Manufacturing across Time Zones (PLM Strategies Column)1 Oct, 2007 By: Kenneth Wong
Managing overseas production processes with PLM.
As far as Joe Lamoreux is concerned, Shenzen, China, is the end of the road. Once a fishing village but now a thriving commercial port, the city also happens to be a corporate outpost of ColdWatt, the power supply design company that Lamoreux oversees as its CEO.
The company maintains design centers in Dallas, Texas, and Bangalore, India. It also has global sales and support across the United States in San Jose, California, and in Austin and Houston, Texas. A one-person office in Taiwan augments the other branches. In China, however, the industrial boomtown Shenzen marks ColdWatt's operational boundaries.
But ColdWatt products — the turnkey 1U power sub-systems — are completely outsourced; they're built beyond the company's physical confines. The management team relies on various contract manufacturers to make the product's components. So the design data has to leave the company's physical cement walls and virtual firewalls.
The Shenzen Exchange
"Shenzen is where we do the day-to-day interfacing with our contract manufacturing partners' management staffs. That includes managing production, quality, and people interaction," said Lamoreux. "Here, we generate all of the files for the contract manufacturing partners from Arena Solutions then deliver those files in e-mails and in person."
In the Pearl River delta, the information flows from ColdWatt to its contract manufacturers, all of whom will make the parts and products ColdWatt needs and then return to deliver those products at a mutually agreed upon time.
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Lamoreux's engineers depend on Arena Solutions' on-demand PLM modules to help gather all the necessary product specs — the complete bill of materials, the schematics (all the way to the last nut, washer, and resistor), and the compliance and sourcing requirements — for handoff to the manufacturing partners.
At some point in the future, Lamoreux might consider giving the contract manufacturers direct access to ColdWatt's Arena PLM system. For the time being, "the handoff is done in the conventional way," he said.
Change Is Imminent
So are the change orders. ColdWatt has learned that the better control it has over its own engineering changes, the more efficient and profitable its transactions with the contract manufacturers are. There's a direct correlation between the design data that leaves the Shenzen facility and the invoices that are received later (figure 1).
"Let's say we've determined we want to change a source," Lamoreux said. "Maybe we're unhappy with a capacitor supplier because of price or quality. So we decide to change to another qualified source."
The change order will then go through the chain of command and the affected departments: "engineering, procurement, and — if already in production — sales, then the customers [the original equipment manufacturers, or OEMs, who will eventually incorporate the ColdWatt devices into theirs]," Lamoreux said.
Then the order is sent to the contract manufacturer, who happily complies. But, Lamoreux pointed out, you might not be so happy if later you receive an invoice with a charge-off for the cost of 10,000 unused capacitors from the old production run because they're no longer returnable. By the same token, if you're operating on a PLM platform that keeps you updated about the ongoing productions and the associated costs at all times, you might be able to take those 10,000 outstanding capacitors into consideration before you sign off on the source change.
Figure 1. Screen capture of Arena to illustrate how a supervisor might identify excess and obsolescence materials.
Know Your Sources
It's a principle that journalists live by, but Lamoreux pointed out it could apply to engineers as well. For the litigation-prone, compliance-conscious era of global manufacturing, making sure you're using parts and components from only prequalified sources is important.
"You don't want one of your engineers switching to a new source because the supplier gave him a nice polo shirt as a present," Lamoreux said with a chuckle." Because ColdWatt has set up the PLM system where no parts from an unknown source can be introduced into a CAD drawing, a polo shirt isn't about to sway any engineers.
"Any parts that go into our item master must be from the list of approved parts. They have to first go through an engineering change order," Lamoreux added.
Grow Fast, Stay Lean
Two years ago, when ColdWatt opened its doors, it had one customer and one product. "We now have about 15 products, many more in development, and 10 customers," Lamoreux said. "But we've added only about 10% more to our staff."
That's because of the scalability of the on-demand business model of its PLM vendor, Arena Solutions, Lamoreux revealed. "As your company grows and you add more projects, you could end up adding more people and layers of administration people to make sure the employees are doing what they should be doing," he reasoned. To avoid this, Lamoreux implemented the PLM system before he went into production. His proactive PLM adoption helps ColdWatt sidestep the kind of data-migration headaches that plague many other businesses that are forced to adopt a PLM system midstream.
Lamoreux does not have an IT staff to manage; ColdWatt's IT is outsourced. The service provider manages the company's e-mail and remote servers.
The Continental Juggle
Brian Walsh, IT manager for SchuF, described his employer as "a family-owned business." It's a bit of an understatement. The corporate family of this custom valve supplier includes operational arms in Germany, Ireland, England, the United States, the Netherlands, India, and Brazil. The facilities in Frankfurt, Germany; Cork, Ireland; Skippack, Pennsylvania; and Coimbatore, India hold together approximately 25 CAD stations. Having a small army of engineers in various international locations can be a blessing and a curse. The good news is that you have a large talent pool to draw from; the bad news is that you have a large talent pool to manage.
Previously, each location had its own document management system. "So every time someone made a change to a common component, we e-mailed one another to keep all the document management systems up to date," said Walsh. "We didn't have good control over what went in and out of our design library. The workflow functionality wasn't really there."
Take, for example, a project for which the design was done in the United States and the production was in India. When the U.S. staff left at the end of the day, they'd check the completed CAD drawing into the library, ready for machining. But those in India didn't realize the file was there. Production didn't begin until the U.S. staff returned to work and formally submitted the file to the Indian office.
To better manage the sites that are oceans apart, SchuF adopted Synergis Software's Adept document management for MS SQL server, which includes integrations for AutoCAD and SolidWorks.
The Difference a Day Makes
SchuF's design center in Skippack, Pennsylvania, and its production shop in Coimbatore, India, are separated by 12.5 hours. The German staff is eight hours ahead of the U.S. staff. The Brazil staff wakes up four hours before the U.S. staff does. What Adept did was introduce a new degree of enterprise transparency so project managers can make the most of those time differences between their locales.
"We were able to shorten our design windows," Walsh explained. "For example, the German staff would sign out a file, work on it, then sign it back in when they left so the American engineers could continue to work on it."
The production facility in India no longer needs to wait for the CAD file submission. From the status of the file that has been checked into the Adept repository, the Indian staff can determine that the CAD file is ready for manufacturing.
Know Your Resources
"The projects are managed in Adept in such a way so that the project managers are able to see how much work is coming their way and whether or not they have enough engineers to handle it," said Walsh.
The added benefit to this arrangement is the ability to identify engineers who have worked on similar designs. "We'd search for a similar product, see who's done it, see which site they're on, and whether they're available." Without hiring additional staff, the project manager can dip into the unused CAD talent and engineering pool from remote sites.
Commenting about the executive dashboards that have become the norm in PLM products, Joe Barkai, Manufacturing Insights' PLM practice director, noted, "Buyers tend to focus more on the snazzy display than the data itself. What we're finding is, sometimes companies have a hard time determining what the key performance indicators should be. There are many metrics that you collect — you do need to collect them for subsequent quality improvement and root-cause analyses — but many companies fail to select the few key metrics that provide effective day-to-day management."
In the Manufacturing Insights study, the analysts discovered a difference in what manufacturers can expect from certain regions. "Take two geographies, Indian and Russia, for example," Barkai noted. "This is what I hear from companies — they are large aerospace contractors — that have used outsourcing providers from both regions, sometimes for the same projects. A great deal of the Indian companies are very advanced in their CMMI [Capability Maturity Model Integration, a process-improvement approach] model, usually at level four or five."
Barkai learned from the same study that "The Russian outsourcers, in terms of technical capability, they may be on par, but they're not that mature in documentation, methodology, communication, and project management — certainly not as strong as their Indian counterparts. As a result, these companies are constantly flying to Moscow to work with their outsourcing providers. You're dealing with a different culture, a different language, so you need face-to-face interaction. You need site visits."
The Black Box Dilemma
Barkai believes the current outsourcing pattern presents a risk. "More outsourcing means more black boxes, more control given to the outsourcing provider, more product knowledge retained by the supplier. Most manufacturers do all right defining specifications and physical interfaces [how the pieces fit together, how cables and the electronics will connect with the other components], but many do not do as good a job in defining functional interfaces and especially failure interfaces, that is, how components — often from different suppliers — fail gracefully without causing a catastrophic system failure."
This problem will become a challenge in aftermarket support and service, Barkai said, and it might lead to the increased number of product recalls and rising warranty costs. "Service technicians have less knowledge and experience about the contract manufacturers' parts," he reasoned. He advises companies to involve outsourcing partners earlier in the design cycle and focus on serviceability. But he also acknowledges that many manufacturers haven't refined their design-outsourcing process to the level where they would willingly share all product information with their partners.
ColdWatt and SchuF foresee certain benefits to giving their suppliers direct access to their data-management platforms, but at the moment, neither has done so. And that probably has to do with the technological sophistication of the suppliers as well as the nature of the relationships.
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