Lean Operations and Supply Chain

Excellence: A Competitive Weapon

Brian C. Quirk Vice President, Global Operations

SEMI Northeast Forum September 11, 2013

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Large supplier of process control instruments, components and subsystems – Broad technology base and applications expertise

Focused on enhancing productivity – Reduce manufacturing and maintenance costs – Improve yields – Easily integrated

Lifecycle support

Global Process Control Experts

Technology for Productivity

The MKS Story

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MKS’ Strategic Operational Mission: Assist MKS in achieving a sustainable competitive

advantage by developing and maintaining world class operations and supply chain management

Attain unrivaled performance in the areas of quality, speed, & flexibility; establishing lean operations as a core competency for the company.

Achieve success through constancy of vision, purpose and long term partnerships

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Global Strategies

Focus on Lean Strategies to achieve Customer Satisfaction

Develop and replicate operational best practices

Design the global supply chain to provide optimal customer service at lowest costs

Develop and expand LCC manufacturing beach heads

Maximum utilization of all internal and external global resources

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Lean Operations Strategies

Forward Demand Mgt. •Capacity/Shipment Planning •Cross Trained Operations •Flex Capacity/85% Load •Shop Floor Control •Daily Huddles •Mgt. Contact

Yield •Customer Awareness •Six Sigma “Light” •Daily Feedback •Training •Efficiency •Mgt. Contact

Cycle Time Reduction •Blitzes •Constraint Mgt. •24/7 Operation •Mgt. Contact

Supply Chain Mgt. •Performance Measures •Outsourcing •Quarterly Meetings •Supplier Business Reviews •Mgt. Contact

Consistent Reporting •Hoshin Goals •Report Cards •Load vs. Capacity •Mgt. Contact

TOTAL CUSTOMER SATISFACTION

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World Class Metrics

1st pass yield 99-100% Five year improvement in 1st pass yield 40% Warranty as a % sales .5% Scrap rework costs as % sales less than 1% Five year mfg. cycle time reduction 20% per year On time delivery 98% Lead-time less than customer expectations

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Lean Supply Chain Management

Supply chain Management Make it a profit center! Multiyear contracting Global suppliers Performance measures Strategic/tactical commodity planning Pull systems/VMI Consolidate spend to leverage your cost Long-term contracting ( mitigating exposure) Earned volume discounting

Quality and Reliability as an Operations and

Supply Chain

Outline and Backdrop Semiconductor Manufacturing Equipment Needs

to be More Reliable with Less Downtime (a chip fab now costs $7,000,000,000)

To Meet Challenge: MKS Invested Significantly to Improve Quality and Reliability of our Products – Financial, Structural and Organizational – Enabling Entire Organization: Structured Problem

Solving, SSQA Continuous Improvement, Design for Reliability, Application Engineering

Results Encouraging: 80% Reduction in Incidents, 30% Reduction in warranty costs, 30% Reduction in Annual Failure Rates on New Products

Lessons Learned MKS Confidential 10

MKS Quality Policy Deliver Products and Services that Consistently

Meet or Exceed Customer Requirements Continually Improve our Products, Processes and

Management Systems Be the #1 Value Provider within the Markets We

Service – Quality Vision: Continuous Improvement Towards

Zero Defects – Mission: Enable QSR Culture: Quality then

Schedule Yields Results

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Quality and Reliability Improvement Timeline

2009 2010 2011 2012 2013

SSQA Journey

Refocus & Revitalization

Achieved 6.3

Target 6.6, BKMs

Achieved 6.5

DFMEA Centralized database

Living document & issues capture

Lessons Learned

Structured Prob. Solving

KT/8D

Monthly Executive Review

Centralized dB: 100 KT/8D

Leading Indicators,

BKMs DfR

Guidelines

Training in 8D, FTA

Q & R Organization Centralize Q&R

Continue Org Development

-Training

Investments: -Rel/Qual Capital -Training

Investments: - Rel Capital - Personnel

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MKS Q&R Improvements 2011-2013 Q&R Organization: Unified and Expanded Quality & Reliability

Team; Millions Invested in Reliability Labs

Structured Problem Solving using KT/8D – 2011: 723 Trained vs 800 goal, 67 KT/8Ds added – 2012: 930 with 1116 goal. 122 KT/8Ds added vs 100 goal in focus areas.

Quarterly Executive Reviews to Reinforce – 2013: 8D/FTA Training: 70 YTD vs 100 KT/8D goal

SSQA (MKS Continuous Improvement Model) – 2011 Goal: Increase KQE to 6.3. Achieved – 2012 Goal: increase KQE to 6.5. Achieved – 2013 Goal: Increase KQE to 6.6. On track with 6.7

MKS Quality Improvement Program – 80% Reduction in Incidents Q2’13 from Q4’10 exceeding 50% goal

Design Failure Modes Effects Analysis Improvements – Moving Risk Management earlier into Product Development. Living

Document. 123 Field Issues Captured in 83 DFMEAs

Reliability Improvements – Design for Reliability: Improve and standardize BKMs across MKS. Utilize

leading indictors to proactively eliminate/prevent failure (reliability scorecard and problems prevented)

KT and 8Ds Available in Searchable Database for Lessons Learned

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Keys to Effective Use of Structured Problem Solving Tool to Manage Problems and Communicate Need Technical Experts Define Root Cause: Turn Problem Off AND On Define when Done Focus on Systematic Actions (Get out of “whack a

mole” in chasing problem after problem) MKS Uses KT and 8D Processes

– KT: To define problem: What, Where, When, Size – 8D Process to Focuses Team on Systematic

Actions

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The SSQA Application

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What is SSQA?

The quality management system of MKS and our suppliers based upon SSQA requirements. SSQA stands for Standardized Supplier Quality Assessment, which is a set of world class quality standards developed by SEMATECH.

SSQA: MKS Continuous Improvement Model Executive Champion: Eric Snyder Team Lead: Pat Sackal Objective: Business processes maturity, measurable results tied to annual

plans Results:

2013 Goals: – Goal to Increase Score to 6.60 with focus on defect reduction – Exceeding

goal – Focus teams with BKM, CIP actions & improvement roadmaps - ongoing – Train Additional Certified Auditors: 1 at Nogales - on track MKS Confidential 18

Product Group

Baseline KQE Score (08/09)

KQE Score FY2011

KQE Score FY2012

KQE Score FY2013

PFMC 6.36 6.31 6.47 6.72

Controls 6.07 6.31 6.65 6.71

ENI 6.19 6.26 6.53 6.76

China 6.50 6.54 6.71 Sep ’13

ASTeX 6.17 6.28 6.41 6.69

Mexico 5.07 6.16 6.42 Sep ’13

Goal 6.00 6.30 6.50 6.60

Avg 6.06 6.31 6.53 6.72

Increased SSQA Score Tracks with Reduced Returns Over Time

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Correlation between SSQA scores & Returns reductions over time.

Failu

re R

ate

Quality Product Design Design FMEA: Pragmatic Approach Provides

Repository of Lesson Learned Design for Reliability Guidelines Developed:

Tracked on Each Project with Reliability Scorecard

Reliability BKM Database Developed to Share BKM Company Wide

PCBA Design Guidelines for Reliability Developed Results:

– Warranty costs Reduced by 30% – 100+ Problems Prevented

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Lessons Learned from Quality and Reliability Improvements

Structured Problem Solving including KT/8D and Preventative Actions helps Sustain Reductions over last 3 years. – Improvements to ICT/FCT Test, Test Stand

Improvements/Poke-Yoke, SPC

SSQA identifies Key Areas for Systematic Process Improvement to Prevent Problems

DFMEA and DfR Improvement Teams Used to Feed Issues/BKMs Back into Design to Prevent Reoccurrence in New/Updated Products – Design Practices, Component Selection and Application

Replacing Legacy Designs Reduced Returns and Improved Reliability

Improved Communication with Field Enabled with Application Engineering Investment

– MKS Local Application Engineers (Taiwan, Korea, Singapore, etc.) helped to identify the problem quicker and understand the application

– Provides closer linkage with end user and application to prevent problems

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Future Planned Q&R Improvements

Continued Improvements via SSQA Process: Focused on Defect Reduction via BKMs

Enhanced Critical Part Program SPC Enhancement: Focused on Key Products

and Excursion Management EQRS: Enterprise-wide Quality and Reliability

System for RMA, CAPA, Audit and Customer Complaints

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