DANIEL J. O’LEARY

Procurement and Product Assurance in the Microwave Tube Business

[This paper was presented at the Midwest Section sponsored Engineering for Electronics Production Symposium, June 19911

THE AUTHOR

is the product assurance manager at Varian Associates, Crossed Field and Receiver Protector Products in Beverly, Massachusetts. He received a bachelor of arts and a master of arts in mathematics from the University of Maine. He is a member of the Institute for Electrical and Electronic Engineers (IEEE) and a member of the American Society for Quality Control (ASQC). He is an ASQC cer- @ed quality engineer, an ASQC certified reliability engineer, and an ASQC certified quality auditor. He has authored and presented papers in the fields of mathematical logic, demographics, product reliability, and customerhendor relations.

ABSTRACT

This paper offers a comparison of definitions of quality based upon the work of Crosby, Deming, and Juran. A work- ing definition of quality in a partnership agreement is then of- fered. The paper examines some procurement strategies for microwave tubes and offers an example, from another field, to illustrate why some of these procurement policies do not work. A series of alternative contract practices are offered which strengthen the partnership relationship between purchaser and supplier. Lastly, improvement suggestions are made based upon current DoD total quality management initiatives.

INTRODUCTION

Tradi t iona l procurement practices are based upon the competitive bid, selecting the lowest price producer who ap- pears to exhibit the ability to produce the desired article. The underlying concept here is that all (competent) produc- ers are of equal quality and the decision to buy should be based upon price.

For many years this has been the commercial view result- ing in policies which did not consider the real needs of the purchaser, but drove the price low. This results in an adver- sarial role between producer and supplier which fails to ben- efit and often injures both parties.

In the commercial sector this approach has given way to-

ward a partnering role between producer and customer to the benefit of each party. This benefit has resulted in the for- mation of long term relationships which produce real bene- fits; benefits which are received by both parties.

The shift to partnering changes the role of Product Assur- ance to match the requirements of the new relationship. Re- liance on traditional methods of inspection, concepts of specifications, and requirements for configuration control give way to new methods. The adverse role between com- peting quality organizations gives way to mutual under- standing and trust.

This paper advocates a shift in policy away from tradi- tional procurement to partnering to achieve quality.

WHAT IS QUALITY

The definition of quality is extremely difficult since it has many meanings to many people. Three significant authors in the field provide definitions. For Crosby [l], the concept is “conformance to requirements” and is based upon a thesis that costs of rework, scrap, inspection, warranty, etc. out- weigh the costs of producing good products. This cost anal- ysis will lead management to adopt methods to conform to requirements and hence operate at minimum cost.

Juran [ 2 ] advocates “fitness for use” as the definition of quality, but leaves a lot to be desired in determining that fit- ness. The user is meant to determine the fitness based upon features which the user finds useful. In particular, it is not easy to understand how the “user” can have a voice in the microwave tube procurement decisions; especially if the user is on a ship in (say) the Persian Gulf.

Deming does not give a definition of quality in the sense of the other two, but advocates a fourteen point plan which requires a comprehensive cultural change in operations [3]. Most relevant here is Point 4:

End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single sup- plier for any one item, on a long-term relationship of loyalty and trust.

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PROCUREMENT AND PRODUCT ASSURANCE DANIEL J. O’LEARY

The premise of this paper is that procurement in the mi- crowave tube industry can be built on the basis of trust, al- lowing the formation of a long term relationship with a sup- plier. This relationship can be as a single-source supplier, but note that single-source does not mean sole-source.

WHAT DOES QUALITY MEAN

Quality means many things to many different people, so a good working definition is required. Some exemplary work has been accomplished in the DoD Total Quality Manage- ment (TQM) initiative. The direction of Dr. Robert E. Costello, the undersecretary of defense for acquisition, in establishing a policy for total quality management, asserts that improvement is necessary. He argues against “mini- mum acceptable” quality which has been pursued in the past. He states [4]:

for much too long we have been following the concept of “minimum acceptable” quality. America’s manufacturers and our maintenance depots have pursued this concept with the placid resignation that a persistent level of errors, per- ceived as irreducible is a way of life ... The process should continuously strive for improvement rather than accept a predetermined level of imperfection.

SUPPLIER AND CUSTOMER ROLES

In looking at a partnering relationship there are two roles to be expressed, that of the customer and that of the suppli- er. The trust relationship depends upon mutual understand- ing, but for many years this was not the case. The relation- ship was based on the principle of caveat emptor-let the buyer beware. This historical relationship forms the basis for many of the procurement practices of today. The buyer must ensure some form of protection against the supplier.

A new partnering relationship requires a new direction. The buyer must trust the seller to provide a good product. This is merely, however, “minimum acceptable” quality. The real change appears when information flows freely from seller to buyer. When the seller is freely willing to open up the processes to view, to allow the warts and de- fects as well as the successes to be shown.

The buyer must be willing to accept the information at face value, and not use it to later punish the seller. The buyer must be willing to assist the seller when needed. Often this assistance is merely patience as the seller works through the inevitable problems that will arise in any pro- duction environment. The buyer has an expectation of good product on time, but must recognize that the road to that end is full of pot holes and problems.

In reporting this presentation Cdr. Perkins, SC, USN states PI:

The operational definition of quality, accepted at a govern- ment and industry conference [6] held to develop a plan to implement Dr. Costello’s approach in DoD, was as follows, “Conformance to correctly defined requirements satisfying the customer needs.” This definition closely resembles a combination of those of Crosby and Juran.

Another version of this definition appears in the DoD Total Quality Management Guide [7], “Quality is confor- mance to a set of customer requirements that, if met, result in a product or service that is fit for intended use.”

I believe that this is not adequate as a working definition for quality because it allows “minimum acceptable” quality. The definitions of Crosby and Juran give a minimal set of requirements, but do not lead to improved relationships through partnering. They miss the mark because they do not employ the philosophy behind Deming’s Point 4 above.

I propose that any working definition of quality for the Navy and the microwave tube business employ confor- mance to specifications as a minimum, but must go beyond that. The specification must be viewed as a communication vehicle that defines the interface between the tube and the system. In order for that tube to work, the minimal demands of the specification must be met. Quality, however, means a relationship that seeks to optimize the performance of the partnership. The partnership is defined by more than just the specification, but also by the day to day working relation- ship of the parties. My working definition of quality is then, “A relationship between buyer and seller that assures ever improving product performance in an ever improving work- ing relationship.”

SHIFTING THE PARADIGM

In his book The Structure of Scientific Revolutions [8] Kuhn describes the paradigm shift. A paradigm is a way to view a body of knowledge; it provides the structure by which we evaluate facts. When the paradigm shifts a new way to view those same facts is created. For example, when one believes that the sun revolves around the earth a sunset is understood differently from when one believes the earth revolves around the sun. This paradigm shift from the geo- centric to the heliocentric solar system made the planetary motions easier to understand. The planets still move the same way in the heavens, but the new conceptual scheme makes the understanding much easier. The paradigm shift is required in procurement.

Let us examine some of the elements of the old paradigm, and see how they would happen under,a new paradigm. This paradigm embodies the working definition of quality.

QUALITY SYSTEM DEFINITION

Today the contract requires a specific quality system, usu- ally Mil-Q-9858A, often tailored by the statement of work. Mil-Q-9858A requires that certain systems be in place, sys- tems which prescribe the actions the supplier will take. While Mil-Q-9858A can be open to interpretation, i t is viewed, at least in the supplier community, as a tight set of constraints designed to inhibit action. I t requires certain management actions such as management to cost of quality.

In the new relationship a specific quality system defini- tion (in the sense of Mil-Q-9858A, Mil-1-45208, or ISO- 9000) is not required. The supplier should have a plan, but

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DANIEL J. O’LEARY PROCUREMENT AND PRODUCT ASSURANCE

definite management actions, such as cost of quality, should not be prescribed. The plan should not focus on control but should focus on improvement. The quality plan should cover elements of process control techniques, deployment of specifications through the plant, continuous improvement methods, establishment and maintenance of goals, and methods to foster communications.

The old quality system plan assumed “minimum accept- able” quality in Dr. Costello’s sense was the norm. In the microwave tube industry we don’t produce one-thousand widgets per day and accept a certain percentage of defective widgets in the shipment. Plans should not be based on this assumption, but rather on an assumption that only good product is shipped and that efforts should be directed toward improvement.

CONFIGURATION MANAGEMENT PRACTICES

Today, a typical contract may require Mil-Std-481 (or even Mil-Std-480), and give the buyer complete and total control over changes made to the product baseline. This sys- tem assumes that the manufacturing process is static, change must be inhibited, and that a long period of study is required to make any changes after qualification. This, is caveat emp- tor carried to the extreme.

The new system requires a flexible factory with the abili- ty to introduce change quickly. Continuous improvement often means the total of many small changes. These changes come from involved, empowered employees. Since the new relationship requires ever improving product performance the system must allow product changes. Configuration man- agement must ensure that the tube fits the socket, i.e. the in- terface is correct. It must not attempt to control the building blocks of the tube.

NON-CONFORMING MATERIAL CONTROL

In the old relationship, non-conforming material is a sig- nificant problem. The system is designed to ensure that de- fective products do not get shipped. A system employing identification, segregation, and a material review board (MRB) is specified. In many cases the contract limits the au- thority of the MRB and requires permission to make certain dispositions.

In a modern system the buyer and supplier recognize that non-conforming material is not in anybody’s interest. In par- ticular, a supplier with a continuous improvement strategy will immediately recognize the incapable process and move to improve it.

COST CONTROL

The old system allows “minimum acceptable” quality and makes the award on price. The assumption is that competi- tive practices are needed to ensure fair pricing. Even though cost of ownership is the proper measure, bid price is the de- ciding factor.

In the new system, continuous improvement means con- tinuous cost reduction. The buyer should expect to share some of this cost benefit with the seller. In the trust relation-

ship the buyer gives up control to allow continuous im- provement, but expects to reap the benefits in long term cost savings.

INFORMATION SHARING

In the old paradigm the supplier produces a monthly sta- tus letter. This letter is designed to foster communication, but it was a one way street. The supplier was required to provide information but the buyer was not. Writing the monthly status letter became an art form, how to fill up the pages without saying anything.

In the new system both parties should exchange letters. A key element of the buyer’s letter should be objective evi- dence of the product performance and the supplier’s perfor- mance as seen by the buyer. Typically this includes mea- sures such as the time distribution of receipts, e.g. how many pieces came in too early. The monthly buyer letter should contain measures of inventory so the supplier has in- sight into product usage. Contracts should be written to allow flexible deliveries based upon demand seen by the buyer and cycle time achieved by the seller.

GOAL SETTING

Mutual goal setting does not appear i n the current paradigm, but will be a key element in the new paradigm. If continuous improvement is an expectation of the parties, then simple, quantifiable measures of improvement should be agreed upon. These measures are long term measures with improvement rates having time frames of years. Buyer and seller should together agree on the goals and monitor performance on a regular (monthly) basis.

A CASE STUDY

Rather than offer these items in the abstract, a case study of a procurement situation is in order. The Naval Engineers Journal of January, 1990 contains an article entitled “Pro- cess Control in a Foreign Acquisition” [9]. The U.S. does not have any manufacturer of anchor chain large enough for use on an aircraft carrier, so a foreign procurement had to be made. An initial purchase of 39 shots (a shot is 90 feet) was made.

An initial production run of 13 shots was produced and tested on a ship with good results. The remainder of the pro- duction was placed in storage. Two years later, 25 shots were used on a new ship with unsatisfactory results. When the chain was measured, it had dimensional problems and appeared to be outside the maximum permitted specification tolerance. When the chain was remeasured i t did not con- form to the measurements provided by the supplier and cer- tified by a third party. The manufacturer, according to the article, rationalized the discrepancies and refused to replace the chain.

The specification was strengthened, and a new procure- ment was made. The same vendor was low bidder, and was awarded the contract. This time extensive first article tests

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PROCUREMENT AND PRODUCT ASSURANCE DANIEL J. O’LEARY

were conducted and the supplier made a commitment to hold the link size between the minimum and the nominal di- mension. When the chain was presented for acceptance the records indicated that some of the shots had links replaced because of dimensional and metallurgical compliance prob- lems. The inspection team reviewed the records and selected some links for remeasurement based upon the data. These links caused additional rejections. In the lessons learned the article states [ 101:

One of the manufacturer’s production people was surprised to overhear our concerns and explained that the dimensions could have easily been held within tolerance if the produc- tion workers knew what was needed. Apparently, manage- ment had never passed our concerns, or their commitments, onto the work floor.

This was not a partnership buy. It appears from the article that source inspection was accomplished at the end of the production run. While the article is not clear, the supplier and the buyer did not communicate. In the initial procure- ment, the supplier did not understand all of the buyer’s needs. In the second procurement, knowledge of the pro- cesses was not shared. There was, no doubt, a quality pro- gram plan, but it did not result in good product. The supplier could have produced the chain, had communication flowed well in the supplier organization. If the supplier had a pro- gram of continuous improvement, then the goal of links be- tween minimum and nominal could have been met.

An opportunity for partnering was lost here. The procure- ment process awarded the contract on price alone and did not take into account the quality history of the supplier. In the end the supplier had gained knowledge of the real re- quirements for the chain. In the next procurement that knowledge may well be lost, because the next job will be awarded on price alone; perhaps to another vendor.

TQM INITIATIVES IN DOD ACQUISITION

The Total Quality Management Guide contains an ap- pendix which outlines some DoD initiatives in this area. Some of these programs lead in the right direction, so will be mentioned here.

COULD COST

This program is a way to get government and industry to work together to eliminate non-value-added effort. In this program all externally imposed rules, regulations, and con- ventions are subject to critical examination and challenge.

EXEMPLARY FACILITIES

suppliers who exhibit continued ability to produce superior products. The use of Statistical Process Control, for exam- ple, is encouraged by this program. The benefit to the sup- plier is reduced surveillance. This approach takes history into account. IN-PLANT QUALITY EVALUATION (IQUE)

The IQUE program is exciting since it is a recognition that the police officer at the end of the line does not work. This program forms a partnership in which processes are ex- amined, charted, and measured by the joint effort of the DLA inspector and the supplier. IQUE provides real oppor- tunities for improvement by recognizing the partnership role.

CONCLUSION

In today’s procurement environment, the buyer and the supplier can both do better. Long term relationships based upon principles of partnership, information sharing, elimina- tion of confining requirements, and introduction of continu- ous improvement concepts will benefit both parties. The buyer can obtain more uniform products, improved over time, at a lower cost. The supplier can also achieve efficien- cy of operations and reduced cost in a new environment.

The groundwork has been laid in the TQM initiatives in the Department of Defense. We should now use these ef- forts to improve the industry and obtain the benefits for both parties.

REFERENCES

Crosby, P., Quality is Free. New York, NY. McGraw-Hill, 1979. Juran, J.M. and F.M. Gryna. Quality Planning and Analysis. 2nd Ed. New York, NY.-McGraw-Hill, 1980. Deming, W.E., Out ofthe Crisis. Cambridge, MA. MIT Press, 1986. Costello, Robert E., Defense Logistics Agency Commanders Conference, Homestead AFB. November 4, 1987. Perkins, A.C. “Quality Perception: A Comparison Between the Navy and the Commercial Environment,” Naval Engi- neers Journal, January, 1990 pg. 41-52. Joint National Security Industrial Association and Aviation Industrial Association Workshop, “DoD Total Quality Man- agement Strategy,” Dec. 16-17, 1987. Department of Defense, Total Quality Management Guide, DoD-5000.5 1 -G, Final Draft, 2/15/90, Washington, D.C. Kuhn, T.S., The Structure of Scientific Revolutions, 2nd ed., 1970, The University of Chicago Press. Halper, I.D., G.S. Prentice, and R.B. Selvidge. Naval Engi- neers Journal, Jan., 1990, pg 53-56.

[lo] ibid. pg. 56. This program provides new approaches for dealing with

42 Naval Engineers Journal, November 1992