Lessons learned over 28 years of buying and selling machinery.

Over the past 28 years I have worked on the supplier and user side, currently at Speedline Technologies, and previously at Motorola. One of my interests is how organizations select and purchase capital equipment for automated electronics manufacturing. I have evaluated, selected and purchased a good deal of process equipment and have seen countless others do the same. I have also “lived with” and observed the results of equipment selection.

Having worked both sides, I have developed my own primary considerations when evaluating and purchasing process equipment suppliers. That’s right, you are not only purchasing equipment, you are purchasing the supplier.

Purchasing process equipment must be an investigative, engineering and business exercise. It must be given the same attention to detail and priority as any critical goal in a manufacturing operation.

Over the past 10 years at Speedline, I have held numerous customer support roles: formal customer process assessments for quality and throughput improvements, process development projects (Pb-free process, miniature component assembly, etc.), process training, technical publications, technical seminars. I have been directly involved in customer process development, implementation and optimization, and have observed many of our customers’ equipment selection processes. During my 18-year career at Motorola, one of my primary responsibilities was selecting and purchasing process equipment for our SMT manufacturing process (printers, dispensers, placement, ovens, cleaners, wave solder, conveyors, cleaners, robotic work cells, etc.). I was involved in the selection and purchase of tens of millions of dollars of process equipment. And I made my share of errors in selecting the correct equipment for our applications and process goals (quality, cycle time, etc.).

Leaning from my mistakes – and from my correct decisions – I developed a philosophy for evaluating and purchasing process equipment. Keep in mind, we are not discussing “good” and “bad” equipment. Instead, we are selecting the “correct” equipment (and suppliers) that will best achieve process goals. Fortunately, with few exceptions, the process equipment available today from the major suppliers is “good” equipment. It will reliably perform the functions it was designed to perform over a number of years of consistent use. There certainly are differences in equipment from supplier to supplier and from model to model, but equipment from major suppliers has been used in operations worldwide with proven performance. Equally, if not more important, then, is selecting the correct equipment supplier.

Many operations do not consider how an improvement in product cycle time, uptime, throughput or quality can provide significant improvement in revenue and profits. We will discuss these improvements and provide some examples herein.

It ‘Works’

We have all been told that a particular piece of process equipment “works.” I always wanted to know what “works” meant. I know equipment and processes can work under controlled conditions or when operated by skilled, well-trained staff. What does “it works” mean to you?

To me, it means the equipment operates to specification 24/7, run by trained operators, in a production environment. This assumes that the equipment is maintained and calibrated properly, and all preventative maintenance is completed on time. It also means necessitates a sophisticated supplier with all the services I need to provide the support I need when I need it at my facilities worldwide.

As user of the equipment, I have an obligation to train the staff on its proper operation; in short, formal supplier-supplied training, not “tribal knowledge” passed from one trained operator to the next, including maintenance, programming and repair.

Case in point: During a visit a few years ago, a major customer requested that I evaluate the operation of one of their high-volume SMT lines. I noticed that they had positioned an operator directly after placement who was repositioning misplaced resistors and capacitors. I thought this odd, because they had world-class placement equipment. When I asked the engineer responsible why he did not adjust the placement machine to correct the problem, he told me he did not know how to operate it! He was given responsibility for the line’s performance but was not trained in how to operate the equipment. His management was sending its staff into battle without the weapons they needed to win; an example of users not fulfilling their obligation to maximize the performance of the equipment they purchased.

The Purchasing Philosophy

Understand your process goals. You must understand what your process goals are for quality, uptime, cycle time and technology. What will the products you are responsible for now and over the next several years require in terms of these key factors?

Equipment needs for the high-volume, low-mix operation will be different from those of a low-volume, high-mix plant. A low-volume, high-mix operation will be more interested in equipment with quick changeover features, for example. Questions to ask are:

• Do your designs use or plan to use miniature components such as 0201 and 01005 resistors and capacitors?

• Do you build or plan to build thin boards or flexible circuits?

• Do you currently or plan to build large boards?

• Will reducing product defects sustain or increase business?

• Will reducing process cycle time sustain or build business?

Consider which factors win business and increase market share within your particular industry segment. Factors that win business in any industry are often called Winning Order Criteria. Ask management, marketing and sales what factors would aid in capturing more business. You may find that customers are happy with your delivery but not with quality. Knowing this, you can focus on the equipment selection and process improvements that would support improving that particular factor while maintaining performance in other areas.

Review and understand your organization’s and industry’s product and technology roadmaps. Are you implementing equipment that will support the direction of those roadmaps?

If you build products for several customers, review and understand the product and technology roadmaps of each. There are many issues to consider to ensure your new equipment will support current and future manufacturing goals.

Never purchase process equipment on price alone (focus on value). If the person responsible for selecting process equipment makes decisions on price alone, they are not doing their job. The cost of equipment is a miniscule percentage of the cost of each product produced. Rather, the cost of unreliable equipment should be considered. When process equipment fails to operate, is difficult to set up or changeover, or produces poor quality resulting in significant cost in rework or lost and delayed product shipments, a few dollars saved on the purchase price will not matter.

Process equipment is not a commodity. There are differences, at times significant ones, in capability (uptime, quality, set up time, etc.). Understanding the value of the equipment and the value of the supplier relationship is vital in making the correct decision. Spend time to understand the differences.

Understand the equipment supplier’s total offerings and capabilities. You are not only purchasing equipment, you are purchasing the entire supplier of that equipment including their spare parts, service, technical support, advanced process development, billing and management. If you purchase equipment from Supplier A, you cannot call Supplier B for service and spare parts. No one wants to purchase equipment from a supplier with no service or spare parts organization, yet many customers fail to fully investigate the capability of a supplier’s support organization until after the deal is signed. That may be too late. Another critical aspect of procurement is the supplier’s global support: Can they provide support where you are currently or are planning to be operating?

You must evaluate the supplier’s capability to support you beyond basic service and spare parts:

• What R&D is the supplier doing to improve their equipment or to introduce innovations that will improve process performance?

• Is the supplier performing R&D in processing?

• Is the supplier working on formal process development projects in emerging technologies?

• Do they have a laboratory of experienced engineers and technicians who can generate statistically valid process development data?

• Can the supplier evaluate your existing manufacturing operation and provide recommendations on quality and cycle time?

• Is the supplier an active member of industry organizations?

• Is the supplier knowledgeable on industry technology and manufacturing roadmaps, and can they ensure future machines will satisfy requirements of those roadmaps over several years?

• Does the supplier have experienced electronics manufacturing engineers who have worked on the user side and understand the requirements of a high-volume operation?

Ask for references or even a customer list so you can randomly select whom to contact. Get to know the supplier’s entire organization. As you would check references before making a hire, the same level of due diligence should be undertaken before entering a long-term relationship with a supplier.

Understand the equipment supplier’s performance specifications. Electronics manufacturing lacks standard criteria for characterizing equipment performance or for what equipment specifications should be supplied to customers. There are no rules used by all equipment suppliers to determine performance specs.

Specifications such as accuracy, repeatability, speed, cycle time, up time, mean time between failures (MTBF), mean time between assists (MTBA) and set up time are based on a particular set of factors from that particular supplier. The customer must understand the qualifying factors on each piece of equipment from each supplier. For example, the quoted cycle time of a printer may include the print time of a particular size board using a particular squeegee stroke speed. The quoted cycle time of a printer from another supplier may be faster or slower based on a different set of qualifying factors. For component placement equipment, placement rates are based on specific criteria such as board size, distance between components being placed, component size and complexity, feeder carriage movement and nozzle changes. A machine with a specified faster placement rate may in fact be slower for a given operation, depending on the requirements. The same variation in methods to quantify performance specs is true for reflow ovens, wave solder equipment, dispensers, AOI systems and conveyors.

Ask the following questions to determine how the supplier generated data to support its equipment’s performance specifications?

• Were the data generated using statistically valid tests?

• Were standard released machines built using standard manufacturing process used in the performance standards testing?

• How were the data gathered?

• How were the data verified?

• How often are the equipment specs verified?

• Are the specs recalculated after a significant modification to the equipment’s design?

• What is done to verify specifications if a new supplier for a major component of the equipment is used?

• What does the supplier consider a significant design modification?

• Was a Gage R&R study performed on every measurement system used in the tests conducted to collect performance specification data?

• What was the performance-to-tolerance (P/T) ratio of each measurement system?

Understand exactly what was done to generate the equipment’s performance specifications. If required, seek the assistance of a statistician or someone knowledgeable in the use of statistics.

Determining what equipment has the best performance specification requires more than comparing spec sheets from various suppliers. If the person responsible selects equipment by comparing published specs, they are not doing their job. Question the supplier on how the value of that specification was determined. Ask for valid data to support performance claims.

For years our industry has relied on third-party verification of equipment safety issues through organizations for compliance to legal standards such as CE, UL and CSA. Third-party verification of some equipment performance specifications is now available. For example: CeTaq supplies equipment and onsite testing services to evaluate, calculate and verify the accuracy and repeatability of printers, dispensers, component placement and other equipment used in electronics manufacturing. Third-party testing provides standard, statistically valid, documented data. Having equipment performance specs verified by a valid third-party minimizes the investigation process and generates confidence in the supplier’s published specs.

Finally, how does the supplier verify that every machine shipped complies with or exceeds published specs? What testing is done on the factory floor? Many of the same questions we asked of how the supplier generated data to support their performance specifications should be asked of the performance verification process for each machine prior to shipment.

During my career at Motorola we were not allowed to place a new machine into a production line until we verified its performance to specification. We would unpack the new machine and run our own performance testing using the supplier’s provided specifications. Often, the machine would not meet the stated performance standards the first time we ran our tests. Working with the supplier we would make the necessary adjustments to the machine and run the tests again. At times, after several adjustments, the machine would pass our test and be placed in a production line. We called this testing Prevention vs. Reaction. The philosophy should always be to prevent defects from occurring, not reacting to them after they occur.

Understanding and verifying equipment performance specifications is one step in a Prevention vs. Reaction manufacturing philosophy.

Invest in training. When you purchase equipment what you are actually buying is just one tool of a manufacturing capability. Purchasing a printer, for example, does not provide a solder-paste printing process. For that, well-trained operators, technicians and process engineers are needed to identify and optimize the other factors that will maximize the performance of that printing process. The most sophisticated equipment will produce poor results if not operated in a well-designed, controlled and optimized process.

If you hire a craftsman to build a custom piece of furniture for your home and you are not satisfied with the results of his work, do you blame the hammer he used? Only in the hands of skilled operators, technicians and engineers can a tool produce optimum results.

Another key aspect of training: the in-house capability to get equipment back on line as quickly as possible. Even the best equipment service organizations will have some delay providing onsite service. Some equipment-service and spare-parts organizations are capable of excellent telephone, Internet and onsite service. Yet there is no substitute for a well-trained technician staff that knows the equipment. For the 24/7 operation, even a few minutes of process time lost can result in significant production delays.

Develop supplier partnerships. In the 1990s many manufacturing operations attempted to nurture long-term partnerships with suppliers. Besides the business side of the partnership, the concept was to share product and technology roadmaps to ensure the supplier was developing equipment the customer required to improve operations. Secure that the customer was entrenched, suppliers could invest in R&D to create equipment that would permit the customer to achieve its process goals. It seems this partnership philosophy has diminished.

One well-known and respected manufacturing technologist once told me, “Our biggest mistake was that we wanted to get rich but we did not allow our suppliers to get rich.” As equipment selection centered on price, suppliers pared investment in R&D. The flow of new equipment and innovations slowed and manufacturing competitiveness dimmed.

A major customer once told me that “even if you sell me 30 machines, you provide all the support I ask and you do all I request, I will still purchase machine 31 from your competition if I can get it for a better price.” Is this the basis for a long-term mutually beneficial relationship? I understand and respect the effort to get the best possible price for anything we purchase. We owe that to our employer. However, the total value of the supplier partnership is not just the price of the equipment.

Both parties should benefit in a business relationship. Think about what each party must receive in the partnership to benefit. Customers must be concerned about the “health” of suppliers. Unless that customer is planning to build its own process machinery, that customer must ensure its suppliers are viable and will be able to support it for years. Equipment suppliers want to help their customers. After all, the supplier’s business grows only when its customers prosper. Discuss current and future requirements with the supplier so they can recommend the best equipment for your needs. Develop long-term mutually beneficial business, support and technology partnerships to continually improve manufacturing quality, reduce costs and satisfy customers.

Benchmarking Value

Several years ago, Speedline Technologies and then parent Cookson Electronics developed a software program called SPACE, a tool for performing a “what if” analysis of manufacturing profitability scenarios. Upon entering its cost factors, the user can evaluate the benefits versus the cost of equipment and materials in terms of cycle time, uptime, quality and performance. SPACE can provide some of the data required to understand equipment value.

The major factors that determine a manufacturing operation’s surface-mount assembly cost and profit are capital equipment, labor, materials, floor space, utilities, cycle time and line uptime. Cycle time and line uptimes have a much more dramatic effect on profit than many realize. By entering a minimal number of user-identified cost parameters, one can use the high-level analysis of the software to determine the resulting unit cost and profitability for any given line. Changes to any cost parameters can be entered to compare the revised cost to the current baseline cost based on user-selected cost parameters.

The following examples, although not from a real production situation, were developed with metrics from a recent iNEMI roadmap. Every effort has been made to make the “baseline” case realistic.

Case 1: Printer cycle time reduction. To demonstrate the ease of such line-specific analyzing using SPACE, we will compare the effects on cost and profit by entering the specific parameters as determined by equipment brands.

Click here to see tables.

For our first example, we use an assembly of a modem over 12 months. We will show the effect of replacing a Brand X printer with a Brand Y printer that costs $30,000 more but decreases cycle time by two seconds. Table 1 lists the cost parameters using Brand X. Given the baseline cost parameters, each unit will cost $103.89, resulting in a gross profit of $4,024,027.05 (Table 2).

Then change the data to reflect the Brand Y screen printer cost parameters. Capital equipment cost is now $1,730,000.00, and cycle time is now 23 seconds (Table 3). Given the $30,000 increase in capital equipment cost and the decrease of cycle time to 23 seconds, the unit cost decreases to $102.85.

Table 4 summarizes the effects of changing the baseline (Brand X) cost parameters to reflect the “what if” (Brand Y) scenario involving an increase of $30,000 in capital equipment cost and two-second decrease in cycle time. The effect is dramatic. Due to a lower unit cost and increased throughput, total profits increase 27% to $5,112,704.18 from $4,024,027.05. The number of units produced increased 8.7% to 715,402 from 658,170, which translates to more products that cost less per unit to produce to be sold, and therefore increased profit. Hence, this analysis shows that adding capital equipment that decreases cycle time can increase profits.

Case 2: Reflow oven reduces maintenance time. While assembling the same modem over the same length of time (12 months), suppose we want to compare how two oven brands affect cost. For our baseline, we enter the Brand X oven cost parameters. We will then enter our next case, a Brand Y oven that costs $20,000 more but reduces maintenance time by 2.5 hours per week. For simplicity we will use the same baseline numbers as in Case 1.

Given the baseline (Brand X) cost parameters, each unit will cost $103.89, resulting in a gross profit of $4,024,027.05. By changing the data to reflect the Brand Y cost parameters, capital equipment cost is now $1,720,000.00, and maintenance time is now 10 hours. SPACE computes that, given the $20,000 increase in capital equipment cost and the decrease of maintenance time to 10 hours, the unit cost decreases to $103.53, resulting in a gross profit of $4,376,973.27.

Due to a lower unit cost, total profits increase 8.8% to $4,376,973.27 from $4,024,027.05 (Table 5). The number of units produced increases 2.8% to 676,890 from 658,170. Once again, this analysis shows that adding capital equipment to decrease maintenance time can also increase profits.

Such examples demonstrate that adding the correct capital equipment positively affects cost parameters and subsequently increases profits. We can see that equipment value is far more important than equipment cost to the profitability of an organization.

Conclusions

Process equipment will be a part of an operation for many years to come. There are many very good suppliers of process equipment. The issue is not to find good equipment; the issue is identifying the correct equipment from the correct equipment supplier for present and future applications and process goals.

The process of equipment evaluation and selection must be a formal engineering, business and investigative process, not a bidding exercise. Public works projects often go to the lowest bidder. How often do those same projects end up over schedule and over budget? It takes a great deal of additional effort and work to understand value over cost. Doing that work is the only way to identify the best value, however. In many cases, a relatively small difference in the initial cost of the equipment will result in significant cost savings and increased profits over the life of that equipment. n

 

Joe Belmonte is project manger, Advanced Process Group, Speedline Technologies (speedlinetech.com); jbelmonte@speedlinetech.com.

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