing and company bill of material, all changes to them need to be furnished to the supplier. The approved manufacturers list for all the components needs to be furnished to the supplier and made part of the PO/ contract. All drawings and specifications and all changes to them must also be sent to the supplier. The advent of engineering systems implemented on top of manufacturing systems has brought on a quandary. When an assembly is purchased from a supplier shall we detail the BOM in both systems or only show the assembly components of the purchased assembly in one system?
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If we do it both places, isn’t that unnecessary redundancy? Of course it is. Both organizations need to get together and have a mutual BOM and data entered once for both systems.
PURCHASED PROPRIETARY ASSEMBLY CHANGES There will be non-interchangeable changes to the purchased assembly level. When this occurs, the part number of the assembly should change. We would track that change “in-house.” The supplier need only change the assembly and its identification as required by the purchase order/PO rev and drawing/spec when the effectivity demands. Non-interchangeable changes to components of the purchased assembly should result in part number changes to the components per our interchangeability rules. A method of tracking those changes is needed. The assembly need not change part number if it is interchangeable, or even if non-interchangeable and not a service assembly. There will also be interchangeable changes to parts in the purchased assembly. Such changes to parts are done by revision level change. In most companies, no tracking is needed. If you are regulated by people who want all changes tracked, then our PO boilerplate needs to be revised. We have already established that rolling revs is not a sane or meaningful method of tracking changes (non-interchangeable or interchangeable). We should have established another method for in-house use – logging in the Job Traveler, for example. That same method should be required of suppliers, unless they already have an established, reliable method in place.
CUSTOMER REVIEW AND APPROVAL OF CHANGES In the majority of purchases, the customers have not asked for change review or approval rights. It is expected that good interchangeability rules will be followed. The product specification (spec control drawing for the supplier) and warranty are the customer’s expectation. If the product does not perform as promised, then the problem must be fixed. It is not expected (also not desirable) that change review or approvals occur. There is an alarming trend for companies to require approval of the supplier changes. Time is added to the process without much value added. The supplier is forced to assign an additional part number for the customers who have/have not approved the change. It is certainly not cost-effective for the supplier company or its customer to go through such processes. Often, approval is used as a crutch in place of agreeing on the product specification and
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interchangeability rules for the purchased item. This is why the product specification, test specification, and specification control drawings (for the supplier) become so important. This is why make-sense interchangeability and part number change rules are so important. Rule: Try not to give customers change review or approval authority. Rule: If negotiations make it necessary, give the customer review authority. Rule: If necessary, give review or approval authority only on the following basis: • Written contract agreement • Non-interchangeable changes to the end product and service parts only • Increase the price for the ECN/ECP processing • Reserve the right to increase the product cost if the customer requests the change or if approval delays cause costs to increase. Rule: Give approval authority only if the customer agrees to be bound by a specific approval time – a default clause for a few days. Reason: To keep the product cost down and to compete in the world market. Whenever possible, have your customer representative on site or at least online for quick review/approval.
CHANGE APPROVAL DEFAULT CLAUSE The customer approval, if absolutely necessary, should be subject to a contractual “default clause,” such as: Example: “If approval/disapproval is not received within 10 working days the change shall be approved by default.” Companies have agreed upon contracts with such a default clause because it is good business for both parties. Most customers know that the longer the wait, the higher your costs go and the higher their price. When excessive time is spent in approval cycles, deliveries are delayed. Ten to fifteen percent of the companies known by this analyst are currently contracting in this fashion. Even the DOD is starting to make this process work with some suppliers. There are those who say 10 days is not enough time. In most businesses, there is seldom a design change that cannot be analyzed by a competent engineer in less than four working hours! So it is a matter of taking the queue time out of the process.
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Developing the default contract requires a fair amount of work on the part of the CM manager or engineering services director. The work for the supplier end is a one-time purchase order boilerplate development and inhouse discipline. The work on the customer end is generally contract by contract. The work done in the contract phase will be more than returned in the execution of the contract. The contract administration people may not be anxious to change the contracting policies. They will, however, usually come around when they realize the benefits. The customer’s representatives at contract time are usually aware of the need for speed because they want the product sooner, not later. Sometimes day-to-day delay in product delivery is added to the default clause. Thus, every day of approval time past the standard, will result in a delay of the ship date. This is a powerful negotiating tool to help obtain a default clause. Golden Rule: The supply chain, without best-in-class CM, is very likely broken.
14
EDC and the Supply Chain Contents Supply Chain is Broken Purchase Order e CM Boilerplate ECO Sent to Supplier Supply Chain Analysis Supplier’s Relationship with the Customer Supplier BOM Purchased Proprietary Assembly Changes Customer Review and Approval of Changes Change Approval Default Clause
326 329 330 330 331 331 332 332 333
Much is written about the supply chain in magazines and journals. Software programs are proliferating. They tout the benefits of their product. The internet is filled with supply chain buzz. Yet something seems to be missing. The supplier’s perspective is sometimes missing. More important, although they often mention the “design,” it seems to be an important thing that is “just there.” Little is said about the design document, the design change, related information, and their importance to the chain. The planner–buyer, the supplier, receiving, receiving inspection, the warehouse (if used), and the use-point all depend upon the design documents. Much of what this analyst reads about the “supply chain” seems to have the same unwritten assumptions – the right drawing or specification is at the right place at the right time and that whatever problems exist in the supply chain process, a new software application(s) can solve them. This author thinks these two issues are a basic fallacy in the supply chain software buzz. The supply chain is also a two-way street. You not only have suppliers, but also customers. You are a supplier to your customer. That relationship, on both ends, needs to be examined carefully. On both ends, the right document must be at the right place at the right time, by the right process or the supply chain breaks. Engineering Documentation Control Handbook ISBN 978-1-4557-7860-7, Doi:10.1016/B978-1-4557-7860-7.00014-4
Ó 2012 Elsevier Inc. All rights reserved.
325
j
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Engineering Documentation Control Handbook
SUPPLY CHAIN IS BROKEN The supply chain may get broken at any link. Not necessarily by the supply chain people but nevertheless, broken. The following lists real-world broken links – followed by the avoidance action: • The engineer takes a drawing directly to a supplier to obtain prototype items without the buyer involved. The supplier chosen may not be offering the best price/quality producer known to the buyer. This issue also holds with pilot items. – Release and change standards must include purchasing. • A drawing is delivered to the supplier with a purchase order that is of the same rev level the supplier already has – but the design has changed. The supplier may or may not check/compare the two. The consequences are obvious and have been discussed earlier. – Only CM should assign revs. • The supplier is not consulted on the design of an OEM proprietary item they will manufacture. Best price forgone. – Include the supplier in team action. • The single supplier is referenced on the design document. Buyer negotiates from jail and the best price is forgone. – Get supplier off the drawings and specs and on the approved manufacturers list. • No specification control drawing exists for an off-the-shelf item to be purchased – the supplier’s part number is specified. The supplier can make changes without apparent restraint. Will they all be interchangeable in all your applications? – Write spec control drawings for critical items. • How well do you understand your product and service part interchangeability issues in your customer’s product when you are making design changes? – See Chapter 4. • An item is released without team involvement. Will it be producible using best manufacturing practice yielding best price? – Use teams per Chapter 6. • The phase that an item is valid for is not specified on the document and/or in the system. Buyers unwittingly buy parts in production quantities that are only for prototype or pilot. The design changes and there are unusable parts on the dock. – Institute release standards that include status coding. • Separate part numbers are assigned to each supplier of an interchangeable item. Worst price, multiplicity of storage locations, and service parts results. Dropping or changing suppliers requires an ECO. Time wasted.
EDC and the Supply Chain
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• An approved manufacturers list does not exist. The buyer may buy from manufacturers whose part has not been tested. Failures result. – Institute a company AML. • The same/interchangeable item is assigned several different part numbers by engineering. Worst price, multiplicity of storage locations, and service parts result, often without being obvious to anyone. – Institute a class coding standard. • The new rev level document is sent to the supplier but not the ECO. The supplier must compare old rev to new rev to figure out for themselves what changes occurred. Errors result in bad parts on the dock. – Send the ECO to your suppliers. • The engineer marks up a document at the supplier’s factory. The team has been by-passed. Best practices are not present. Errors result in bad parts on the dock. – A cultural issue wherein the chief engineer needs to “get in the face” of that engineer. • Suppliers are sometimes certified by “the wand” with no receiving inspection performed – more bad parts on the dock. – Policy must require a testing method for all parts promoted to production status. • The incorrect rev drawing is in receiving/inspection. – See tech support for point of use. • What marking is required? Part numbering and rev level of every part is very expensive. Will your suppliers have to purchase expensive tools/ equipment to meet your marking requirements? How about “bag and tag?” – Re-examine part marking policy. • Has the effectivity of the change been properly communicated to both the supplier and to receiving inspection. When do we expect the new designed part to cross our dock? – See change standards and point of use. • Are supplier-requested changes processed quickly or will more bad parts, missed schedules, waivers, or added costs result? – Measure the supplier request turnaround time. • Are bad/non-conforming parts investigated as to the root cause and the proper corrections made? Or will the same problem occur again and again? – Institute a meaningful deviation standard. • Suppliers for proprietary designed assemblies are not told how to identify or trace internal changes. Rev level is not adequate. The change content of the assembly and thus your product is unknown. – Put trace policy in the PO boilerplate.
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• The buyer is often buying from a different BOM than the engineering BOM. Differences, reconciliation, and errors result. – One BOM database needed. • No method is specified for suppliers to request changes. The result is that some requests are lost in the process. – Another requirement for PO boilerplate. • Will we share the savings resulting from a supplier-requested cost reduction change? – Company policy should share supplier cost savings. • Bad parts are often not identified on the dock but rather in assembly, test, burn-in, or even in the field. At what cost – the rule of tens applies. – Audit supplier test methods, institute inspection method, and release for production must require test method in place. • Do we expect approval or review of any supplier changes to their proprietary designed item? – Put interchangeability standard on suppliers for their end item and any parts spared. • Are the units of measure specified compatible with your manufacturing system and with the supplier? – One BOM with one unit of measure as purchased. • On the other end of the supply chain, field failures are not always followed up to find the root cause. Failures continue and trust declines. – Standardize and measure the failure reporting process. The worst case this author experienced was a client company where the engineering folks were not aware that the purchasing folks were not giving ECOs to suppliers if the PN didn’t change. As discovered during consultation, they considered them unimportant! This is certainly not a list of all the potential supply chain breaks. Some of the “breaks” are not even very visible to the supply chain folks. Most of the problems are not with the supplier. The OEMs must take the responsibility for getting the right drawing to the right place (supplier) at the right time. The list, however, does establish that the vast majority of breaks in the chain are EDC/CM issues. The supply chain requires the right document, at the right place, at the right time, and by the right process. Many of these issues can be duplicated in your relationship with your customer. They may not understand best-in-class EDC/CM and you both pay the piper. These and other issues constitute a “hidden” reason why the EDC/CM discipline is so important to the supply chain and management. They also are compelling reasons for supply chain folks to be present on the teams in the CM processes – which they often are not.
EDC and the Supply Chain
329
This analyst believes that the number one reason for bad parts/nonconforming material in the supply chain is lack of good EDC/Configuration Management.
PURCHASE ORDER – CM BOILERPLATE It has become obvious that certain CM issues need to be addressed in every purchase order. So let’s take a shot at same: • Our company interchangeability standard shall be applicable to the purchased item and any serviced parts thereof. (Let the supplier know your rules.) • Our company part number change standard shall be applicable to the purchased item and any serviced parts thereof. (Let the supplier know your rules.) • Our company traceability standard or an equivalent standard shall apply to the non-interchangeable part number changes to assemblies of our design. (ECO specifies those changes.) • If a new drawing or spec is furnished without a revision level or part number change the supplier will immediately contact the buyer and make no parts. • Supplier request for change of design or document shall be sent to the buyer via email with a copy to CM. • Upon any change to our designed purchased item an ECO delineating the exact changes shall be included with the revised PO. If missing, the supplier shall notify the buyer immediately. • Effectivity of changes to purchased items are the dates the new designed parts are expected to cross our receiving dock. • Item marking with our part number or revision level is not required unless specified on the drawing or specification. • Our company representatives are not allowed to mark up drawings or specifications at your location for items coded on the PO as “S” or “P” or on the document revision block as numeric or alpha revision level. If this occurs notify the buyer via email with a copy to CM. • Our assembly designs must be made only with parts made by manufacturers specified on our AML (furnished). If the supply chain is to furnish the right parts to the right place at the right time, by the right process, the purchase order must put such CM requirements on our suppliers.
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ECO SENT TO SUPPLIER Why must the changes be precisely described in the ECO? Put yourself in the shoes of the document customer. Given a revision D drawing and a revision E drawing is not your first question going to be “what is different?” The several users of the documents are going to get neck strain comparing the documents. Your suppliers will often have a light table to overlay both copies in order to identify the differences. Your document customers will spend a lot more time if changes are not precisely described – and make errors which will come back in the form of bad parts or higher prices. The time spent by your document customers (including the suppliers) will far exceed the time required to precisely describe the changes. Do not just send the supplier the new revision drawing, send them the ECO which includes a marked print or precise description of the change. The ECO should also carry the effectivity – probably the date you expect the revised item to cross your dock.
SUPPLY CHAIN ANALYSIS There is a crying need for facts in the CM–supply chain arena. Much data gathering and analysis needs to be done in most companies. The effort invested will pay dividends for the company. Here are some of the items that should stand analysis: • Supplier Change Requests – Regardless of the form. • Material Rejections – At receiving or in receiving inspection. • Deviation Authorizations – Internal or initiated by the supplier. • Material In Process Rejections/MRB – Assembly, test, burn-in. • Customer Returns Field Failures – Bad part or product. • Customer Change Requests – Regardless of the form. • Customer Change Approval Time – And percent rejected. Careful root cause analysis should be done, starting with a list of probable causes and refined as you go along. Careful root cause analysis is needed. This may require two views, the supplier view and the company view. Start with a list of possible causes, and refine it as you go. In the end, we would be able to quantify all problems found, and then put the CM portion into proper corrective CM action. These are things that some QA departments may already do/partially do. The CM manager needs to analyze the data and relate it to the CM processes; Example: Parts made from wrong rev drawing is the QA identified cause/fact.
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Analysis: It needs to be asked, why was the wrong rev drawing used? Was the effectivity not clear, not communicated to the supplier, not sent to the supplier, or what? If no root cause analysis exists, make higher management aware of that deficiency.
SUPPLIER’S RELATIONSHIP WITH THE CUSTOMER Engineering interaction with suppliers should always be done with the buyer’s knowledge. This is as much a cultural issue as a CM one. The management must expect all communications with a supplier to be done with the buyer’s involvement. The customer should have a specified method of requesting changes which applies to all suppliers. When a supplier has ideas for changes to your proprietary designed items they are generally cost reductions. The benefit should, when practical, be shared. If the idea will save 20 cents an item, expect a 10 cent price reduction. On the supplier-designed items (off the shelf), change approval should be shunned in favor of applying good interchangeability rules. Your spec control drawing is the basis for such rules, just as your product specification is the basis for this relationship with your customer. The same attitude should be expected of your suppliers that you would hope your customer would expect of you.
SUPPLIER BOM This discussion is about the purchased item that is our proprietary design and is for our production phase needs. When an assembly of our design is purchased with a company assembly drawing and company bill of material, all changes to them need to be furnished to the supplier. The approved manufacturers list for all the components needs to be furnished to the supplier and made part of the PO/ contract. All drawings and specifications and all changes to them must also be sent to the supplier. The advent of engineering systems implemented on top of manufacturing systems has brought on a quandary. When an assembly is purchased from a supplier shall we detail the BOM in both systems or only show the assembly components of the purchased assembly in one system?
332
Engineering Documentation Control Handbook
If we do it both places, isn’t that unnecessary redundancy? Of course it is. Both organizations need to get together and have a mutual BOM and data entered once for both systems.
PURCHASED PROPRIETARY ASSEMBLY CHANGES There will be non-interchangeable changes to the purchased assembly level. When this occurs, the part number of the assembly should change. We would track that change “in-house.” The supplier need only change the assembly and its identification as required by the purchase order/PO rev and drawing/spec when the effectivity demands. Non-interchangeable changes to components of the purchased assembly should result in part number changes to the components per our interchangeability rules. A method of tracking those changes is needed. The assembly need not change part number if it is interchangeable, or even if non-interchangeable and not a service assembly. There will also be interchangeable changes to parts in the purchased assembly. Such changes to parts are done by revision level change. In most companies, no tracking is needed. If you are regulated by people who want all changes tracked, then our PO boilerplate needs to be revised. We have already established that rolling revs is not a sane or meaningful method of tracking changes (non-interchangeable or interchangeable). We should have established another method for in-house use – logging in the Job Traveler, for example. That same method should be required of suppliers, unless they already have an established, reliable method in place.
CUSTOMER REVIEW AND APPROVAL OF CHANGES In the majority of purchases, the customers have not asked for change review or approval rights. It is expected that good interchangeability rules will be followed. The product specification (spec control drawing for the supplier) and warranty are the customer’s expectation. If the product does not perform as promised, then the problem must be fixed. It is not expected (also not desirable) that change review or approvals occur. There is an alarming trend for companies to require approval of the supplier changes. Time is added to the process without much value added. The supplier is forced to assign an additional part number for the customers who have/have not approved the change. It is certainly not cost-effective for the supplier company or its customer to go through such processes. Often, approval is used as a crutch in place of agreeing on the product specification and
EDC and the Supply Chain
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interchangeability rules for the purchased item. This is why the product specification, test specification, and specification control drawings (for the supplier) become so important. This is why make-sense interchangeability and part number change rules are so important. Rule: Try not to give customers change review or approval authority. Rule: If negotiations make it necessary, give the customer review authority. Rule: If necessary, give review or approval authority only on the following basis: • Written contract agreement • Non-interchangeable changes to the end product and service parts only • Increase the price for the ECN/ECP processing • Reserve the right to increase the product cost if the customer requests the change or if approval delays cause costs to increase. Rule: Give approval authority only if the customer agrees to be bound by a specific approval time – a default clause for a few days. Reason: To keep the product cost down and to compete in the world market. Whenever possible, have your customer representative on site or at least online for quick review/approval.
CHANGE APPROVAL DEFAULT CLAUSE The customer approval, if absolutely necessary, should be subject to a contractual “default clause,” such as: Example: “If approval/disapproval is not received within 10 working days the change shall be approved by default.” Companies have agreed upon contracts with such a default clause because it is good business for both parties. Most customers know that the longer the wait, the higher your costs go and the higher their price. When excessive time is spent in approval cycles, deliveries are delayed. Ten to fifteen percent of the companies known by this analyst are currently contracting in this fashion. Even the DOD is starting to make this process work with some suppliers. There are those who say 10 days is not enough time. In most businesses, there is seldom a design change that cannot be analyzed by a competent engineer in less than four working hours! So it is a matter of taking the queue time out of the process.
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Engineering Documentation Control Handbook
Developing the default contract requires a fair amount of work on the part of the CM manager or engineering services director. The work for the supplier end is a one-time purchase order boilerplate development and inhouse discipline. The work on the customer end is generally contract by contract. The work done in the contract phase will be more than returned in the execution of the contract. The contract administration people may not be anxious to change the contracting policies. They will, however, usually come around when they realize the benefits. The customer’s representatives at contract time are usually aware of the need for speed because they want the product sooner, not later. Sometimes day-to-day delay in product delivery is added to the default clause. Thus, every day of approval time past the standard, will result in a delay of the ship date. This is a powerful negotiating tool to help obtain a default clause. Golden Rule: The supply chain, without best-in-class CM, is very likely broken.