Quality Charter

Jim Beck, OptoElectronix CTO and Chairman, on Quality

Early in my career, which as can be seen was a long time ago, I was a design engineer at General Motors. In those days, a car radio consisted of hundreds of discrete components, soldered in place on a single-layer (two layer considered unreliable) PCB. The board would be assembled into a metal box with connectors, transformers, knobs, lights, etc. and then manually aligned and tested. That was a pretty complicated system by early 1970s standards.

It was the Company's policy in those days to maintain a 2% customer return rate. In other words, for every hundred cars that left the factory, it was expected that two would come back to the dealer to have the radio removed and repaired. The theory was that a return rate of greater than 2% indicated that too many customers would be affected and the remedy for that high return rate was to increase the testing of finished radios before they left the factory to get the "quality level up". If the return rate dropped below 2%, that indicated that "too much money" was being spent on Quality Control. Some would argue that there must be people left at General Motors who still think that way but the rest of us have learned at least three important things about quality.

The first is that quality cannot be tested into any product; it has to be built in. Poor quality products can be tested and retested until every last one fails but the quality of the lot will never get any better than it was when it was first manufactured. In order to manufacture a high quality product, every single component, material and process must be designed and controlled to produce the quality level expected in the end product.

Secondly, it does not cost more to produce high qualify products than it does to produce lower quality ones. Actually, the opposite is true. In the final analysis, it is less expensive to build it right the first time and the way to achieve the lowest possible overall cost is to produce the best quality product.

Finally, there is no customer return rate that is acceptable other than zero.

At OptoElectronix our goal is to produce products of the highest quality and to deliver them on-time to our customers at a competitive price with zero product failures. To the extent we are able to do that, we are able to meet our Company goals of growth and profitability. Doing it means that we need to approach each new opportunity with the following principals in mind.

OptoElectronix Inc. is a manufacturing company. That means that we don't do contract design work for profit. Instead, we design products in cooperation with our customers, which can be manufactured in our captive manufacturing facilities in the most efficient manner possible. Our quotations are always organized around a manufacturing contract, specifying lead-times, production quantities, delivery dates and unit pricing.

There is usually an NRE component to our quotation. The NRE is designed to recuperate our direct engineering costs, including the actual time and material costs of our employees and consultants, required to design the product. But it covers more than the product design; it includes all of the process specifications, production flow documentation and quality management details needed to put the product into volume production.

Our quotations will very often include a tooling component. This covers the cost of plastic molding tools, metal stamping dies, artwork, etc. but it also covers production fixturing. A major component of good quality manufacturing has its roots in automation. Humans are not good at doing things, millions of times, over and over again. Machines do a better job and machines need jigs, fixtures and firmware, made specifically for each product. There are times when it is not apparent that the production volume justifies the level of mechanization being proposed. Those are times when it is important to remember that automation is not just a way of reducing manual labor; it is a necessary and major component of good quality as well. Generally these tooling items become the property of the customer but are maintained and replaced as required by OptoElectronix Inc.

In as much as OptoElectronix is structured as a manufacturing company; in addition to not doing contract design work, we also do not do subcontract assembly work. In other words, we work closely with our customers to design and manufacture the best quality products for their needs but, in our experience, to separate the design effort from the manufacturing process usually does not lead to an optimum solution. We strongly believe that products must be designed to fit an existing manufacturing process; not the other way around. That can only be done when the manufacturing people in the factory are involved in the product design process.

Many new products are designed these days in the USA to then be subcontracted to production plants in China. While it is true that the labor rate is much lower in China than in Malaysia, experience suggests that the base labor rate is not the largest factor in determining product cost. China manufacturing can be an effective solution for toys and low cost consumer items but markets such as industrial and medical instrumentation require optimum quality which is currently difficult to find there. These higher quality standards cannot be realized using manual labor alone. It is possible only with a much higher level of manufacturing sophistication and mechanization. That situation is sure to change over the next decade and we will move certain operations to China as the infrastructure there improves. Currently OptoElectronix, with manufacturing headquarters in Penang, Malaysia is a ready, willing and able partner to customers who find themselves suffering from quality problems, product performance problems, ramp-up problems or business/commercial issues, stemming from manufacturing sites in China or elsewhere in the developing world.