Reducing the scrap rate in an electronic manufacturing SME through Lean Six Sigma

methodology
*Alireza Shokri, PhD Six Sigma in SCM, Senior lecturer in operations and supply chain management, Lean Six
Sigma Green Belt, Newcastle Business School, Northumbria University, UK
[email protected]

Farhad Nabhani, Professor in Manufacturing Management, School of Science and Engineering, Teesside
University, [email protected]

Gareth Bradley, MSc Student in Mechanical Engineering, School of Science and Engineering, Teesside
University, [email protected]

ABSTRACT

Purpose – The aim of this project was to reduce the level of scrap rate in the production of a
product known as the “Remote Acceleration Sensor (RAS)” that is used for Air Bags through
Lean Six Sigma (LSS) methodology.
Design/methodology/approach – This is an action research that was conducted in a single
case study and used the LSS methodology of DMAIC concentrating on one fully automated
sub-process of the production called the “Overmould line”.
Finding – It was found that implementing DMAIC methodology had an effective impact on
the production and scrap rate was reduced achieving the 99.03% First Run Yield (FRY) from
98.4% FRY before implementation. This was the improvement from 3.65 to 3.85 in the
Sigma scoring term with significant financial impact at this scale.
Research Limitations/Implications – This action research could be deployed in other sub-
processes of the production line, other processes of the company and could also be conducted
in more than one single case study from the same sector. The research investigation needs to
be fully controlled by the team in order to correctly gauge the effect of any changes made to
the process.
Practical Implications – This project adds further evidence of effectiveness of the LSS
methodology in manufacturing SMEs through adding value to the process and reducing the
scrap rate and waste. The project had greater saving than expected by the managers at
£98,000 per annum. This saving could even be higher when the company is expanded.
Originality/Value- The approach of this research project combines proven statistical tools
with some basic but effective lean tools to be applied in an original sequence in order to
design robust product and match manufacturing capabilities.
Key Words – Lean Six Sigma, Six Sigma, DMAIC, Manufacturing, SMEs, Scrap Rate

1. Introduction

Process improvement and operational cost reduction through quality improvement practices
has been at the centre of attention for many businesses in different sizes and in a variety of
sectors to gain a more competitive advantage. Lean Six Sigma (LSS) is an effective and
disciplined business transformation strategy and problem solving tool that has evolved
through the combination of Lean and Six Sigma, both recognised as leading Total Quality
Management (TQM) tools for performance improvement in organisations with a proper
infrastructure built on leadership and change culture (Dora and Gellynck, 2015; Assarlind et
al, 2013; Wang and Chen, 2012; Choi et al, 2012; Hilton and Sohal, 2012; Atmaca and
Girenes, 2013; Lee et al, 2011; Delgado et al, 2010). The effective top-down methodology of
LSS in both manufacturing and service Small to Medium – Sized Enterprises (SMEs) has
been acknowledged by researchers and practitioners (Kanpp, 2015; Isa and Usmen, 2015,
Bhat et al, 2014, Algasem et al, 2014; and Brianvand and Khasseh, 2013). In fact, there have
been many research studies available in relation to Six Sigma implementation in
manufacturing SMEs with the focus on improving the quality of the product, customer
satisfaction and financial enhancement (Albliwi et al, 2015; Brun, 2011; Antony et al, 2005;
Antony and Desai, 2009; and Kaushik and Khanduja, 2009). The term SME for the purposes
of this study uses the EU definition of any organisation with less than 250 employees
(European Commission, 2003 and Department of Trade and Industry DTI, 2005 cited in
Kumar et al, 2009).

However, despite of growing number of research studies and case studies in manufacturing
SMEs (Dora and Gellynck, 2015; Thomas, 2009; Gijo, 2014; and Cournoyer, 2012), the LSS
research and application with the purpose of waste reduction would need further attention by
both researchers and SME practitioners. The purpose of this project was to reduce the level of
scrap rate in the sub-process of a vision inspection system as part of the fully automated
process of “Overmould Line”. Although the company is practicing LSS as part of company
establishment, this problem has been prioritised at this stage due to being considered as a key
measure for waste and cost reduction through LSS methodology. This problem may also be
more serious in upcoming years due to expansion plans. This production line is used to
produce a product known as the “Remote Acceleration Sensor (RAS)” that is used for air
bags. The role of the vision inspection system (Figure 1) in the Overmould Line is to
determine whether the dimensions of the pins inserted in the board are to the customers’
specifications before the unit is injection moulded.

Figure 1 – Vision Inspection Process

2. LSS in manufacturing SMEs

LSS is an appropriate approach in managing waste and variability to keep the operating
expenditures to the minimum (Ismail et al, 2014). It has been emphasised by researchers that
focusing on low hanging fruits will have the best and most productive results in any LSS
project (Dora and Gellynck, 2015; Choi et al, 2012), which perhaps could even be more
appropriate for the SMEs due to being more restricted in resource availability. Although it
has been suggested that LSS could be deployed in SMEs similar to their larger counterparts
with consideration of specific resource management (Kaushak et al, 2012), it has also been
argued that its application for SMEs could be considered in a different perspective (Kumar et
al, 2011; Kaushik et al, 2012). This could be extended to different scales in financial gains.

At an operational level within the manufacturing sector, the LSS model aims to clarify the
process of identifying opportunities for non-value added activities, as well as reduce
variability and improve the process cycle time and quality of the manufacturing process
(Bamford et al, 2015; Holmes et al, 2015; Worley and Doolen, 2015; Sarkar et al, 2013; and
Thomas et al, 2009). This will result in some strategic benefits such as customer satisfaction,
financial enhancement and more efficiency in manufacturing processes (Shafer and Moeller,
2012; Cournoyer et al, 2012; Jayaraman et al, 2012; Gupta et al, 2012; and Manville, 2012).
Despite all of these benefits, “internal resistance”, “the availability of resources”, “changing
business focus”, and “lack of leadership” have been suggested as the greatest impediments to
implement LSS in any manufacturing SME (Timans et al, 2012).

Scrap rate is one of the common elements of the cost of poor quality, which may appear as
the result of high defect and variability level in any manufacturing process. Scrap rate could
potentially have negative impact on increasing the process cycle time and therefore
generating extra cost and uncertainty to supply the products (Hilmola and Gupat, 2015). It
was evident from recent research studies that scrap rate could be significantly reduced
through LSS deployment in the automotive sector (Orbak, 2012). By utilising the LSS five-
phased systematic methodology of DMAIC (Define, Measure, Analysis, Improve, Control)
manufacturing SMEs can tackle any process variation and defect including scrap level
(Prashar, 2014; Gupta et al, 2012; and Orbak, 2012). The next section presents the case study
and methodology of this research project.

3. Case Study and Research Methodology

The client is a 1st tier automotive supplier who specialises in sensor and safety electronics
and has already been implementing some LSS projects. The company has hired one Black
Belt (BB) with few Green Belts (GB) and this project has been conducted by a GB with the
supervision of the BB. The managing director of the company has the power of approval and
project tollgate review as the Champion. The approach taken to complete the scrap reduction
of the Overmould line was that of inductive case study and action research. Action Research
is viewed as a research strategy in which the researcher is working collaboratively with
practitioners and directly involved in the organisational change (Suanders et al, 2012; and
Avisonet al, 2001). Researchers believe this could be the best possible research methodology
for this study, since a production failure as a contemporary phenomenon will be investigated
in a real life context. The data collection and data analysis methods of this study are in
accordance with the LSS methodology of DMAIC. The next section presents the phases of
this methodology that has been applied as part of a LSS project.

4. Results

Define
Scrap reduction has been part of the corporate standard for quality for the client. The
Overmould line scrap, which contributed to 18% of the total scrap level in the factory
corresponding the cost of £130Kwithin the course of three months investigation, has been
nominated as a priority for the next LSS project. In order to reduce the scrap produced by the
Overmould line a cross functional team was assembled, which included a quality engineer
(Green Belt), a manufacturing engineer, production staff, a Black Belt and a senior manager
who acted as the sponsor of the project. The project goal was established to reduce the level
of scrap produced on the Overmould line from the current value of 3.52% of its own product
sales down to 1.5% representing the FRY improvement from 98.4% to 99%. A closer look at
the data for the Overmould line identified four main sub-processes contributing to the level of
scrap (figure 2). The problem of the 1st stage Overmould process and its solution were
already known by the process engineer and steps had been taken to resolve this. Therefore the
second problem sub process was taken on which was the vision inspection system. The vision
inspection system ensures that the part is compliant to the customer’s specification by
measuring seven different characteristics of the Printed Circuit Board (PCB) at that point in
time. The tools used to fully outline the project to be completed were: a SIPOC diagram,
High Level Process Map (Appendix A), CTQ tree, and a Project Charter (Appendix B).

Figure 2 - Overmould Sub Processes Scrap cost Pareto Chart

Measure
The system’s ability to be measured has been approved through Measurement System
Analysis (MSA). The baseline performance of the line was determined through the FRY data
collected over the three months prior to the start of the project. The control chart in Figure 3
represents the average 98.4% FRY resulting in a sigma score of 3.65. The vision inspection
system uses seven different parameters to determine whether the part is within specifications.
When generating the process capability for the system, each of the seven parameters was
treated individually with the results displayed in Table 1. The Normal Distribution for
Parameter 2 has been provided in Appendix C as the sample.
 Figure 3 – Baseline Performance Control Chart

Parameter Specification Process

Table 1 – Process Capability (Cpk) for all 7 parameters

Analysis
To start off the analyse stage, a brainstorming session was held in order to identify the
potential issues with Vision Inspection. The personnel involved with the brainstorming
session were the Six Sigma team and the line operators. The results of the brainstorming
session were displayed as a Cause and Effects Analysis diagram (Figure 4). The validity of
these ideas was determined by the analysis of the data identified in the data collection plan.
The review of process capability analysis revealed that parameters 2, 3 and 7 have Cpk of
0.8, 0.88 and 0.32 respectively. These values are much less than those expected for a capable
line, which would be in the region of 1.33 by the Company’s standard.
 Figure 4 – cause and Effect Diagram

A Gemba investigation has been set up in the production line and the first problem that has
been identified was related to the cleanness of the Vision Inspection system. A Gemba or
Gemba Kaizen is a method which is meant to be a technique of line inspection in which
obvious problems are able to be rectified in a short period of time (Tyagi et al, 2015; and
Burton, 2011). The brighter parts identified by the circle in pictures taken by the camera
(figure 5) show debris on the nest which can lead to an incorrect measurement of the
thickness of the pins as the system will take the debris as the datum point rather than the edge
of the pin. It was revealed that debris have been coming from previous process
(Depanelisation).

Figure 5 – camera view of the debris on the nest

The second problem was identified as the variation in programme set for the vision inspection
system for different customers, despite of measurement against the same specification. This
will result in slight shift of the measurement and also changeover time between different
customer parts. The final note that has been taken as the result of Gemba investigation was
related to the tight clamp on the first moulding cell, which will tighten the tolerance
compared to customer specification (figure 6).

Figure 6 – First Moulding Pin Clamping Mechanism

The dimensional testing of 30 scraped parts as samples against the engineering drawing by
the use of a Co-ordinate Measuring Machine (CMM) confirmed that all parts were genuinely
failed.

Improve
The Analysis phase uncovered three issues as dust and debris on the PCB nests, the too tight
tolerances and multiple Vision Inspection programmes. In order to generate a set of solutions
for these problems a brainstorming session was conducted. The solution for debris on the nest
has been agreed as having regular cleaning procedure for Depanelisation process in 8 hours
intervals and also treating the Vision Inspection cell with Ioniser regularly to reduce the static
electricity and remove the debris on the nest. An experiment was conducted with two
different sets of tolerances as two trials setting applied to the Vison Inspection process of the
1st stage Overmould and Pin check (Table 2). The first of tolerances include an increase in the
three parameters shown to be below the expected level of process capability while the second
also increased the parameter relating to the angle of the pin in relation to the PCB. The DoE
was not feasible at this stage due to time constraints limited to 4 hours to complete the trail to
prevent any interfere and also nature of improvement strategies that would have minimum
interactions with each other.

The results of the experiment revealed that both trails setting improve the process capabilities
of the parameters examined with no failures at either the 1st stage Overmould or at Pin check
(Table 3). To re-iterate the result the Normal Distribution for Parameter 2 after the
improvement has been provided in Appendix D, where the difference in productivity and
process performance compared to before the improvement is evident.
 Parameter Set Parameter 2 Parameter 3 Parameter 6 Parameter 7

Standard Settings 11mm ± 0.5 0 mm ± 0.6 90° ± 3 0 + 0.8

Trial 1 11 mm ± 0.7 0 mm ± 0.8 90° ± 3 0 + 1.2

Trial 2 11 mm ± 0.7 0 mm ± 0.8 90° ± 5 0 + 1.2

Table 2 – Trial Setting

Settings Parameter 2 Parameter 3 Parameter 6 Parameter 7

Standard 0.8 0.88 1.66 0.32

Trial 1 1.51 1.59 1.87 2.27

Trial 2 1.58 1.78 4.61 2.19

Table 3- Trial Settings Cpk

A generic programme was developed and implemented two weeks after new settings for the
system. The result presented in figure 7 shows the increase in yield from 98.81% to 99.03%,
as the result of this generic programme meeting the target set out at the start of the project. It
took the technicians four weeks to be able to find optimum programme and the best possible
result.

Figure 7 - Generic Vision Inspection Program Control Chart

In order to control the process and retain the improvement in the FRY the clients’ FMEA and
control plans were updated with the changes made to the process. In addition to the FMEA
and Control Plan, the control chart that was used through the previous four phases of DMAIC
to identify the process performance has been upheld in order to be able to quickly identify
any problems with the process.

5. Discussion and Conclusion Remarks

The main motivation behind using LSS methodology in this project was the existing LSS
culture in the Company and also validity of the DMAIC methodology to reduce the variation
and therefore scrape rate in the production line. The objective of the project has been
attained, since the Vision Inspection process achieved an improvement in FRY from 98.3%
to 99.03%, which exceeded the management target and represents sigma score from 3.65 to
3.85 and saving of £98k annually. The result of the project has been approved and was
subjected to tollgate review by the project Champion. The result of this project could also be
significant for the management team who have been planning to expand the production line
and any process improvement in any scale would be critical for the managers. The saving
could be greater in the future as the result of a possible plant expansion. The case study adds
further evidence to the effectiveness of the LSS methodology in relation to waste reduction
and cost saving in the manufacturing industry and in particular the electronics and automotive
sections.

The analysis of the potential increments of identified factors would not have been completed
due to the lack of a DoE. Therefore the Cpk for all trials and FRY may have had slightly
different results compared to when the DoE is used, which is recommended to be considered
in the future work. There could also be a possibility of skewness in the improve phase due to
possible regular alteration of settings by the Overmould technicians without any record. In
addition to this, the LSS implementation in this Company could be extended to other
processes rather than just manufacturing and being fully controlled by the team in order to
correctly gauge the effect of any changes made to the process. It is also recommended that
the project could be extended to other issues in the Overmould process that were identified in
the Define stage as major contributors to the scrap level experienced.

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Appendices

Appendix A

High Level Process Map

Appendix B

Project Charter Details

Parameter 2 Process Capability Normal Distribution

Appendix D

Trial 1 Parameter 2 Process Capability Normal Distribution