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AdvancedTEK Company Profile

: Feb. 1998 ( Office Now: Taipei, Hsinchu, Shanghai) : ERP/SCM/EB : 80 Sites : 60% : PDM: PTC/Windchill
EM: EB:

BizTalk, Netfish
CRM: SCM: ERP:

S A P

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AdvancedTEK International

AdvancedTEK Market Positioning

Traditional Strategy Firm

STRATEGY CULTURE VALUE BIZ ARCHITECT MANAGEMENT ORGANIZATION STRATEGIC PLAN BIZ PROCESS TATICS CHANGE
IT ARCHITECT SOLUTION IMPL

Big 6 (Big 5 + AC)

AdvencedTEK Intl Corp.

SW Vendor Service Org

Local SI & SW House

TECH DEVEL CUSTOMIZATION LOVALIZATION SW DEVEL.

Solution Landscape
Design Collaboration Product Configuration Manufacturing Process Planning

Collaborative Product Management (PDM) Demand Chain (CRM) Supply Chain (SRM)
Qualification

Collaborative Planning (EAI, EHI)

Specification and Development Planning and Execution Sourcing and Procurement Quoting and Fulfillment

Product Configuration Marketing Forecast Ordering and Tracking Order Service

Sourcing

Supply Chain Management (SCM) Enterprise Resource Planning (ERP)

Procurement

Monitoring

B-B, Portal, Marketplace E-Logistics

Service Landscape

Assessment R&D Implementation

Hosting Integration

Customization

Partial Customer List

NEC Johnsons & Johnsons


V.S.

 ?
/ (Strategy/Innovation Gains) / (Technology/Knowledge Gains) (Management Gains)

(Commodity)

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 Commoditization
Globally the commoditization of products, sectors and markets is accelerating. Differentiation, innovation and cost leadership are crucial.

i g h

From Transform Your Supply Chain - Releasing Value in Business, Jon Hughes, Mark Ralf, Et Bill Michels

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( ) ( Hierarchy ( Push ) ) (Self Sufficiency ) (Partner as a Last Resort ) (Products Orient ed)

(&) (Network ( Push & Pull )) (Interdependencies) (Long-term Partner Opportunistically ) ( Core Competencies )

(Static , (Dynamic Goals ) Efficient Goals) / (Synergy / (Competition ) Synchronization ) (Company (Supply v.s. Company ) Chain v.s. Supply Chain ) (Inter media ry) (Infor mediary)
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 ( I )
( Push ) (Local Optimization)

(R&D)

/ / /
(Sales/Marketing) (Procurement)

( & Push &

(Production)

(Distribution) (Finance) Pull) & Service

Integrated & Synchronized Chain

(R&D)

/ / /
(Sales/Marketing) (Procurement) (Production) (Distribution) (Finance)
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 ( II )
Supply Flow

(Supplier) ( Distribution) (Retailer)

(Customer)

Demand Flow
JIT and Quality Material Flow

(Supplier) ( Distribution) (Retailer)

(Customer)

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Qn-time, Accurate and Paperless Information Flow


Open Competition

Emphasize rigour and tough barganing. From Suppliers Suppliers to Customers Customers

Link up all the players in a horizontal supply chain. Emphasize seamless delivery, optimization and integration. Dominate or Die

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( M

a s s
16

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(Leading- Edge Technology
Innovation) ( Quick Follower (TTX) and Differentiation )
( Global Supply Chain Management) ( Focus on Core Competence)

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Generic SCM Model

Suppliers

Ven dor s Ma ke Mo ve
Distribution

Manufacturing

Sel l
Retail

Cus tom e

rs

Customers

From: i2 presentation materials

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Semiconductor SCM Model

Integrated Device Manufacturer
- CPU - Memory - DSP - Network - Communication - Automotive

Fabless Design House

Reticle Mfg.

Reticle s

- Memory - ChipSet - Graphics - Network - Communication - Gate Array (FPL) - ASIC, ASSP - Power MOSFET - Sound/Music

Computer Communication Consumer

Packaging Die

Tested IC

Wafer Mfg.

Raw Wafer

Wafer Fabrication

Wafer Device

Wafer Sort

Probed Wafer

Assembly Packaging

Final Test

Equip. Mfg.

Memory IC

DRAM Module

Module Assembly 20

Massive Lot Tracking Information

m x n combinations
Reticle Mfg.
Reticle s

Fabless Fabless Design House Design House

Wafer Mfg.

Raw Wafer

UMC UMC TSMC TSMC CSM CSM

Wafer Device

Wafer Wafer Sort Sort

Probed Wafer

SPIL SPIL ASE ASE ANAM ANAM

Packaging Die

SWC SWC AST AST

Tested IC

Equip. Mfg.

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EE Supply Chain Model

PKG MATL ASIC MFG PCB WH INST TEST INSP JPN PCBA ASSY/ PKG FG SHIP

Material Planning

Demand/ Distribution Planning

WH DELIVER

USA

UK

TWN

Capacity SMT Planning

TESTER

OPER

HQ & MFG Site

Regional Distribution Center & Sales Channels

OEM

DIST.

Mfg Process Overview

Suppliers

Procure

Matl 6,000s

Mfg.

PCBA 200s

Assy /Pkg

FG 600s

Ship/ Deliver

DC/ Overseas 10s

ASIC: 10 wks PCB: 4 wks Major: 4 wks Minor: 2 wks

7 - 14 Days

2 - 5 Days

1 - 3 wks

600s FG 200s PCBA 6,000s Matl

Logistics Issues-Opportunity
USA Market
Transportation $400 billion Distribution $41b Import/Export $81b Inventory Carrying costs $256b(excluding distribution) Inventory $1.325 trillion

Some efforts to reduce inventory investment have merely shifted the burden

Assume 40% Savings in inventory carrying costs.

What a big savings!

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Integrate, Synchronized, Lean, and Responsive Flow of Materials, Information, Funds, Processes, Services, and Organizations from Suppliers Suppliers to Customers Customers.

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Supply Chain Characteristics

(B u ll w h ip Eff ec t)

IC

IC

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 (Bullwhip Effect) pp.165~194

Order variability is amplified up the supply chain Upstream is worse Information distortion : What you see is not what they face Beer Game Phenomenon

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Increasing Variability of Orders Up the Supply Chain

From Coordination and Speed in Demand Management , Hau Lee

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P&G

3M

From: Hau Lee Lecture Materials

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[Sterman] [Hau Lee]

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 (Demand Forecasting) (Batching Effect) $35~$75/Per Order Process in 1993 Quarter End, FTL Discount (Price Fluctuation) (Shortage Gaming) (Lead time)
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=>Information Distortion =>

 .( )-(I)
Forward Buy: 80% transactions between mfgers & distributors in grocery industry $75~$100B of inventory in grocery industry(special discount, terms) Antibodies in pharmaceutical industry > 1yr supply

From P&G Presentation Material , G.Y. Wang

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 .( )-(II)

From P&G Presentation Material , G.Y. Wang

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 .( )-(III)

From P&G Presentation Material , G.Y. Wang

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 .( )-(IV)

From P&G Presentation Material , G.Y. Wang

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--
From P&G Presentation Material , G.Y. Wang

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 - - ; - ; - -
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POS/EDI (Sell-Thru), VMI, Lead time Reduction, Consumer Direct, CPFR CRP, 3PL/Consolidation, Mixed SKU TLs EDLP (In 1994, P&G Gained the Highest Profit Margin in 21 Years But Reduced Its List Price By 24%) reduces forward buy and promotion Allocation Based on Past Sales
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(Information Distortion) (Asynchronized Channel) (Chain Complexity) (Inefficient Operations) (Cultural Problems)

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MPS Key problem : (Lead rime) One of obvious solutions : (Accurate and Quick Response; AQR)----
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 (QR)
QR :(The substitution of information for inventory.) [From:Christopher]

( S e r v
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AQRQR with the effective management of the supply chain.


L C e s s I m p a c t f r o m o m p o n e n t P r i c e F l u c t u a t i o n L e s s S c h e d u l i n U n c e r t a i n t y g

R L

e d u c e e a d t i m

e w

e r

r e c a s t

r r o

r E

e s s C N s

e s s I n v e n S u p p l y C

t o r y L i e n s ts h P e i p e l i n h a i n I n v e n t o r y

F R e l a x e d B E f f e c t u l l wL he si ps S a f e t y S t o

e w e r M t 'l S cU k n e x p e c t e d

h S

B D

e t t e r O n - t i m e e l i v e r y / C u s t o m S e r v i c e

e r

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HP Deskjet Supply Chain Management Case Study

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HPs DeskJet Industry Characteristics

Rapid Changing Technology. Highly Competitive Market. Commodity Product w/ Changing Marketing Channels. Quality/Reliability/Availability Are Important. Decreased Product Loyalty.
From: Case Study: Hewlett-Packard: Deskjet Printer Supply, Hau Lee

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The Vancouver Supply Chain

IC Mfg-Integrated Circuit Manufacturing PCAT-Printed Circuit Assembly and Test FAT-Final Assembly and Test Print Mech Mfg-Print Mechanism Manufacturing
From: Case Study: Hewlett-Packard: Deskjet Printer Supply, Hau Lee

p
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Problems Faced
Forecast nightmare Higher inventory and imbalanced inventory Lower customer service Terrible Bullwhip Effect

From: Case Study: Hewlett-Packard: Deskjet Printer Supply, Hau Lee

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Sample Demand Data November 89 to October 90

From: Case Study: Hewlett-Packard: Deskjet Printer Supply, Hau Lee

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Suggested Alternatives
Using Better Forecasting Model Manufacturing In Europe Delivery Through Air Developing Universal Product Building Core Product at Vancouver, Customizing in European DCs (Localization): An Application of Postponement

From: Case Study: Hewlett-Packard: Deskjet Printer Supply, Hau Lee

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Supply Chain with Postponement

manufacturing & customization

transport

distribution

manufacturing

transport

Distribution localization
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From: Case Study: Hewlett-Packard: Deskjet Printer Supply, Hau Lee

 (Postponement)
(DFSCM) (By Hau Lee) Logistic Postponement Moving customization point closer to customers. Form Postponement Delaying differentiation point by standardization

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The P/S-MATRIX AND GENERIC SUPPLY CHAIN P/S-STRATEGIES

Logistics
Speculation
Decentralized inventories

Postponement
Centralized inventories and direct distribution

Speculation

Manufacturing

Make to inventory

The full speculation strategy The manufacturing postponement strategy

The logistics postponement strategy The full postponement strategy

Postponement
Make to order

From: Supply Chain Postponement and Speculation Strategies: How to Choose the Right Strategy, Pagh &Cooper 53

ILLUSTRATION OF THE FULL SPECULATION STRATEGY

Production plant

Plant of central warehouse

Optional Final Retailer/ levels of warehouse Customer distribution level warehouses

From: Supply Chain Postponement and Speculation Strategies: How to Choose the Right Strategy, Pagh &Cooper 54

ILLUSTRATION OF THE MANUFACTURING POSTPONEMENT STRATEGY

Production plant

Plant of central warehouse

Optional levels of distribution warehouses

Final Retailer/ warehouse Customer level

From: Supply Chain Postponement and Speculation Strategies: How to Choose the Right Strategy, Pagh &Cooper 55

ILLUSTRATION OF THE LOGISTICS POSTPONEMENT STRATEGY

Production plant

Plant of central warehouse

Retailer/ Customer

From: Supply Chain Postponement and Speculation Strategies: How to Choose the Right Strategy, Pagh &Cooper 56

ILLUSTRATION OF THE FULL POSTPONEMENT STRATEGY

Production plant

Retailer/ Customer

From: Supply Chain Postponement and Speculation Strategies: How to Choose the Right Strategy, Pagh &Cooper 57

The P/S-MATRIX, AND IMPLICATIONS RELATED TO EACH GENERIC SUPPLY CHAIN P/S-STRATEGIES
Logistics
Speculation
Low production costs Speculation High inventory costs Low distribution costs High customer services Manufac

Postponement
Low production costs Low/mid. inventory costs High distribution costs Low/mid. customer services Mid./high production costs Low inventory costs High distribution costs Low customer services

turing

Mid./high production costs Postponement Mid./high inventory costs Low distribution costs Mid./high customer services

From: Supply Chain Postponement and Speculation Strategies: How to Choose the Right Strategy, Pagh &Cooper 58

/
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From: Designing Products and Process for Postponement, Lee and Billington


Product Modularity) Product Postponement Process Modularity Group Technology Resequencing Concurrent Processing

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Logistic Postponement by Process Re-sequence : Sears

From Design for Supply Chain Management , Hau Lee

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Postponement Application

From Design for Supply Chain Management , Hau Lee

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Concurrency by Process Decoupling

Canon

From Design for Supply Chain Management , Hau Lee

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1) (process) ? D.C. Distributor

2) (justify)?

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Redesign Costs, Module Safety Stock, Finished Goods Inventory, WIP, Testing, Freight, Customs & Duties, Fixed Investment, Extra Training at DCs, Leadtime, Forecast Errors, Schedule Accuracy, Material Shortages?

From: Case Study: Hewlett-Packard: Deskjet Printer Supply, Hau Lee

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THE CONCEPT OF THE PROFILE ANALYSIS

See Paper Figure 8.

From: Supply Chain Postponement and Speculation Strategies: How to Choose the Right Strategy, Pagh &Cooper 66

USING THE PROFILE ANALYSIS; A MAINSTREAM PRODUCT HAS BEEN PROFILED

See Paper Figure 9.

From: Supply Chain Postponement and Speculation Strategies: How to Choose the Right Strategy, Pagh &Cooper 67

V a lu e P o s tp o n
Forecast Uncertainty Inventory Risk Shortage Cost
From Design for Supply Chain Management , Hau Lee

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 VS.

Total Value of Postponement

Life of Product

From Design for Supply Chain Management , Hau Lee

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 VS.

Uncertainty Demand Variability Option Correlations Forecast Horizon

Postponement Value Higher for higher variability Higher if negative ; Lower if positive Higher for longer horizon

From Design for Supply Chain Management , Hau Lee

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Resistance Encountered
R&D: Not my job Why rock a successful product? Violating TQM principle Distribution Center: More work No experience in manufacturing No experience in procurement, BOM, and MRP
From: Case Study: Hewlett-Packard: Deskjet Printer Supply, Hau Lee

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Results
Deskjet redesigned to be DC-localizable. Implementation in early 1992. Millions of dollars saved, from inventory and service improvement, and freight reduction. Innovative packaging won patents. All Vancouver products now DC-localized. Vancouver as showcase for Design for Localization. Best Case Study: Hewlett-Packard: Deskjetto otherHau Lee divisions. From: practice spreads Printer Supply, HP
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Sport Obermeyer Ltd. Supply Chain Management Case Study will be discussed on 5/5

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