MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION FACULTY FOR HIGH QUALITY TRAINING GRADUATION PROJECT INDUSTRIAL MANAGEMENT IMPROVING PROCESS TO REDUCE INDIRECT MATERIAL CONSUMPTION IN ASSEMBLING LINE A CASE STUDY AT INTEL PRODUCTS VIETNAM CO.,LTD SUPERVISOR: MASTER. NGUYEN THI ANH VAN STUDENT: NGUYEN KIM NGOC TRAM SKL008223 Ho Chi Minh City, April, 2021 MINISTRY OF EDUCATION & TRAINING HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION FACULTY OF HIGH QUALITY TRAINING GRADUATION THESIS TOPIC: IMPROVING PROCESS TO REDUCE INDIRECT MATERIAL CONSUMPTION IN ASSEMBLING LINE A CASE STUDY AT INTEL PRODUCTS VIETNAM CO., LTD Student name : NGUYEN KIM NGOC TRAM Student’s ID : 17124113 Class of : 2017 Major : INDUSTRIAL MANAGEMENT Instructor : Master. NGUYEN THI ANH VAN Ho Chi Minh City, April, 2021 EVALUATION OF INSTRUCTOR ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Ho Chi Minh City,………………2021 Instructor Page i EVALUATION OF REVIEW LECTURER ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------- Ho Chi Minh City,………………2021 Reviewer Lecturer Page ii ACKNOWLEDGEMENT Firstly, as a student of the Faculty of Economics of Ho Chi Minh University of Technology and Education, I would like to thank all the lectures in here, they have always been enthusiastic in teaching knowledge and sharing value experiences to students. Secondly, I want to thank honestly to my instructor – Nguyen Thi Anh Van for giving me a lot of meaningful advice during the research and her enthusiastic support for me to complete this thesis well.
As my knowledge is restricted, this thesis cannot avoid mistakes, I hope all of you to be willing to give me your comments as well as recommendations to improve better. Thirdly, I would like to express sincere thanks to Intel Products Vietnam Co., Ltd for giving me the chance to complete the internship successfully. This was my pleasure to support the MSE team and the manufacturing department and accumulate knowledge also improve skills. Especially, I want to thank my instructor – Mrs.
Do Tuyen, MSE Manager, who always patiently instructed me and gave me helpful advice on my career orientation in Manufacturing field. I want to thank Mr. Nguyen Hoang Chuong, Control MSE Tech, who always helped and supported me enthusiastically. Finally, I want to express my gratitude to my family, they are always a strong mental motivation for me to overcome all difficulties and support me to pursue future career path.
Ho Chi Minh City, 1st April 2021 Student Nguyen Kim Ngoc Tram Page iii ABSTRACT There appears to be a great risk for businesses posed by the Covid-19 pandemic. This urges manufacturing companies to save production cost to strengthen their businesses. This study was conducted at Intel Products Vietnam to help the company to save its indirect material cost in assembling line. Applying PDCA as the main approach, this study went through 4 phases of the methodology to identify root causes and then carry out countermeasure actions to address the problem.
Finally, new process was proposed which helped to reduce 50% of 1 indirect material per lot compared to old process. Moreover, there is opportunity for the result of this study to be proliferated to other product platforms as well as other factories in Intel’s factory network. Readers could find this study as a helpful lesson for conducting process improvement project under the abnormal time due to the pandemic. Page iv LIST OF ACRONYMS Acronyms The meaning of acronyms IDM Indirect Material IDM MSE Indirect Material Manufacturing System Engineer CAM Chip Attach module BAM Ball Attach module ATM Assembly and Test Manufacturing VNAT Vietnam Assembly and Test VF Virtual Factory MI Manufacturing Integrator IPN Intel Part Number CT Cycle time MMS Manufacturing Management System Page v LIST OF FIGURES Figure 0.1: Coupon consumption across product families .2: Thesis process flow (self-design) .1: Intel Products Vietnam Co.
Intel evolution logo. System-on-Chip products group (Intel Corporation, n.1: Summary content of chapter 2 .2: MIBI model for business process improvement, adapted from (Adesola & Baines, 2005) .4: Steps of benchmarking process, adapted from (Dragolea & Cotirlea, 2009) .5: Radar matrix cycle as a methodology of EFQM Excellence model, adapted from (Sokovic, Pavletic, & Pipan, 2010). 19 Figure 2 6: PDCA cycle & DMAIC models, adapted from (Sokovic, Pavletic, & Pipan, 2010) .6: Overall assembly and test process flow .7: Process flow, container flow and coupon flow summary (self-synthesis) .9: Both sides of new coupon .3: Substrate (left) & coupon (right) with highlighted areas upon which epoxy machine would capture to identify .4: Substrate (left) & coupon (right) under capturing window view .5: Old coupon design (left) and proposal coupon design with label shifting down 5 millimeter (right). 59 Page vi LIST OF TABLES Table 2.2: Comparison table between different methodologies .3: Successful cases of implementing PDCA approach in manufacturing industry .4: Example of 5W1H as improvement determinations adopted from (Sunadi, Purba, & Hasibuan, 202) .2: Expectations of stakeholders from the project .3: Key metrics to monitor .4: Percentage of coupon usage causing by partial carrier and defect unit to total output of Mobile product (data from the start of 2021 to 26th April 2021).5: SIPOC map of assembly process .6: 5W1H analysis for Lot size factor .7: 5W1H analysis for reusing coupon practice .8: Current state of coupon usage per lot for lot size 1680.9: Scenarios of coupons needed when changing lot size .10: Result of improvement plan after 3 months of execution.
60 Page vii TABLE OF CONTENTS EVALUATION OF INSTRUCTOR .i EVALUATION OF REVIEW LECTURER .iv LIST OF ACRONYMS. v LIST OF FIGURES .vi LIST OF TABLES. vii TABLE OF CONTENTS. Rationale of the topic.
Objectives of the study. Scope of the study. Significance of the study. Structure of the study.
6 CHAPTER 1: GENERAL INTRODUCTION ABOUT INTEL PRODUCTS VIETNAM CO.1 Preliminary introduction about Intel Products Vietnam Co.2 History of formation and development of Intel Products Vietnam Co. Vision and mission of Intel Products Vietnam Co. Business strategy of Intel Products Vietnam Co. Main products of Intel Products Vietnam Co.
Introduction the Manufacturing department. Preliminary introduction the Manufacturing department. Function of the Manufacturing department .3 Indirect Material Room Overview. Indirect Material definition.
Type of Indirect Materials. 14 CHAPTER 2: THEORETICAL BASIC .1 Reviews on process improvement methodologies: .1 Model-based integrated process improvement methodology (MIPI) .3 Radar matrix methodology .5 Six-sigma methodology .7 Business process re-engineering (BPR) .8 Comparing different methodologies .2 Previous successful cases of applying pdca cycle in process improvement project at manufacturing companies .3 Tools and techniques used in the study .2 VOC- Voice of Customer .3 SPC tools - Statistical Process Control tools. 30 CHAPTER 3: MANUFACTURING PROCESS OVERVIEW AND CURRENT STATE ANALYSIS OF COUPONS CONSUMPTION .1 Assembly and test manufacturing process .1 Basic component of microprocessor product .2 Overall assembly and test process flow .3 Process flow from Chip Attach Module (CAM) to Ball Attach Module (BAM) – Process scope of the study .2 Current state of coupons consumption .2 Current state of coupons consumption. 37 CHAPTER 4: APPLYING PDCA TO REDUCE COUPON CONSUMPTION IN ASSEMBLY PROCESS.
40 Step 1: Initiative to make improvement project. 40 Step 2: Determine the subject of interest. 42 Step 3: Collect and analyze data of current situation. 44 Step 4: Analyze of the causes, contributing factors of problems.
45 Step 5: Select and establish improvement plan. 55 Page ix Step 6: Implement the solution .3 CHECK - STEP 7: MONITOR & EVALUATE THE IMPROVEMENT PLAN RESULTS. 61 Step 8: Standardize the new process. 61 Step 9: Close the improvement project .5 SUMMARY RESULT OF THE PROJECT.
62 CHAPTER 5: CONCLUSIONS AND. Error! Bookmark not defined. Page x INTRODUCTION In this chapter of the thesis, the following content are mentioned: problem statement, objectives of the thesis, scope of the study, and significance of the study…, etc. In which, the problem statement highlighted the need for cost saving of Intel Products Vietnam, under which the project took place.
The objectives of the study and scope of the study are then presented to help explain the goal of the study. Thesis process is also described in hope that reader would have an overview of the thesis structure. Rationale of the topic As a result of globalization and increasing customer expectation, every business all over the world is constantly striving to find sustainable ways to maintain and gain more control in their market. According to Kaplan & Norton (1992), companies should keep track on their balanced scorecard to measure their performance.
Improving business process is one of the four factors in the balanced scorecard and it is also an effective way to keep the company adaptive to the fast changing environment. Business process improvement is an approach to improve business process in a way that makes enhanced product or service for customer (Rashid & Ahmad, 2013), or simply put, to make the current process better. Business process improvement is a broad term that could involve many aspects from continuous improvement to the revolutionary business process re-engineering. For a long time of evolving (Moen, 2009), Plan – Do – Check – Act (PDCA) has become a prevalent methodology for process improvement.
PDCA cycle provides a systematic approach to problem solving regarding to quality and process improvement Many process improvement methodologies have been proposed (Rashid & Ahmad, 2013) for business process improvement in different context of uses. Process improvement methodologies can be named as PDCA cycle, DMAIC, Radar Matrix, DFSS…Each methodology has its own strengths and weaknesses. 1 With the ongoing trade war between China and The United States since 2018 (Wong & Koty, 2020), US companies that outsource their production to China worried that they would incur high tariff when import their product back to the US. Across industries from furniture to technology, US companies which have facilities in China are looking for new countries to shift their production to and Vietnam seems to be their destination (Shoulberg, 2019).
Vietnam is facing a huge opportunity with the moving trend of foreign companies, most observers expect Vietnam to gain business across different products categories, but there may be limits. Vietnam is experiencing a severe labor shortage, especially high skill workers (Shoulberg, 2019). For those reasons, in order for success in moving and developing their production in Vietnam foreign companies not only need to do business better their than competitors but also need to push their margin higher so they can stay benefit and attractive enough to keep their employees not looking for other better companies. Reducing operational cost is an effective way to do so.
Intel Products Vietnam (IPV) is the largest assembly and test facility within Intel Assembly and Test network of Intel Corporation. The initial investment to start IPV was claimed to be $1B and so far the biggest US high tech investment in Vietnam. IPV was started to build in 2007 and finished in 2010. IPV has been operating since 2010 and tremendously contributing to the development of Ho Chi Minh City.
In assembly process at IPV, coupon is a highly demanding indirect material for different products. Based on financial report, more than 7-digit amount of dollars spending for coupon in 2019 was called out. There is a big opportunity to reduce the cost of coupon consumption in order to extend the profit margin of the company.1: Coupon consumption across product families As show as in Figure 0.1 is the coupon consumption forecast for 2021 for four product families, it can be seen that Mobile product volume will be the highest, accounts for more than 60% of total coupon consumption. For all those reasons above, author of this study propose: “Improving process to reduce indirect material consumption in assembling line – A case study at Intel Products Vietnam” to address the problem.