NPI Supply Chain Craft

Practical Techniques for Holistically Taking Over Existing New Product Programs.

Part 2: Debrief all Program Requirements and Current Status (step 3).

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• Part 1: Right mindset & the foundational rules (Steps 1&2)
• Part 2: Program requirements and status (Step 3)
• Part 3: Manual BOM, Bill of Materials (Step 4)
• Part 4: BOM conversion to materials tracker (Step 5)
• Part 5: Priorities and execution (Steps 6&7)
• Part 6: Combo BOM Trackers (Step 8)

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This is a continuation of my blog posts on this subject. Please proceed to Part 1 to read the full article from the start.

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Step 3- Debrief all Program Requirements & Current Status.

Timing: Depends on the project quantity and scope for which you’re responsible. You might be able to get most important information from project team meetings.

Armed with company knowledge, the next step is to familiarize yourself with each of your responsible NPI & R&D programs. This includes contractual requirements, product specifications, and current status affecting procurement. Projects are typically represented by a sales order in which the company is contractually obligated to deliver the new product deliverables. Deliverables could be hardware, software, or some kind of service (often designated as “NRE”, Non-Recurring Engineering).

Getting up to speed as soon as possible on program requirements and status will enable you to proactively manage the supply chain better than if you were to just jump straight to MRP action messages like a typical production buyer. First, you’ll become more informed to resolve current supply issues in permanently. Second, you’ll uncover issues in pre- and post-purchasing activities that will negatively affect the material activities (in terms of P.O. placement, sourcing, cost, quality, etc.). This gives you the opportunity to prevent potential risks instead of reacting to them the day they affect your workload. You’ll be able to raise alarms.

How to get an NPI program’s details and status?

The Integrated Project Team (IPT) members are best suited to advise you on relevant status. They should also be able to provide supportive documents. Here are typical knowledge and reports they could share.

• Program or Project Manager – project schedule, materials budget, customer information.
• Project Engineer – technical requirements, product details, engineering status.
• Design Engineer – preliminary drawings (usually for RFQ), blueprint reading.
• Planner – MRP status, work orders, system routing, capacity constraints, work scheduling.
• Quality Engineer – P.O. quality codes, formal supplier root cause and corrective action (RCCA) guidance.
• Mechanical Engineer – work routers, assembly instructions, blueprint interpretation.
• Test Engineer – preliminary test procedures, test material shortages list.
• Contracts Officer – customer & sales order info.

Below are categorized questions for your team or their documents. Use the answers to find urgent Action Items, uncover process constraints, and prioritize your workload. Don’t be surprised to find yourself with a bigger workload and more multiple deadliness than expected after a complete review. Please don’t consider the list below all-inclusive in case I forgot anything.

• Customer. Corporate company, government, foreign, prime contractor, start-up, potential partner? Major revenue customer? Importance to your company’s future business? ITAR, DFARS, or EAR requirements?
  • Status: Has customer purchase order been accepted? Is the sales order loaded into your ERP system? What is level of Management visibility on the order? How satisfied are the customer contacts satisfied with the progress so far? To what extent are they monitoring their supplier (your company) and, in turn, material procurement?

• Product or Service. What product was ordered (design and function)? Is Product brand new or a modified design (requires new components or uses “legacy” parts)? Is there NRE and for what type of Engineering or Quality service? Will the NRE deliverable require material or supplier services?
  • Status: If applicable, when and for what services are suppliers needed for any NRE? Is there already a designated supplier? Are fresh quotes needed and, if so, is there at least a draft specification or test plan available?

• End User. Who is the customer’s customer? Is your product for use as is or simply a sub-component to a final product? What’s the use or mission of the final product? What’s at stake and who are the stakeholders?
  • Status: Are they any issues at the End User level or with their mission that negatively impacts your procurement, either in whole or for particular parts?

• Quantity. How many products ordered? Varying design, based on phases (prototype, qualification, golden unit, first run units)? Is it a one-off order or low volume order with potential for future orders?
  • Status. Which of the phases above is the program in now? Are the customer-ordered quantities in line with or deviating from the original proposal quantities? If so, is this causing material budget issues for the project? For low volume orders, are there major current price variances with the estimated BOM costs because Minimum Order Quantities (MOQ) were not properly addressed during the proposal phase?

• Delivery Date & Schedule. All due on one date or staggered due dates? Is due date aligned with your company’s quoted lead time in the Proposal Phase? Will your company be at financial risk if product ships late or fails to deliver at all? Is the latest schedule kept in a shared and accessible folder? Does the Program Manager regularly review and update the schedule with the team to manage daily and weekly goals?
  • Status. Is the schedule on track and, if not, to what extent? What are the problems and solutions, if any, for late activities? Are any of them prerequisites to procurement activities? Is the schedule aligned with the sales order dates and material master data and MRP requirements (if available)? Does it have accurate or reasonably estimated lead times for procurement and assembly, including those activities before and after?

• Revenue. What is the monetary value of the order? What is the potential scope of future revenue?
  • What is the current level of visibility and pressure upon the program and the supply chain?

• Design. What are basic features of the final product to be shipped to the customer (size, weight, function)? Will component designs be based on “similar-to” or brand-new designs? Is there a draft BOM available? Will any components involve some kind of risk or learning curve (such as abnormal size or weight, complex geometry, very long lead time, super tight tolerances, sole supplier, unusual manufacturing or processing methods)?
  • Status: Are any in-house or ordered parts undergoing manufacturing issues because of the issues above? Is Engineering struggling with any conceptual issues or features that are causing design delay? Has Procurement been engaged for any ESI (Early Supplier Involvement), like for ease of manufacturability? Which drawings are currently released and unreleased? Are they being prioritized? Has a complete or partial Bill of Material (BOM) been released in your ERP system? What are the constraints preventing pending drawing or BOM release? If needed, can the responsible Engineer provide redline or sketch drawing for sourcing?

• Manufacturing/Planning. Which parts or operations will be in-house or outside (make or buy)? What about subassemblies? Do NPI and Production orders share floor operations and human resources, or does NPI have its own manufacturing, assembly, machining, testing, and stock room area? Are there any critical Operations roles dedicated to NPI jobs only, such as a Planner? Or are you responsible for both functions as Buyer/Planner? If so, do you have the necessary ERP system access?
  • Status. If you are a Buyer only, what is the planning status (master schedule, purchasing requisitions, work order generation, inventory counts)? Is MRP demand activated for the program? Are there any process bottlenecks, equipment malfunctions, capacity constraints, labor shortages, inventory inaccuracies, and other operations issues affecting procurement? If pre-MRP purchasing is allowed, what requisition system is being used? What actions are pending to change any Buy parts to Make parts or vice-versa?

• Quality. What customer purchase order flow downs could or will impact supply chain quality requirements? Which company Quality Codes must be flowed down to your suppliers? Is Purchasing required to use any customer-approved sources only? Are formal development supply chain procedures authorized?
  • Status. Have all required commodity quality codes for purchase orders been released; if not, when? Are any parts on quality hold in inspection, on the floor, or at a supplier? Who has the next action and by when? Are any purchase orders awaiting Quality approval pending submittal to the supplier?

• Sole Suppliers. Are there any sole supplier requirements embedded in the program as a result of the Proposal and Contract Award Phase? Who is the supplier, are they domestic or foreign, what is their deliverable, and what will be the extent of their involvement? What is their track record in delivery and quality?
  • Status. Has a purchase order been issued and is it on schedule? If on hold, what is the issue, who are responsible, what are the possible outcomes, and by when? Are there any contract issues, such as anything affecting price? If the supplier does not yet have a purchase order, what unknown or unresolved elements are keeping it from being submitted? Are your company and the supplier at least in agreement on the quote and terms? Would a Letter of Agreement (LOA) or Memorandum of Understanding (MOU) be appropriate at this point in order to have the supplier take some time-critical actions?

• Personnel. Who and what roles comprise the IPT (Integrated Project Team)? Do the members include a Project Manager, Buyer, Planner, Design Engineer, Systems Engineer, Project Engineer, Mechanical Engineer, and Quality Engineer? Is each one NPI-dedicated or do they serve production as well? What is their level of experience and skills? Are there recurring progress meetings? Beyond the team, who are key stakeholders (those who have an interest in program success)? Beyond them, who and what are other supporting roles in other departments, including managers?
  • Status. Is the IPT currently short any critical roles? Are they a Single Point of Failure (SPOP) or is there a competent back-up? If any IPT members are shared with production, are they still able to support in a timely manner? If the Buyer and Planner are separate, is the Planner taking a proactive approach in the early NPI phases and ensuring that the project schedule is kept on track for procurement and assembly?

• Budget. What is the program’s material and outside services budget? Is an itemized parts list available to you? What are the most expensive items to least expensive? During the cost estimating phase, what percentage was based on legacy, quoted, estimated, and speculated pricing? Are the proposal phase supplier quotes (primary and backup) available and, if so, what’s the quote expiration status?
  • Status. Collectively and individually, what are the budget variances? Are there any alarming negative variances? Have any conceptual or design changes nullified any particular item pricing from the estimated BOM? Are expired quotes still good or can be negotiated for same pricing? Do you need to obtain quotes for new items not accounted for in the proposal phase?

• Testing. Are there any testing requirements during the R&D and/or Qualification phase? Will early and production deliverable products require Acceptance Test Procedure (ATP) testing? Are test fixtures, test unit holding attachments, equipment, or special tools or devices required? Do any of these have long lead time, high cost, or question as to whether or not they can be sourced? For testing outside the facility, were sources and quote pricing embedded into the proposal to the customer?
  • Status. Is there any current or upcoming testing? If so, is any test material required and what is the requisition or procurement status? For any fixtures requiring fabrication, can it be done in-house or are suppliers needed? If so, when can the Test Engineer provide drawings or sketches? Does there exist a shortage report for tooling material? For upcoming outside testing, are there draft or released procedures (ATP or Qualification Test Procedure – QTP) available? Are there Suppliers on your company’s Approved Supplier List (ASL) that can perform these tests to procedure? If there is a need to find a supplier to do an outside service for the first time, do you have ample lead time to perform sourcing, quoting, evaluation, selection, ASL addition, and purchase order creation/approval/submittal?

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Part 3 of this blog will cover manual creation Bill of Materials in order to develop a materials shortage tracker.

To be continued. Stay tuned for Part 3!