Ericsson meets SMID

Define
April, 2011
Agenda
› 4th April
– Ericsson presentation
– Statistical tools in manufacturing
– DMAIC/IDDOV
› 7th April
– Define
– Measure
› 11th April
– Analyze
› 14th April
– Implement
– Control

Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 2

DMAIC Chart

D efine
Understand the task
M easure
Develop and execute
A nalyze
Find the root
I mprove
Generate and
C ontrol
Ensure that the
and its financial an appropriate data causes. implement solutions. results will last.
impact. collection method.

• Task selection • Process map • Fishbone diagram • FMEA risk analysis • Documentation,
• Data collection • Correlation • Process map
Light

matrix standardization and

• SMART review table analysis training
• Stakeholder map •Pareto diagram
• Risk Management

• SWOT analysis • 7QCT • 7QCT • Poka-Yoke • 7QCT

Comprehensive

• Process map • Measurement • Hypothesis testing • Hypothesis testing • SPC

• VOC and break system analysis • Regression- • Loss functions • Business case
down to CTQs • Sampling technique analysis • Cost/Benefit verification
• 7MT • SIPOC • DOE selection
• Affinity diagram • Gauge R&R, Gauge • Anova •Pugh Concept
attribute • 7MT Selection
• Capability analysis • Data
• Benchmark transformations
• Tagushi loss • Simulations
functions

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Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 4
Cost of Poor quality
“Improvements in quality always, and automatically, results in
cost and lead time reduction, increase productivity, increase
market shares, and hence increase profits.”

MR.W.Edwards Deming

“ COPQ are costs that would disappear if the products and processes
of a company would be fail or defect free“

Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 5

Cost Of Poor Quality
COPQ
Material Material
Manufacturing Manufacturing
.

Process 1 Process 2 Process 3 Process 4

defects defects defects defects

Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 6

 COPQ Stratification
Cost Of Poor Quality can be divided into product specific COPQ, more
process related COPQ and COPQ related to employee effects or “soft”
effects.

Product Process Soft / Intangible

Lack of producibility Non used capacity Lost goodwill
Delayed plans Overtime
Cost for test
Extra freight cost
Inspection cost Staff turnover
High field and service costs
Increased customer support
Trouble shooting / analysis Incorrect pricing
Disappointed customers
Repair & Rework Overdue debts
Scrap High maintenance costs
Extra paper work
Increased stock
Customer returns (claims)
Incorrect orders

Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 7

INCOMING INSPECTION
COPQ Product
Example Module Production
Product
Printing AOI SMA AOI INSPECTION
Lack of producibility

Cost for test

Inspection cost

Trouble shooting / analysis

ASSEMBLY TEST ASSEMBLY TEST INSPECTION
Repair & Rework

Scrap

Customer returns (claims)

CUSTOMER
RETURNS
SCRAP

TROUBLE SHOOTING
REPAIR / REWORK

Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 8

COPQ Process & Soft / Employee

Supplier A Supplier B Supplier C

Price Price Price

2,30 USD 2,45 USD 1,99 USD

Lead Time Lead Time Lead Time

6 weeks 6 weeks 4 weeks

Delivery precision Delivery precision Delivery precision

93,2% 98,0% 82,0%

Failure rate PPM Failure rate PPM Failure rate PPM

984 223 5632

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Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 10
What is a CTQ?

› CTQ are the product-, subsystem-, parts- or process features that significantly
impact the final cost, performance or reliability of the product or process

› CTQ’s have to be obtained to meet customer and stakeholder needs and

objectives.

› CTQ’s often have effect on several identified targets (Six Sigma Y’s)

› CTQ’s are found by making a CTQ-tree and should be tangible and

measurable.

Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 11

 Develop and define attribute
or variables for CTQs

Voice of the
Customer/ Features CTQs Measurement
Market Accessible sales staff (no of missed phone-calls)
Quotations
No errors (did understand (no of loops)
customer needs)
Responsiveness (response-time)

Meets customer needs (% of deliveries to

customer request)
Delivery
No updates (Delivery on first confirm date)
Shorter lead-
times
To site delivery (% of units delivered to site)

Short assembly time (h/inst)

Installation
Test trail done same day (% of inst)
as site installation

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Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 13
Y = f (X1, X2, X3... Xn)
Ytot = ƒ(x1, x2, x3… xn)

x3 = Ysub1 = ƒ ( x1, x2, x3… xn)

x1 = Y sub2 = ƒ( x1, x2, x3… xn)

and so on…..
In best situations one could find root causes which could
improve several high level Ys in a positive way. In worse situations
two Ys could go in opposite directions for a common x.

The Y = ƒ(x1, x2, x3… xn) approach can be used in a variety of situations.
From simple limited problem solving cases to big business strategy missions.

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Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 15
 Business Case
› The purpose of the Business Case is to answer the question:

– What is the financial benefit of this improvement?

› A Business Case includes both costs (project, investments and implementation) and
savings (hard and soft).
› The Business Case give you authority to drive the mission.
› Prioritize to other programs/projects that may conflict.
› Give you a mechanism for judging solutions from a cost/saving ratio
› Summarizes and quantifies company profits.
› Money is a common language.

Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 16

Business Case Calculations – Savings
Hard Intermediate › Soft
› Defects › Missed orders › Un-needed capacity
› Man hours Bottle neck › Potential capacit y › Customer Happiness
› Cost Avoidance History › Cost Avoidance Probability › Market share
› TK › etc. › Employee motivation
› etc. › etc.

Business Case Calculations –

Cost
› Project man hours
› Investments
› Equipment
› Training hours
› etc

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Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 18
 Goal Statement
- with SMART assessment
Ensure that your goal is set up SMART to be able
to judge when your project and goals are fulfilled.

Specific Specify what products/processes/services/activities are included in the goal

formulation. Keep it simple but specific. Avoid abbreviations that are not generally
known.

Measurable What measurements will show that the goal will be fulfilled? How will relevant
progress be tracked? Variable data are always desirable, it facilitate you to track
positive or negative progress trends to the final goal.

Achievable How tough must we set the goal to be challenged to do our best efforts and
more? A tough and very ambitious goal will drive new perspectives and out of the
box thinking. An over ambitious goal will cause de-motivation and lack if
empowerment.

Relevant Do we know that this goal area is what we should put our efforts on? Is it high
enough priority so it won't be down prioritized by other activities?
Not only set up a time when the goal shall be fulfilled but also during what period
Time bounded of time (start and stop time) will measurement will be taken to prove a solid
baseline for goal fulfilment?
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Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 20
 Microsoft Excel

Stakeholder analysis
Worksheet

Level of true Individual Interest

1. Brainstorm stakeholders Low High
– Whom will be effected or
have to know of the project? C Keep Satisfied D Key players

2. Categorize stakeholders Individual E Area manager B

– In interest and authority

Formal or informal authority

Individual A
3. Communication plan

High
– Set up a communication Area manager A
Individual D
plan for group A-D.
– What media? I.e. meetings,
mail, phone, presentations,
oral, etc.
– When? Weekly, monthly,
quarterly, when ever needed Individual B
or when we meet in other
occasions etc)

Low
Individual F

Individual C
All line-operators

A Minimal effort B Keep informed

GROUP:
A. What minimal effort is required to keep Group A ticking over?
B. How do we keep Group B informed in a consistent and regular manner?
C. How do we manage Group C engagement in such a way that keeps them satisfied & decreases their ‘wrecking’ potential?
D. How do we engage and delight Group D so that they can help us to engage Group C?

Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 21

 Communication Plan
› With the stakeholder analysis as a base, build a plan for when, what
and to whom information must be shared along the improvement
execution?

News letter/ E-mail Steering Team Informal

Media group meeting meeting To whom
web
Group A Group B Keep Group C Keep Group D
Minimal effort informed satisfied Key
Type of player
deliverable
Road Map All x x Individual Individual F Individual B Individual E Individual D
E Individual C Area mgr A Area mgr B

Analysed Facts x x Individual E

Alternative Solution x x x x Area Mgr. A Individual E

Area mgr A

Progress Report x Individual B Individual E

Area mgr A

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Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 23
 Notice!
Try to find preventive

Risk Analyze - Example actions that moves

risks to the right,
downwards or both.

Microsoft Excel
Worksheet

High Probability High Probability

High Impact Low Impact

G E C F
B
Low Probability Low Probability
High Impact Low Impact

D H
A

1) Rate the risks within an improvement by the level of impact and level of probability

2) Identify preventive actions, responsible drivers and ready date

3) Follow up and update probability and impact when preventive actions are taken
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Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 25
 Time schedule

•Project phases (DMAIC)

•Identify milestones
•Identify tollgates

Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 26

 NOT OK OK

Problem/ opportunity statement: Problem/ opportunity statement:

Our delivery precision for the STREAMLINE product portfolio
Our delivery precision is poor. Goal level is has been poor during 2003 and 2004. We loose revenues
98% and last month it was 76%. This is a big since the market need has been higher than our capacity
problem for us and needs to be solved during 2004 and a missed delivery is a missed invoicing. The
quickly. general customer expectation is a D.P at 98% and baseline
Q1 and Q2 it was 80%. If we don't show a D.P at 98 % at the
end of 2004 we will not only loose invoicing but also
customer contract. The D.P. also cost us extra
administration.
Goal statement: Goal statement:
Aligned with the KPI target the Delivery Delivery Precision  98,0% measured on all STREAMLINE
Precision = 98% at Q4 2004. shipments during 041201-041231.
Business case: Business case:
Every missed delivery cost us ~ 1 Ksek in Hard savings: Invoicing losses sales margin 300 Ksek 03Q3-
extra fright costs and administration. At 04Q2, Extra admin 30 Ksek.
present D.P. figures we will lose ~ 500 Ksek Soft Savings: Potentially missed contract during 2005 ~ 10
during 2004. 000 Ksek.
Costs: Manhours 30 Ksek, Traveling costs 30 Ksek.
Hard Savings – Costs during 04Q3-05Q2 = 247,5 – 60 =
187,5 Ksek
Project Scope: Project Scope:
The project will only focus on suppliers who
No project limitation at this stage.
SD/TFT responsibility.
Ericsson @ SMID - Define phase | Commercial in confidence | 2011-03-24 | Page 27
Define - Key questions
1.Why do we need the improvement?
2.What process/product/service has to be addressed?
3.What is the goal deliverable?
4.What is the Critical To Quality parameters?
5.Is it a solid Business Case?
6.How do we avoid risks with the project and improvement?
7.Who should attend in the project?
8.Where do we have Stakeholders that has to incorporated in the task?

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