Ericsson meets SMID Define April 2011 Agenda 4

Ericsson meets SMID Define April, 2011

Agenda › 4 th April – Ericsson presentation – Statistical tools in manufacturing – DMAIC/IDDOV › 7 th April – Define – Measure › 11 th April – Analyze › 14 th April – Implement – Control Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 2

DMAIC Chart Comprehensive Light D efine M easure A nalyze I mprove C ontrol Understand the task and its financial impact. Develop and execute an appropriate data collection method. Find the root causes. Generate and implement solutions. Ensure that the results will last. • Task selection matrix • SMART review • Stakeholder map • Risk Management • Process map • Data collection table • Pareto diagram • Fishbone diagram • Correlation analysis • FMEA risk analysis • Process map • Documentation, standardization and training • SWOT analysis • Process map • VOC and break down to CTQs • 7 MT • Affinity diagram • 7 QCT • Measurement system analysis • Sampling technique • SIPOC • Gauge R&R, Gauge attribute • Capability analysis • Benchmark • Tagushi loss functions • 7 QCT • Hypothesis testing • Regressionanalysis • DOE • Anova • 7 MT • Data transformations • Simulations • Poka-Yoke • Hypothesis testing • Loss functions • Cost/Benefit selection • Pugh Concept Selection • 7 QCT • SPC • Business case verification Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 3

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 Material Manufacturing Process 1 Process 2 defects Process 3 defects Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 6 COPQ Material. Manufacturing Process 4 defects

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 Lack of producibility Cost for test Inspection cost Trouble shooting / analysis Process Soft / Intangible Non used capacity Lost goodwill Delayed plans Extra freight cost High field and service costs Incorrect pricing Repair & Rework Overdue debts Scrap High maintenance costs Customer returns (claims) Increased stock Incorrect orders Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 7 Overtime Staff turnover Increased customer support Disappointed customers Extra paper work

COPQ Product Example Module Production INCOMING INSPECTION Product Printing AOI SMA AOI INSPECTION Lack of producibility Cost for test Inspection cost ASSEMBLY TEST INSPECTION Trouble shooting / analysis 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 2, 30 USD Price 2, 45 USD Price 1, 99 USD Lead Time 6 weeks Lead Time 4 weeks Delivery precision 93, 2% Delivery precision 98, 0% Delivery precision 82, 0% Failure rate PPM 984 Failure rate PPM 223 Failure rate PPM 5632 Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 9

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/Ma rket Features Measurement CTQs Accessible sales staff Quotations (no of missed phone-calls) No errors (did understand customer needs) Responsiveness Meets customer needs Delivery Shorter lead-times No updates (no of loops) (response-time) (% of deliveries to customer request) (Delivery on first confirm date) To site delivery (% of units delivered to site) Short assembly time (h/inst) Test trail done same day as site installation (% of inst) Installation Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 12

Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 13

Y = f (X 1, X 2, X 3. . . Xn) Ytot = ƒ(x 1, x 2, x 3… xn) ß x 3 = Ysub 1 = ƒ ( x 1, x 2, x 3… xn) ß x 1 = Y sub 2 = ƒ( x 1, x 2, x 3… 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(x 1, x 2, x 3… xn) approach can be used in a variety of situations. From simple limited problem solving cases to big business strategy missions. Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 14

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 › › › Defects Man hours Bottle neck Cost Avoidance History TK etc. Intermediate › Soft › › › › › Missed orders Potential capacit y Cost Avoidance Probability etc. Un-needed capacity Customer Happiness Market share Employee motivation etc. Business Case Calculations – Cost › › › Project man hours Investments Equipment Training hours etc Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 17

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 Measurable Specify what products/processes/services/activities are included in the goal formulation. Keep it simple but specific. Avoid abbreviations that are not generally known. 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? Time bounded Not only set up a time when the goal shall be fulfilled but also during what period of time (start and stop time) will measurement will be taken to prove a solid baseline for goal fulfilment? Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 19

Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 20

Stakeholder analysis 1. Level of true Individual Interest Brainstorm stakeholders Categorize stakeholders – Set up a communication plan for group A-D. – What media? I. e. meetings, mail, phone, presentations, oral, etc. – When? Weekly, monthly, quarterly, when ever needed or when we meet in other occasions etc) High Communication plan D Key players Individual E Area manager B Individual A Area manager A Individual D Individual B Low – In interest and authority 3. C Keep Satisfied Formal or informal authority 2. High Low – Whom will be effected or have to know of the project? Individual F All line-operators A Minimal effort Individual C 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? Media News letter/ web E-mail Steering group Team meeting Informal meeting Type of deliverable Road Map All Analysed Facts x Alternative Solution x x Progress Report x x x Individual E To whom Group A Minimal effort Group B Keep informed Group C Keep satisfied Group D Key player Individual F Individual B Individual C Individual E Area mgr A Individual D Area mgr B x x x Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 22 Individual E Area Mgr. A Individual E Area mgr A Individual B Individual E Area mgr A

Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 23

Notice! Try to find preventive actions that moves risks to the right, downwards or both. Risk Analyze - Example High Probability Low Impact High Probability High Impact G E C F B Low Probability High Impact D Low Probability Low Impact 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 Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 24

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: Our delivery precision is poor. Goal level is 98% and last month it was 76%. This is a big problem for us and needs to be solved quickly. Our delivery precision for the STREAMLINE product portfolio has been poor during 2003 and 2004. We loose revenues since the market need has been higher than our capacity during 2004 and a missed delivery is a missed invoicing. The general customer expectation is a D. P at 98% and baseline Q 1 and Q 2 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: Aligned with the KPI target the Delivery Precision = 98% at Q 4 2004. Delivery Precision 98, 0% measured on all STREAMLINE shipments during 041201 -041231. Business case: Every missed delivery cost us ~ 1 Ksek in extra fright costs and administration. At present D. P. figures we will lose ~ 500 Ksek during 2004. Hard savings: Invoicing losses sales margin 300 Ksek 03 Q 304 Q 2, Extra admin 30 Ksek. Soft Savings: Potentially missed contract during 2005 ~ 10 000 Ksek. Costs: Manhours 30 Ksek, Traveling costs 30 Ksek. Hard Savings – Costs during 04 Q 3 -05 Q 2 = 247, 5 – 60 = 187, 5 Ksek Project Scope: The project will only focus on suppliers who SD/TFT responsibility. Project Scope: No project limitation at this stage. 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? Ericsson @ SMID - Define phase | Commercial in confidence | 2011 -03 -24 | Page 28