Process Controls for Contract Manufacturers of Large Machining and Large Fabrications – Part One – Customer Supplier Interface
This is the first in a series of articles that will explore the process controls that are used by contract manufacturers that specialize in large machining and large fabrications. The focus is on the process controls that may be different for a contract manufacturer of large machining and large fabrications. The intended audience includes buyers, product engineers, manufacturing engineers, quality engineers, and auditors that are dealing with contract manufacturers. The areas where process controls are needed apply to any contract manufacturer of large machining and large fabrications. The process controls that are used as examples are only one possible control method. Process controls are subject to continuous improvement activities and to corrective and preventative action and are constantly evolving.
Part one of this series of articles looks at the interface between the customer and the contract manufacturer of large machining and large fabrications and the control of customer supplied documents. Future articles will explore the process controls for, operator instructions, welding and machining, material traceability, material release to suppliers and scheduling, among other topics.
The company that provides contract manufacturing services for large machining and large fabrications has the following conditions that impact the process controls:
- Low volume – Order quantity can be as low as one piece, production orders for ongoing jobs are typically one to five pieces per week. A high volume production job may be up to five pieces per day.
- Infrequent repeat orders – A repeat order for a part that has been manufactured in the past may be placed several years after the last time a part was produced.
- One time orders – An order may be placed for a part that will never be required in the future.
- High customer mix – Parts for several different customers are in the manufacturing system at the same time.
- High part mix – Many different part numbers are in the manufacturing system at the same time.
- High cost of raw materials – Large parts require large raw materials. Large steel castings can cost $50,000 each. A standard size steel plate one inch thick can cost $3,300.
- Make to firm order – Contract manufacturers of large machining and large fabrications typically build to firm customer order and order materials only for firm customer orders. In some cases a customer will give material authorization for the contract manufacturer to purchase material when the customer has not yet placed a firm order.
- Market volatility – The contract manufacturer is subject to the market volatility that their customers face. When market conditions are bad for the customer, work will be brought into the customer facility or delivery dates for firm orders will be pushed out. When market conditions are good, customers will outsource more work to the contract manufacturer.
Pictures 1 through 4 are examples of products that are subcontracted to a large machining and large fabrication manufacturer. Picture # 1 is a large fabricated, machined, painted and assembled base for a large CNC router. Each machine is made to order to a specific set of drawings. Other similar machines have been made in the past and may be made in the future, but each is unique, built to the customer’s end-customer requirements. Picture # 2 is a large ductile iron casting for a wind turbine. Production volume reached five pieces per week and every piece is machined to the same customer drawing. Volume rises and falls depending on the customer build rate. Picture # 3 is a large high strength steel fabrication for a winch used in an offshore application. This was a onetime build. Picture # 4 is a large steel fabricated engine block being machined. This is a one-time build, which may repeat years in the future at a different design revision level.
The customer interface areas that require process controls and that are important for this type of business are:
Customer quote request – The contract manufacturer deals with many customers. Every customer has different specifications and expectations. It is important that all customer specifications, drawings, and requirements are considered in the quote to the customer. All the customer documents that are used to prepare the quote must be controlled. One method to control the documents that are submitted by the customer for quotation is a location on the company server with controlled access specifically for these documents. Documents are stored by customer name, customer part number and date. Management of these documents is controlled by a designated person. The sales function submits all customer documents that are included with the quote request. As the engineering function works with the customer additional customer documents that are received are submitted to the designate control person for filing. All documents are available for review of a future purchase order or for discussions with the customer. Access to all documents is restricted to the people that need the documents to do their work, for example engineers working with the customer on quotations.
Contract manufacturer’s quote to the customer – The quote to the customer includes documentation of what services and materials are included in the offering, FOB point, delivery date, and price. It also includes any exceptions that are taken to the specifications or requirements that the customer included in the quote request. Process control for this document can be handled in a similar manner to the customer quote request. This is an important document for both the customer and the contract manufacturer. It may be subject to review and discussion at a distant time in the future.
Purchase order – This is the point in the process where there is a contractual commitment by the customer to purchase and the contract manufacturer to deliver. Control of this document is critical. It may be received through EDI (Electronic Data Interface), FAX, mail, or email. One method for process control utilizes a designated person to review the purchase orders for completeness and then entry into the order release system. The designated person compares the purchase order to the quotation to make sure that price, delivery, part number, revision level, quantity, and other requirements match. If there are any differences between the quote and the purchase order they are resolved with the customer prior to order entry. If there are no differences the purchase order is entered into the ERP (Enterprise Resource Planning), MRP (Material Resource Planning) or other system.
Customer drawings and specifications – Now that a purchase order is accepted and entered into the manufacturing system the control of customer documents becomes even more important. The part will be manufactured now and any mistakes made by using the incorrect document can result in costly mistakes. The contract manufacturer must use information from many customers. Each customer has their own print and specification naming convention. The contract manufacturer’s systems must incorporate the diverse naming conventions into a standard convention that all employees can use and understand. ERP and MRP systems utilize a database system. Oracle is an example of a database that is used by ERP and MRP systems. The database of the ERP or MRP system is used to store and control customer information. The ERP/MRP system database can be expanded or connected to other databases used to control all customer documents. This link will give more information on using an Oracle database in conjunction with an ERP system. The data entry function is the process control point for entering customer and other documents into the ERP system. This person is identified in the quality system documentation. Each item entered into the database has access privileges defined. For example manufacturing engineers may be given access to look at obsolete revision levels of drawings, but manufacturing operators and supervisors may be only able to read the current revision level of a print. Only the designated document control person and alternate are given access to add and delete documents from the system. Picture # 5 shows an interface for an Oracle database that is integrated into an ERP system. Customer name and part numbers have been covered. The “Customer Drawings” section is highlighted on the left. Customer drawing numbers are listed on the right. The drawing is opened when the drawing number is selected. You can see the selection of documents on the left hand side that are stored and controlled in this database. Every important document for manufacturing is stored, controlled and accessed from this database, which is available to all employees from CEO to machine operator. Each person has access privileges appropriate for their job function.
Using this Oracle database integrated with an ERP system, documents are received from the customer and entered by the authorized person and become immediately available by everyone in the contract manufacturing company with authorized access. Only the latest revision level is available for manufacturing on the shop floor. This database can be accessed from desktop computers in the office and tablet computers on the shop floor.
If you are working with a contract manufacturer of large machining and large fabrications you trust the contract manufacturer to provide a quality product, delivered on time, to your requirements. An important part of the job of the contract manufacturer is to control all of the drawings, specifications, and other documents that define your expectations. The process controls that the contract manufacturer has in place are critical to the fulfillment of your expectations.