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Production Management ASSEMBLY LINE

Cost benefits of production line management

The Shop Floor Line Management (SFLM) application software provides real-time access to pertinent process data and facilitates corrective responses to PCB process instability. The paper discusses the cost and benefits this system realizes.
By Kyle Klatka
Marketing Engineer GenRad Inc. As a process engineer, you continuously consider more effective methods to manage the numerous factors that affect your yield and process line machine utilization. Each station on your PCB assembly line (i.e. pickand-place and reflow oven) produces a plethora of information that can be analyzed to identify process improvement opportunities. If data can be efficiently and economically transferred between the manufacturing equipment and a common database, analytical methods can be employed to quickly gain process visibility and knowledge. An SFLM system automatically collects data from the entire PCB assembly process, and individual applications transform the data into information resulting in greater process knowledge. SFLM applications monitor information generated by the PCB assembly line and help close the manufacturing enterprise information loop. You may very well ask, why are these focused applications important? During a recent production run at Georgia Tech, the process line generated a staggering 1MB of data per PCB - not all required for process control analysis.

Figure 1 1: SFLM methodology.

2 Electronics Engineer June 2000

Production Management ASSEMBLY LINE

In this case, an SFLM application could extract pertinent data that would help you improve yield and production volume capacity. In a high-volume environment, proactive process control makes real-time access to shop floor equipment control data essential. An SFLM systems applications will increase your line visibility by filtering-out superfluous data and display pertinent process information in real-time. Improvements in machine interoperability standards benefiting from the NEMI Plug & Play Factory project and the SECS/ GEM protocol and Web-based mark up languages, such as XML, form the building blocks of an SFLM system and facilitate real-time data analysis. While machine interoperability and mark up language expedite data transfer and viewing, the quality of the individual SFLM application relies on clear concise pre-formatted reports and the flexibility to customize reports based on a companys organizational needs. and taking the corresponding corrective action. If the amount of time required for the corrective action decreases, fewer defective boards enter the process pipeline, increasing yield. SFLM can assist you in discovering defects. First, a common server collects data from all elements of the manufacturing line, including defects diagnosed at the in-circuit test station. SFLM reviews each data object (i.e. individual defect) and recognizes re-occurring defects based on user defined rules. In addition, by monitoring inspection equipment and manufacturing defects, SFLM applications can monitor all assembly equipment for process problems. For instance, the state of the placement machine can be monitored for feeder jams and machine program auditing. An assembly line typically contains US$5 million to US$7 million of capital equipment. Industry consultants currently believe that the machine utilization rate for PCB assembly equipment is between 25 percent to 30 percent. Increasing machine utilization leads to lower unit cost due to lower machine and labor costs. More importantly, it enables higher capacity and the capability to increase production volume on the existing line. Three primary factors impede machine utilization: downtime, set up and preventive maintenance. SFLM

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applications monitor line activity and provide machine reports that optimize maintenance and reel loading. For example, rather than stopping the line to replace a single reel after it runs out of components, an SFLM application can recommend that several other reels should be replaced since their component supplies are low.

Reducing rework costs

Many sites collect defect information and post lists containing 10 most common failures. In addition, organisations procedures can result in varying response times when taking corrective action to process instability. SFLM applications help to minimize the amount of time required in identifying a re-occurring defect

SFLM system integration

The SFLM can be modified for any individual process line. You can do this by adding existing process rules to the SFLM systems database. You also have the control to prescribe actions that should be taken by the SFLM system if a rule is violated. For example, if the electrical test station reports that a particular group of

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$22,000.00 $ 500.00 $ 500.00 $ 500.00 $ 500.00 $ 500.00

$12,236.88 $12,236.88 $12,236.88 $12,236.88 $12,236.88 $12,236.88

-$9,763.12 $11,736.88 $11,736.88 $11,736.88 $11,736.88 $11,736.88

NPV (d=10%) -$9,533.24 $11,190.68 $10,927.18 $10,669.89 $10,418.66 $10,173.34

Table 1 1: Production line cost and benefits greatly determine profits.

3 Electronics Engineer June 2000

Production Management ASSEMBLY LINE

System price PCB selling price Quantity manufactured Quantity shipped Yield Total costs Gross profit Increased profits Production stats First pass yield Cycle time (secs) Manufacturing hours Set-up time (Hours) Downtime Maintenance (Hours) Available mfg hours $1,500.00 $500.00 3,648 3,539 97.00% $433.77% $186,887.04

$1,500.00 $500.00 3,739 3,627 97.00% $433.77 $191,559.22 $4,672.18

In the variables presented, the process yield is equal to the number of boards shipped divided by the number of boards that entered the PCB manufacturing process.

Cost and time benefits

How does SFLM help reduce the variable cost components of the profit equation and how can you, as a manufacturer, put a value on the SFLM system? With the example shown in table 1, it is assumed that the combined costs of software licensing, implementation, and training is US$22,000 per process line. The soft and hard benefits can be attained from the implementation of the SFLM. Soft benefits include higher level qualitative improvements such as better process visibility and production planning, which lead to the hard, quantifiable benefits. These hard benefits help quantify the process and product opportunity costs such as lost revenue associated with an hour of downtime or rework and scrap. An increase in line utilization should allow the manufacturer to increase the number of boards manufactured. An increase in yield should effectively reduce rework costs. Direct downstream effects of improved shop floor line management include time-to-market and time-tovolume improvements. Time-tomarket and time-to-volume metrics are important in the new product introduction phase, especially for products with a fixed window of market opportunity. Often last minute design changes and product validation force manufacturing departments to ramp-up to full production in a short time period. Therefore, production schedules may attempt to closely mimic the forecasted demand of the product. In todays market, rapid technological progress creates a fixed production window, and delays during the production ramp-up cycle that result in unrecoverable lost profits. If a company can accelerate the time

95.00% 60 90 4 20.00% 10 60.8

95.00% 60 90 4 18.00% 10 62.32

Table 2 2: The SFLM optimizes component loading schedules that decrease machine downtime.

solder joints have been shorted on five out of 100 boards, there is a reasonable chance that a process variable needs to be adjusted. Therefore, the SFLM system can immediately alert you via a page when this rule has been violated, and the process engineer on duty can respond to the situation. The process engineer can view process line throughput and individual cycle times for each process step through the SFLM system. The engineer can quickly identify any fluctuations in individual cycle times that may impede the throughput of the process line. This can be seen in figure 1. Before a value can be placed on the SFLM application, the baseline costs for current data collection and analysis, rework, scrap and an inactive line must be assessed. The following equation can be used to calculate the gross profit per shippable PCB based on the manufacturing costs and selling price. If the per unit profit equation is multiplied by total quantity produced, the total expected gross profit can be calculated. This approach is based on a real-time costing method so that individual cost components can be 4 Electronics Engineer June 2000

itemized and changed to understand the effects on profitability. p = qs * [R - (fPCB + fcomp + vlabor + vmach + vrent + vrework + vcons)/y] In the equation, bareboard and component costs are identified as fixed costs, while non-material costs are described as variable costs. It can be assumed that the purchasing department has already procured the PCBs and components at a set price per unit. The variables included in the equation are as follows: p - profit qs - total quantity shipped and sold R - revenue per saleable unit produced fPCB - cost of the bareboard (fixed) fcomp - cost of materials and components (fixed) vlabor - direct labor costs vmach - amortized cost of capital machinery vrent rent vrework - amortized rework costs vcons - cost of consumables y - final process yield

Production Management ASSEMBLY LINE

required to manufacture shippable product (time-to-market) and the time to ramp-up to full-scale production volume (time-to-volume), opportunities to increase revenue and profits are immediately presented. To further confer the benefits of the system, a case study in PC motherboard manufacturing is presented in reference to SFLM. The typical PC motherboard has a product lifecycle of six to nine months. This market window is usually based on a marketing groups forecast of consumer demand for the products technology. The manufacturer, whether OEM or contract manufacturer, should know the factorys capacity once it reaches full-volume production. In this example, assume that market demand is 3,500 PC motherboards per week. Early in the production cycle, PC motherboards produced in excess of the ordered quantity of 3,500 can be sold immediately due to strong consumer demand for the end product. If the manufacturing department receives US$500 per motherboard, increasing current production capacity should directly improve profitability. Let us assume that the manufacturing process provides a final process yield equivalent to 97 percent, with a first pass yield of 95 percent and 40 percent is reworkable with manufacturing costs/PCB equivalent to: fPCB = US$35.00 fcomp = US$375.00 vlabor = US$20.00 vmach = US$1.20 vrent = US$0.90 vrework = US$0.50 vcons = US$1.10 the manufacturing group should investigate alternative methods to increase line utilization. You may again ask, how can an SFLM application be used to increase machine utilization, and eventually production capacity? Visibility into current machine status and process throughput reports can be used to accurately calculate the manufacturing lines utilization rate. Often machines remain idle when they could be used more productively. The machine and process reports can help you to pinpoint these idle time periods, optimize maintenance scheduling and create additional production time. In this case, assume that the SFLM application software helps the process engineer to optimize scheduling of component loading that decreases machine downtime from 20 percent to 18 percent. As shown in table 2, a 2 percent reduction in machine downtime/idle time results in an extra 90 minutes of available manufacturing time. This, in turn, translates to an increase in profits of US$4,672.18/ week. A small reduction in PCB unit costs should also occur, since the fixed manufacturing costs will now be distributed across a greater quantity of PCBs. Overall, one is likely to think that the software only monitors process lines. But, the system has an inherent capability to resolve all process instability problems. However, an SFLM system should not be viewed as an autonomous actor with respect to process engineers. Instead, it should be seen as a contributor to the process engineers decision making process, supported by focused process monitoring applications.

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We can use the formula previously discussed and arrive at a profit value equivalent to US$66.33/unit.

Higher line utilization

Procurement of additional assembly equipment is not an option for you, so 5 Electronics Engineer June 2000

You may e-mail your comments on this article to Kyle Klatka at klatkak @; or fax: 1-978-5892050.