Understanding the Dell Continuous Improvement Process (CIP)
Contents
The Dell Culture and Environment
Underlying Principles of the CIP
Major Components of the CIP
Example with the “Little Red Wagon Company”
Understanding the Dell
Culture and Environment
Dell Mission
“To be the most successful computer company in the world in delivering the best Customer Experience in the markets we serve.”
Understanding the Dell
Culture and Environment
Dell Business Model
Articulates Dell’s lean, fast-paced operational environment
Demands Suppliers who can combine agility and exceptional levels of quality in their product line
Understanding the Dell
Culture and Environment
Unique Role of Dell Suppliers
Dell’s production base providing all the internal and external components of Dell computers
Dell’s manufacturing operation consists of assembly of Supplier-provided components and modules into a system
The successful Supplier must share the Dell Customer Experience
Underlying Principles
Global application
Dell is a global corporation with global Suppliers
Worldwide participative problem-solving
Recognize regional challenges
Seek common root causes to be applied universally
Underlying Principles
Shared expectations
Continuous improvement is a team effort between Dell and Suppliers
Dell and Supplier expertise applied against all problems
Underlying Principles
Common Standard
Quality and process improvement standards apply equally for all products procured from that Supplier
Dell and Suppliers team to ensure highest quality standards
Major Components of the Dell CIP
Process Map
Pareto Chart
Quality Improvement Plan (QIP) ….let’s look at each in detail
Major Components of the Dell CIP
Process Map
Visually depicts commodity flow from Supplier through Dell to Customer
Provides valuable information on where breakdowns are occurring
Major Components of the Dell CIP
Pareto Chart
Depicts Dell and Supplier results data and trends
Visually captures results of quality improvement efforts
Major Components of the Dell CIP
Quality Improvement Plan
Spreadsheet that details data on defects, causes and cures
Valuable tool for forecasting improvement in defect rates
Meet the Little Red Wagon Company!
A fictitious Supplier to Dell...
The Little Red Wagon Company (LRWC) produces generic red wagons
Dell adds parts from other Suppliers (such as wood rails and wheel covers) to create the Dell “Austin Flyer” model wagon, which is sold worldwide
LRWC is a worldwide Supplier with factories in Vermont and Taiwan
Regionalized flow of wagons and parts across the Dell Corporation
Setting Dell Principles into Motion with the Little Red Wagon Company...
The Global Perspective
CIP sessions would be scheduled alternately at Dell and LRWC worldwide
Regional capabilities and challenges of both parties considered in seeking common root causes of defects and corrective actions
Setting Dell Principles
into Motion with LRWC...
Shared Expectations
Both Dell and LRWC work together to enhance the Dell Customer Experience
The Common Standard
If LRWC was providing additional commodities to Dell, the same quality and continuous improvement standards would apply
Using the CIP Step by Step
Now let’s use our basic understanding of the Dell CIP to look specifically at the Little Red Wagon Company and how the CIP is used step-by-step...
The Process Map
Shows the flow of Supplier products through the Dell assembly facilities
Two distinct, but connected parts-- the LRWC side of the process, and the Dell side of the process
Shared expectations and expertise are the “glue” between the Supplier and Dell processes
The Process Map
LRWC Process Map Activities
Shows the principle activities in the LRWC process flow
Shows principle Suppliers for the LRWC regional production sites
Shows which LRWC production sites provide commodities to the Dell regional facilities
Dell Process Map Activities
Highlights the principle activities in the Dell process flow
Shows where the Austin Flyers are assembled and distributed around the world
Shows where defective units are returned Note: In Asia defective Austin Flyers are returned to the assembly plant. As shown on the diagram, field FA procedures are performed on defective units at all three locations.
What the Map Tells Us
Helpful in visualizing “who does what to whom”
Helps localize the problem to a particular region or even to an individual Supplier Note: For example, when wheel pin failures are noted in Dell’s European Return Facility only, the problem may be tracked to the sole Supplier of pins at the LRWC Vermont manufacturing site
Dell/LRWC Performance Results Displayed on the Pareto Chart
Helps graphically capture and track our continuous improvement efforts
Demonstrates the principle of shared expectations through use of a single Pareto Chart
Each defect can be individually tracked
Cumulative effect of Dell and Supplier effort can also be tracked
Pareto Chart
Note: You can see on the graph that over three months the overall defect rate has improved, but that raw material defects have increased.
More on the Pareto Chart
The Pareto also helps us forecast future performance and project goals
Actual performance can be measured against goals
Using the Worldwide Quality Improvement Plan to Reduce Defects
Now let’s look at how the worldwide QIP helps document defects and the actions taken to reduce them. First, we’ll go through the QIP generically, then we’ll show how it is used specifically with the LRWC.
Using the Worldwide QIP...
Defects Categorized and Ranked by Frequency
Failure Analysis is single most important element of the CIP
FA performed by both Supplier and by Dell
Provides information defect frequency (DPPM)
Defects are categorized and rank-ordered by Supplier defects and by Dell-induced defects
Root Cause Determination
Root causes determined for each defect
Using the Worldwide QIP...
Corrective Actions and Owners Assigned
Corrective Action (CA) for each root cause determined
“Owners” assigned are accountable for CA and serve as a point of contact
Cut-In Dates Determined for Supplier and Dell
Results take time, when can we expect them?
Dependent on many factors, especially existing inventory levels
Actual, Forecast, and Goal DPPM Estimated
Actual performance trends allow us to forecast future performance
Corrective Actions plus cut-in dates help further determine performance goals
Using the Worldwide Quality Improvement Plan Template
Now let’s look at how we actually use the QIP template with the Little Red Wagon Company
Defects and Root Causes
Defects Ranked by Frequency
LRWC defects categorized in three primary areas: workmanship, design, or raw material
Dell defects categorized as Dell-Induced Defects (DID), or Cannot Duplicate (CND)
Root Cause Determination
Root causes for the defects are determined by both the Supplier and Dell and are entered on the template
Defects and Root Causes Cont’d
LRWC primary cause for defects: Workmanship with paint application
Root cause: Outdated painting equipment
Dell primary cause for defects: Improper installation of wood rails causing scratching and corrosion
Root Cause: Abrasion due to materials used
Defects and Root Causes Cont’d
Corrective Actions and Owners
LRWC Root Cause: Outdated painting equipment
Corrective Action: Purchase automated paint system; CA Owner assigned
Dell Root Cause: Abrasion due to materials used
Corrective Action: Use different screw and use teflon pop-in washer to minimize scratching; CA Owner assigned
Corrective Actions and Owners Cont’d
LRWC and Dell Cut-In Dates
LRWC Corrective Action: Purchase automated paint system
Cut-in Date impacted by: Existing inventories (30 days), Engineering and Installation of new system (60 days)
Dell Corrective Action: Use different screw/washer
Cut-in date impacted by: Existing inventories (45 days), procure quantities of new hardware items (40 days)
LRWC and Dell Cut-In Dates
Actual, Forecast, and Goal Performance Measures
Actual performance trends allow us to forecast future performance
Corrective Actions for Dell and LRWC plus cut-in dates help further determine performance goals
Forecasts and Goals reviewed and revised in LRWC/Dell CIP sessions
Actual, Forecast, and Goal Performance Measures Cont’d
Lessons Learned Database
Valuable tool for planning and implementing future Supplier quality strategies
Bringing it all Together
Dell’s culture and environment, along with its underlying principles, form a powerful combination with the Continuous Improvement Process
APPENDIX
CIP Loop
12 Steps of CIP
STEP #1 Team Formation
A cross functional team consisting of key players from both the Supplier and Dell is identified for the CIP activity. The team should have the total support of management from both sides for the success of this program.
12 Steps of CIP
STEP #2 Process Mapping
A flow chart that visually depicts the flow of a commodity from a supplier (sub-supplier in case of critical components) through the Dell facilities, to the end customer, and then back again should a problem be reported. This process provides valuable information on where breakdowns are occurring.
12 Steps of CIP
STEP #3 Data Collection
The supplier will gather data related to failures in their processes (DPPM) while Dell will gather data in each of their Manufacturing sites (DPHU) as well as field returns (IFIR). The failures at each location should have clear assignable causes for ease in failure analysis.
12 Steps of CIP
STEP #4 Pareto Analysis
The use of Pareto Analysis is recommended to set priority on the top issues the team would work on. Typically the top 5 issues should be prioritized.
12 Steps of CIP
STEP #5 Failure Analysis/Root Cause
All failures should have a detailed failure analysis performed to identify the root cause. Where a root cause is not easily identifiable, Design of Experiment (DOE) or other tools are recommended.
12 Steps of CIP
STEP #6 Plan Corrective Actions
Once the cause of the failure has been identified a corrective plan will be generated. This plan will include the details needed to resolve the issue. The plan will also include costs to ensure return on investment.
12 Steps of CIP
STEP #7 Forecast Improvements
The team should forecast measurable improvement to the applicable metric (LRR/IFIR/DPHU).
12 Steps of CIP
STEP #8 Implement Corrective actions
Corrective actions identified should be implemented at the site where the defect occurred, and also passed onto other sites where similar products/processes are used.
12 Steps of CIP
STEP #9 Factory Cut-In Dates
All changes to the product/process resulting from the improvement should have set cut-in dates, both at the Supplier and Dell to minimize impact to the existing inventory.
12 Steps of CIP
STEP #10 Performance Reporting
Performance reporting should be set up to monitor the effectiveness of the corrective action and to ensure that forecasted improvement are met and sustained.
12 Steps of CIP
STEP #11 Lessons Learned
The team should develop means of transferring the lessons learned during this process, onto new products/processes in all the supplier/Dell regions or sites.
12 Steps of CIP
STEP #12 Communication
The team should meet on a weekly basis or an agreed upon frequency to discuss past and future action items to continuously improve the process to reduce DPPM/DPHU/IFIR at the Supplier and Dell.
This presentation describes the Dell Continuous Improvement Process as it relates to Supplier Quality Management. It can be used by Dell employees as well as current and prospective Suppliers in order to understand and apply the process.
We will look first at the Dell environment, the underlying principles of the process, and the major components of the CIP.
Then, using a fictitious Supplier, the “Little Red Wagon Company”, we will show step by step how the process works.
The Dell Business Model articulates our commitment to eliminating reseller markups, building to order, service and support, quick time to volume, and low inventory/capital investment.
This equates to a lean, fast-paced operational environment that demands Suppliers who can combine agility and exceptional levels of quality in their product line.
Dell’s Suppliers provide our production base. Dell relies upon Suppliers to provide all the internal and external components of its computers. Dell’s manufacturing operation consists of assembling Supplier-provided components and modules into a system.
The Dell Supplier Quality Management team serves as a bridge between the Supplier and both Dell and the Customer. The successful Supplier must share the Dell Customer experience, and effectively guide actions accordingly in an atmosphere of continuous improvement.
Dell is a global corporation with global Suppliers. As we seek to implement continuous improvement efforts, we do so on a global basis. To achieve this we conduct Continuous Improvement Process sessions with representatives from all of our affected world-wide activities as well as Supplier representatives from each of their production sites. By doing so, we are able to solve problems universally, and initiate improvement efforts world-wide.
To ensure we understand the environment and the challenges on both the Supplier and Customer sides, we rotate CIP sessions between Dell and Supplier locations, and attempt to meet at all Dell and Supplier locations on a rotational basis.
As a global corporation that appreciates the diversity of our Supplier base, we recognize that there are regional challenges that are unique, however, we analyze each problem for common root causes and seek to apply the lessons learned universally.
Our unusually close relationship with our Suppliers includes shared expectations of continuous improvement. As we work proactively with Suppliers to improve defect rates, we also work to reduce our assembly and delivery defects.
Symbolic of our shared expectations of continuous improvement are Pareto Charts, which combine Supplier-induced and Dell-induced defects on a single chart.
Our Continuous Improvement Process sessions yield improvement actions and forecast goals for both Dell and the Supplier. Dell and Supplier expertise is shared whenever possible to solve problems of mutual concern.
Where multiple products are received by the same Supplier, we believe that quality and process improvement standards apply equally (across the entire product line) for all products procured from that Supplier.
We are committed to work with Suppliers to achieve the highest quality standards with each product provided, and expect a corresponding level of concern from the Supplier on each product.
There are three major components of the Dell CIP:
First is a Process Map, a flow chart which visually depicts the flow of commodities from Suppliers through the Dell facilities and to the consumer.
Second is a vertical bar graph, called a Pareto Chart, which graphically depicts Dell and Supplier performance results data and trends in an easy-to-use format.
The third component is the worldwide Quality Improvement Plan (QIP), a spreadsheet which captures pertinent data on defects and their causes, corrective actions and their outcomes, and actual/forecast goals for improvement.
Each of these components is important to the Dell CIP. The Process Map affords both Dell and the Supplier valuable information on where breakdowns can occur in the flow of commodities. The Pareto Chart visually captures the combined efforts of both Dell and the Supplier to improve product quality and clearly identifies performance trends. The worldwide Quality Improvement Plan provides definitive information on the causes and corrective actions for defects, and is a valuable tool for forecasting improvement in defect rates.
The Little Red Wagon Company (LRWC) produces wagon shells, which includes the tub, wheel and axle assemblies, handle and steering mechanism. They provide these as a completed and painted assembly, to which Dell adds parts from other Suppliers (such as wood rails and wheel covers) to create the Dell “Austin Flyer” model wagon, which is sold worldwide.
LRWC assembles their wagon shells in two different plants, LRWC USA, located in Vermont, and LRWC Asia/Pacific, located in Taiwan. The LRWC plants use common Suppliers for some parts, and independent local Suppliers for other parts. Each plant provides the wagon shells to different Dell assembly sites worldwide, where the “Austin Flyer” models are assembled and distributed.
In order to experience the overall Supplier-Customer environment, CIP meetings would be scheduled alternately at Dell and LRWC facilities.
The first CIP session with LRWC, for example, would be held in the Dell Braker facility in Austin, the next at the LRWC plant in Vermont, the next at Dell’s assembly plant in Europe, the next at the LRWC Asia/Pacific facility, and so on.
This would assure a complete understanding of needs, capabilities and challenges of both parties and allow participation from all areas of each company over time.
The example will show through the components of the Continuous Improvement Process how Dell and LRWC work together to enhance the Dell Customer Experience.
In this example, LRWC only provides one product to Dell, the wagon assembly.
If LRWC provided Dell with other assemblies, such as wheelbarrows or garden carts, the expectation for quality standards and continuous improvement efforts of that entire product line would be the same.
The Process Map shows the flow of Supplier products through the Dell assembly facilities. It can be viewed in two distinct, but connected, parts. The first portion of the map shows the Supplier side of the process, and the second portion of the map shows the Dell side of the process. It also shows how shared expectations and expertise are the “glue” between the Supplier and Dell processes.
The map shows the principle activities in the LRWC process flow. It shows who the principle Suppliers are for the LRWC regional production sites.
As the diagram depicts, axles and wheels are provided by Acme Wheel and Axle, while pins are provided by separate Suppliers at each location.
It shows which LRWC production sites provide products to the Dell regional facilities.
There are also Supplier Failure Analysis (FA) activities depicted on the Process Map. Details on who performs FA activities and the quantity of parts captured are available through Dell Supplier Quality Engineering.
The process map highlights the principle activities in the Dell process flow.
It shows where the Austin Flyers are assembled around the world. It further shows the distribution sites associated with those assembly plants, and, finally, it shows where defective units are returned.
You will note that in Asia, defective Austin Flyers are returned to the assembly plant. As shown on the diagram, field Failure Analysis procedures are performed on defective units at all three locations.
The process map is most helpful in visualizing “who does what to whom.” When Supplier-derived failures are noted, it may help localize the problem to a particular region or even to an individual Supplier.
For example, when wheel pin failures are noted in the Dell’s European Return Facility only, the problem may be tracked to the sole Supplier of pins at the LRWC Vermont manufacturing site.
The Pareto Chart helps us graphically capture and track our continuous improvement efforts. We again demonstrate the principle of shared expectations through combining the efforts of both Dell and the Supplier on a single Pareto. Each defect can then be tracked, and the cumulative effect of the shared effort can also be tracked. The defects can be tracked on a monthly, quarterly, or yearly basis as required.
You can see on the graph below that over three months the overall defect rate has improved, but that (raw material) defects have increased.
The Pareto Chart also helps us project our monthly, quarterly, or annual goals. As shown on the graph, the goals were measured against results for 3 months to see where additional emphasis may be needed.
While the Process Map helps us track down the source of defects and the Pareto Chart helps us visualize and forecast our improvement efforts, the worldwide Quality Improvement Plan helps document defects and the actions taken to reduce them. We will now look at the principle features of the QIP.
DEFECTS CATEGORIZED AND RANKED BY FREQUENCY
Failure Analysis is the single most important element of a continuous improvement effort. Without Failure Analysis you cannot have a Continuous Improvement Process. Failure Analysis that is performed by both Suppliers and by Dell provides information on how often each type of defect has occurred over a specified number of produced items. This performance measurement is normally expressed in Defective Parts Per Million (DPPM). Defects are categorized and rank-ordered by Supplier defects and then by Dell-induced defects.
ROOT CAUSE DETERMINATION
Root causes are determined by the responsible party for each item identified under a defect category. Within each category of defects, there may be several root causes determined. Root cause failures may include defective materials, such as faulty wheels, axles, or metal screws that hold the wagon together.
CORRECTIVE ACTIONS AND OWNERS ASSIGNED
For each root cause determined, a corrective action (CA) and an owner is assigned. This provides an individual who can be accountable for the corrective action and can also serve as a point of contact on the status of the corrective action.
CUT-IN DATES DETERMINED FOR BOTH SUPPLIER AND DELL
When a corrective action is assigned, there will be a certain lag-time before the results of that action is realized. This is dependent on the inventory on hand at the Supplier and at Dell, as well as on how long it actually takes to put the corrective action in place.
ACTUAL, FORECAST, AND GOAL DPPM
Given Continuous Improvement Process data over a number of quarters, it is possible to forecast future performance based on actual performance trends. Considering the potential impact and the time requirements of the corrective actions, DPPM goals can be developed.
Now that we’ve talked about what is included in the QIP, let’s look at how we actually use the template with the Little Red Wagon Company. We will step through each column in the template and will show how it provides an continuous improvement cycle for both LRWC and Dell.
DEFECTS RANKED BY FREQUENCY
Through the FA efforts of both LRWC and Dell, defects and their frequency can be determined. These are rank-ordered and placed on the QIP template. On the Supplier side, defects normally occur due to three primary causes: workmanship, design, or raw material defects. On the Dell side, primary causes are Dell-Induced Defects (DID), or Cannot Duplicate (CND) defects.
ROOT CAUSE DETERMINATION
In our example, the number one cause of defects was workmanship, specifically, poor paint application. Through analysis, LRWC determined the root cause to be inconsistent application of paint due to outdated painting equipment. On the Dell side, the number one cause of defects was improper installation of the wood rails, which resulted in scratches in the paint and eventual corrosion. For the purpose of illustrating how the QIP template is used, we show several defects and their causes.
Based upon the root cause of the defect, corrective actions are developed for each defect. An owner is assigned to each corrective action. This person must be knowledgeable in all aspects of the problem and the related actions, and serves as a point of contact for progress on the defect.
In our example, the root cause of the paint problems resulted in LRWC purchasing a new automated spraying system that would apply a consistent finish on the wagon.
The Dell corrective action was to use a new type of screw that was less likely to cause scratching during assembly.
Additionally, Dell and LRWC worked together on a solution that used a teflon pop-in washer that would minimize scratching and subsequent corrosion. This washer was provided at the LRWC factories.
Whenever a change is made to correct a defect, it will take time for that change to take effect.
In the case of the Little Red Wagon Company, their new painting system will take time for installation and testing before it can be used. In the mean time, existing inventories will have to be depleted before the new and improved wagon will be produced.
For these reasons, dates are determined when the improved models will be provided from the Supplier and also when these improved models will be completed Austin Flyers at the distant end of the Dell assembly line.
Both of these dates are important, because it would be inaccurate to attempt to measure improvements before they had a chance to take effect. In a like manner, the Dell identified defects are also given a cut-in date.
From the corrective actions taken, we can forecast improvements and set goals. By noting actual performance in DPPM units, we can forecast how our corrective actions will improve overall performance, . reducing DPPM. From the forecasts, we can set goals. When we look at the total actual defective parts against our goals to reduce defective parts, we have a clear idea where we need to make improvements.
Continuous improvement implies continuous learning. Through applying corrective actions and measuring their success or failure, we can compile a Lessons Learned Database.
This is particularly useful as we roll out new products and work the Continuous Improvement Process. The Lessons Learned Database provides a valuable tool for planning future Supplier Quality Management strategies.
We’ve seen, through the use of a simple example, how the Dell Continuous Improvement Process works.
When you combine the three elements of the CIP with the Dell culture and environment, and the underlying principles, you have a powerful combination that will yield spectacular results.
