Preface

NPI (New Product Introduction) is becoming more and more important in most manufacturing companies. It is the first step to win customer, confidence on both production capability and business management. Standing as manufacturing service provider, we may focus on followings:
· How to get profit from the NPI business
· How to manage the NPI business
· How to come out a proper NPI report to customer to get customer approval
· How to transfer the NPI to factory to implement mass production smoothly

The electronics manufacturing services industry is a growing and fast-changing field, creating many global EMS heads, even some local small factories. At the same time, the match is getting closer and closer due to market became more and more mature and most customers are prefer to setup strategic partnership with some suppliers who can do each project effectively and honor the commitment. The competitors must continually improve the business skills and production quality, especially should expand the service offering to cover the whole lifecycle on products including design, new product introduction, supply chain management and after-sales services, for example, supply chain profitability, human/facilities resource allocation optimization, and implement best practices and key processes. In customer view, NPI is the first stage of a component’s life cycle since it leads to final design and has a great impact on the final quality of the component.
What is customer’s most concern? Let’s divide the whole NPI into 2 processes, the first is supplier, you, EMS provider, the second is the product, himself, the product design. For you, customer would secure your process with respect to a> quality, b> capacity. For product, customer would secure with respect to a> enough training to operators and engineers, b> product requirement are clear and implemented solidly, c> process setup adequately, d> process evaluation is ready.
The practice and lesson learnt in NPI phase are most important as customer is prefer to solve all problems which are related to design and system fault at this phase, not mass production phase.
“Pro-actively”, this word is often appeared in the mouths of many customer engineers. The reason is customer engineers are very concern about the feedback from manufacturing lines. Working pro-actively means trying to find problems and respective solutions before it occur, before it became a real problem. Therefore, NPI program manager have to closely monitor the whole process and drive team members to work aggressively. Much more money would be cost on an incident at ramp-up phase than what cost at NPI phase.

Most EMS companies have the product life cycle chart as below:

The most important objectives for NPI process are, to provide value-added in terms of short time-to-volume with parallel ramp-up, lower total cost and easy communication channel. Then, how to implement these wordings?
1. Quotation phase:
Sometimes, PM need to help sales manager to calculate the manufacturing cost. When the overall quotation finished, PM may also need to be involved into quotation review. The basic information is annual volume. Some indexes are constant (relatively), they are raw material cost, inbound/outbound freight & duty, mark-up coefficient, interest rate and base profit. As for the manufacturing cost, we need experienced engineer to do product and process analysis to get an accurate cost list, especially for whole new product.
The engineer can be IE (industrial engineer) or PE (process engineer). In my experience, they may calculate wrong at following items:
1.1. SMT tooling. Once an engineer forgot stencil. It is a big problem once you also overlooked.
1.2. Spare part maintenance. It is serious if no this budget, especially for that used on testing equipment. One RF cable would cost thousands dollars, to top it worst, it has to be changed once 3 months.
1.3. Equipment amortization. To get real amortization rate from financial dept.
1.4. Process yield and defect cost. Few products are 100% direct passed and no any defect. It must be considered.
After quotation report completed, Sales Manager should call related people to do quotation review. Pls. be reminded you may stand in opposite position to this chairman. He would give you pressure to cut down the cost since he need to compete with other EMS providers to catch customer. But, if the cost is lower than the investment, you may lose passion to do this business. Normally, if the quotation is just for NPI product, the price may be higher, for example, 10~20%. Please remember, some business cells can live only on NPI.

2. NPI phase:
This is my topic, so I have to divide it into steps.

2.1. Pre-study. It is like quotation phase. Sales manager call related people to review the sales offer, forecast, project budget and agreement.
2.2. Planning. This phase is very important to whole program. PM should have a detailed list to review one by one to ensure all information are ready and all plan have responsible people and deadline. Once the ECR/ECO process was not defined clearly, when an ECO received, the tooling investment did not been included in the ECO confirmation letter, and then some money was lost.
In this phase, we should fix following items:
2.2.1. Project milestone.
2.2.2. Project organization. PM got the organization from customer and also send ours to customer. Keep right people can contact each other directly. In general, the organization should include all engineering people and office people. Engineering people, are process engineer, SMT engineer, diagnostic engineer, quality engineer and production supervisor. Office people, are Program manager, Sales, Buyer, Planner, PDM (product document manager), Finance, etc.
2.2.3. Investment plan. PM or higher hierarchy to define the investment. The investment includes equipment cost, tooling & jig & fixture cost, training cost and renovation cost. Most cost has been put into quotation, but now, we need control it by items.
2.2.4. Facility plan. PM should call production manager, WH manager, Facility manager to define the location. Which SMT line can be adequate use? Where to allocate the production line? Where to store the finished goods? Fix them on this meeting. Some peoples may challenge you about the schedule and estimated volume. Please prepare.
2.2.5. Material management plan. We need Material Manager to discuss the purchasing plan and delivery plan if consigned material there is. This plan is very serious to make sure there is no material shortage. Shortage is very easy occurred on three cases, a> single source, b> DOS (days of supply) too long, c> bad BOM usage. What is bad BOM usage? The usage of some component is not constant. For this case, we can use safe stock to control.
At the same time, prepare a localization plan to them. Pls. be reminded the two plans, quarterly PPV (purchasing price variance) and localization report, are very important to meet the cost reduction requirement from customer at mass production phase.
2.2.6. Quality plan. Quality dept should provide quality control plan, sub-supplier management plan, FMEA, environment report (if applicable).
2.2.7. Manufacturing plan: Production manager should report the manpower allocation, and the training plan to operators. IE should finished the layout plan and standard time calculation, based on the volume, shift arrangement, operator quantity, line layout, tooling & equipment balance, technical people support, should be all planned OK. Functions should also feedback the running status to PM. We may encounter troubles like tooling & equipment cannot be arrived on time due to customs delay, testing software cannot be installed correctly due to software or hardware problem, one material are not received due to supplier delay, operators are not so skillful so that the output is very lower than target, and so on. I really wish PM can be God, can solve all problems. He has to review all change and the respective impact frequently.
2.2.8. Risk management plan: Like the trouble we encountered in 2.2.7., an intelligent Manager won’t get himself into trouble, even they are potential so far. He said, “Hi, Tom, you are testing engineer, pls. have a risk management report on the action once equipment was breakdown or spare part was used up.” “Hi, Jack, you are quality engineer, pls. have the risk management report on the action once serious quality problem occurred or customer raise warning message on bur-in test failure.” Not all potential problems would occur but if occur, some people may going to “death”.
2.2.9. ECR/ECO plan: PDM and product engineer should control this plan. Most companies have the procedure document to specify, but PM have to concern about once the engineering change would cause cost change. So, to define an ECR/ECO handling procedure and cost control process are necessary.
Now, once these plan are all ready and all actions have deadline, Congratulations, you can success in most subsequent phases.

(to be continue)

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