Operations Management in a Contract Manufacturing Environment

Francesco Grieco, Vice President of Operations

Posted on October 22nd, 2018

What is the role of Operations Management in a contract manufacturing environment?

Operations Management needs to optimize CM resources and ensure key performances are met.  Paramit’s operations leadership drives continuous productivity and efficiency gains which is essential to our providing our customers with long term value.

Additionally, a CMs operations management is heavily involved with supply chain management including materials execution and awareness of global trends that could disrupt build plans.  Customers expect operations to ensure supply chain continuity.

What benefits and/or competitive advantages can be derived from operational excellence, both for a CM and its customers? How does Paramit measure its performance in this area?

Operational excellence is a cultural attitude that embraces certain principles and methodologies to create sustainable improvement. CMs should focus on process excellence to ensure reliability and consistent delivery with minimal variation. At Paramit, we routinely demonstrate extreme performance in terms of quality, on-time delivery, and customer satisfaction. Key steps and milestones that have enabled us to reach this level of excellence include:

  • Introducing our patented vPoke computer directed assembly process, which allows us to build complex systems with zero defects and detailed traceability. vPoke not only provides a dramatically higher level of control and validation, it also allows Paramit to efficiently scale production volumes up or down.
  • Reducing SMT manufacturing defects to <10 DPMO (defects per million opportunity).  This industry leading quality allows Paramit to treat each defect as an “event” which gets quickly scrutinized by process engineering.
  • Creating custom application tools to manage all aspects of materials procurement, planning, and internal logistics.  Our in house software development allows Paramit to create systems based solutions tailored to our customer’s needs.  We’ve establish rigorous performance standards called Key Performance Indicators. Examples of these are last part dock, kit-commit, MRP generation, and auto-booking.

The competitive advantages our customers derive from these efforts are flexibility and scalability. Our ability to rapidly implement changes and adapt processes as necessary is a critical factor in meeting our customers’ needs, especially for those customers who are striving to introduce new products to market in a timely manner.

Who within Paramit is responsible for initiating operational improvements and/or innovations?  What steps can be taken to remove obstacles in this area and encourage positive outcomes?

Operational excellence stems from the right work culture. It is an attitude and a work ethic that empowers individuals in any role to lead and pursue the organization’s goals.  At Paramit, individuals and teams are all responsible for operational improvements.  Our “Stop on Defect” Quality policy enables anyone in the factory to stop a process when a defect is detected, allowing us to address the issue immediately. Most often, however, we push ourselves to do it right the first time.

In order for a CM to succeed, everyone must “think systemically.” All members of the organization should avoid thinking too narrowly. In order to achieve operational excellence each individual must think about the whole system and understand how the different processes connect and relate to one another in ways that can impact the final outcome.  We encourage every employee to “own the outcome”.

If you were an OEM assessing the capabilities of a prospective CM, what specifically would you look for and why?

It is important that a CM understand the customer’s needs at all levels including reliability, cost, schedule, and business opportunities or risks.  The CM will then be in a position to create value by exceeding those expectations. I would look for the following in a CM: ability to scale without compromising quality, flexibility and speed when implementing changes, Supply Chain Management, Test Development, and Sustaining Engineering. A productive and lasting relationship will be assured if the CM is able to continuously deliver value to the customer.

What do you enjoy doing in your personal time?

I have two children, ages 11 and 13. Since moving to California 15 years ago, I have enjoyed learning to surf with them.

Francesco Grieco joined Paramit in 2002 and has since designed numerous methods, processes and systems to increase productivity throughout the company. We’d like to thank Francesco for his time and for helping us better understand the role of Operations Management in a contract manufacturing environment.