By James Montgomery, News Editor, Solid State Technology

Several presentations on Tuesday at The ConFab offered insights and experiences on how companies outside the core chipmaking segment have improved their manufacturing efficiencies. For Solectron, a streamlined manufacturing operation was achieved by following in the mold of Toyota, renowned for its streamlined production systems, and deploying a combination of lean manufacturing and “Six Sigma” methodologies.

Mark Onetto, EVP of worldwide operations for Solectron, outlined what he termed a “classical state of imbalance” in manufacturing, where fast innovation (e.g., pushing new products out every six months) offsets a slow supply chain where companies push out six month lead times, with little flexibility and not enough focus on quality. This combination can lead to missed sales during growth times, and major write-offs during slowdowns, he explained. The “Internet bust” exposed these limitations, he noted, and our industry paid a heavy price — three years of losses, 123 sites closed or sold, $6 billion in writeoffs, and $28 billion in market capitalization evaporated.

Solectron’s vision still embraces fast innovation of a new product launch every six months, according to Onetto, but it also strives for improvements on the “supply chain” side of the scale. He claimed the company has compressed lead times down to less than two weeks, providing lean flexibility while still maintaining Six-Sigma quality.

The first steps in building a lean production environment are to eliminate complacency and deliver early results, Onetto said. A company must focus Kaizen on customer “critical-to-quality” needs, and prime the pump by leveraging customers that already have adopted or are working on their own lean manufacturing strategies. Such partnerships involve joint organizational investment, with engineers working together under executive sponsorship (ultimately with merged process development), as well as information transparency, a shared risk/gain incentive structure, and joint accountability.

Solectron’s deployment roadmap follows four points: design-for-manufacturing (a preparation stage for future efforts), followed by focusing on the needs of customers (e.g., predictable response times, and demand-on-pull), then in the company’s factories (flexibility and responsiveness, low conversion costs, zero defects, and end-to-end pull among facilities), and finally with its suppliers, offering short lead times, a target cost approach, and vendor-on-pull manufacturing plan.

Onetto listed the benefits Solectron and its customers have achieved since it began its lean manufacturing efforts: production footprint reduced by about 500,000 sq. ft., gross margins improved by about 1%, operating expenses declined by 1.3%, and total debt reduced from $2.79 billion to $0.9 billion. He also presented data showing what Solectron’s lean manufacturing efforts have done to improve work with partners including Asyst Technologies (on-time delivery improved by >200%) and Teradyne (66% space saved, cycle times reduced by 40%). — J.M.