Taking the "Process Approach" to RFQs in Electronics Contract Manufacturing

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The ISO 9001:2015 standard can be applied to any organization, any management system and any process. While it is generic in its application, the specific implementation can be the difference between lagging (inefficient, inconsistent) and leading (efficient, consistent) results.

The purpose of this article is to review how the process approach applies specifically to the request for quote (RFQ) process in the electronics manufacturing services (EMS) industry. For this, we will use the process approach framework of PDCA: plan, do, check and act.

Plan

In order to effectively improve any process, the first step needs to involve proper planning. This means setting objectives to meet business needs and defining the scope of the process it addresses.

For the purpose of RFQs in EMS, common objectives are:

1. RFQ turn time: Measure how efficient the process is and how effectively the organization is able to handle fluctuations in demand
2. Win ratio: Measure whether the output of the process is meeting customer or market needs
3. Estimated cost variance: Measure whether the output of the RFQ process is accurate
4. Margin: Measure whether the quoted price reflects a sustainable margin for the business to continue operating competitively

The process scope for RFQs begins when a customer submits an RFQ to their contact at the EMS company (perhaps a salesperson, program manager or other contact). It includes calculating the price to submit to the customer including materials, labor, overhead, risk and margin. And finally, it includes the conversion of the final quote into a purchase order and/or collection of feedback from customer regarding the quote.

Do

Depending on the size of the organization and number of steps involved in your RFQ process, quoting might involve multiple people across several departments, or it could be vertically integrated into a single individual that plays multiple roles.

In either case, it is important to establish work instructions, templates, and tools to perform the RFQ function adequately. Here are some things you may wish to implement:

1. Detailed procedures for quoting to streamline training of new team members
2. Risk assessment template with questions to evaluate all relevant criteria
3. Documentation standards which can be shared with the person who is requesting the quote (including BOM formatting guidelines, Gerber file format, assembly drawing requirements, etc.)
4. Margin matrix: Turn qualitative inputs into a quantitative target margin range
5. Labor calculation template with researched and agreed-upon standard times and labor rates for activities
6. Glossary of common terms and phrases such as turn time, excess material, preferred supplier, available to ship
7. Bill of material (BOM) costing template to record quoted quantity requirements, required overages, and identification of materials at risk
8. Quote template communicating to end-customer price and turn-time commitments along with terms and conditions
9. Standardized RFQ template to capture relevant information from customer, including quantity, turn time, special build requirements, IPC standard, accompanying communications

Check

Once an RFQ process has been scoped and implemented, it is important to continue monitoring the effectiveness of the process. Reviewing process performance should be built into the process definition and not treated as an ad-hoc activity. Here are a few ways you can do that:

1. Schedule periodic reviews to go over key metrics, manage exceptions and load-balance resources and respond to changing forecast of RFQ activity
2. Create alerts or escalations to notify the appropriate stakeholders the status of key metrics and challenges
3. Benchmark against goals and historical performance to understand the progress of your process
4. Regularly solicit input from key stakeholders on opportunities for improvement

Act

Based on metrics, exceptions and escalations, it may be necessary to make modifications to the process. A few things to consider when making updates to a process:

1. Record the changes in all accompanying documentation, including training materials and forms
2. Be especially diligent in monitoring performance metrics after a process change to identify whether the change positively impacts business requirements
3. Ensure that the process change and the reason behind the process change are communicated to all stakeholders

Setting standards and implementing systematic processes can save companies time, provide consistency, and establish metrics to measure your continuous improvement. By expanding your implementation of the new ISO 9001 standard into the RFQ process, you'll save time and win more of the right business.

This article was originally published in the February 2017 issue of SMT Magazine.

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