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Modeling Profitable Semiconductor Fulfillment: Part One of a Series on Inventory Buffers
Modeling Profitable Semiconductor Fulfillment: Part One of a Series on Inventory Buffers
Modeling Profitable Semiconductor Fulfillment: Part One of a Series on Inventory Buffers
Modeling Profitable Semiconductor Fulfillment: Part One of a Series on Inventory Buffers
Modeling Profitable Semiconductor Fulfillment: Part One of a Series on Inventory Buffers
Modeling Profitable Semiconductor Fulfillment: Part One of a Series on Inventory Buffers
Modeling Profitable Semiconductor Fulfillment: Part One of a Series on Inventory Buffers
Modeling Profitable Semiconductor Fulfillment: Part One of a Series on Inventory Buffers
Modeling Profitable Semiconductor Fulfillment: Part One of a Series on Inventory Buffers
Modeling Profitable Semiconductor Fulfillment: Part One of a Series on Inventory Buffers
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Modeling Profitable Semiconductor Fulfillment: Part One of a Series on Inventory Buffers

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A Supply Chain/Planning Department Check List for rationalizing semiconductor inventory strategy in the electronics supply chain. This presentation by Dean Strausl, the founder of the Electronic …

A Supply Chain/Planning Department Check List for rationalizing semiconductor inventory strategy in the electronics supply chain. This presentation by Dean Strausl, the founder of the Electronic Supply Chain Association (ESCA), is the first in a series. Tensoft is sharing it here with Dean Strausl's permission.

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    • 1. Modeling Profitable Semiconductor Fulfillment Part One of a Series Inventory Buffers A Supply Chain/Planning Department Check List for rationalizing semiconductor inventory strategy in the electronics supply chain
    • 2. Semiconductor Supply Chains: Defining Inventory Buffers 86 Fabrication Fabrication Fabrication DB FGS Customer Customer Customer Customer Customer Disti Die Bank Provides Protection From Forecast/Yield Uncertainty Push-Pull (Decoupling) Point Backend Finished Goods Stocks Provide High Fill Rates and Manufacturing Flexibility Lets You Treat Fabrication as Your Supplier, Insulating “Push” From “Pull” Enables Your Role in Customers ’ Supply Chains
    • 3. Buffer Inventory
      • Semiconductor manufacturing lead times (months) require that product is “pushed” into the pipe based on forecast, buffered and “pulled” out of the pipe to fill customer demand
      • Buffer inventory is a necessary element of profitable fulfillment strategy
      • Buffer inventories are planned and initially based on product/market characterization
      • Inventory is factored in light of fulfillment strategy, uncertainty and risk tolerance.
      • Well planned buffers maximize fill rates while minimizing risk
    • 4. Factors in Modeling Inventory Buffers Historical Run Rates Customer Service/Fill Rate Goals 87 Fabrication Fabrication Fabrication DB FGS Uncertainty Customer Customer Customer Customer Disti Replenishment Lead Times Product Life Cycle Costs of Shortage/Overstock Push-Pull (Decoupling) Point Backend
    • 5. Decoupling
      • Decoupling point is where “push” stops to wait for “pull”
      • These decoupling points are planned and create buffers
      • Buffers used for postponement improve flexibility and reduce cost and risk
      • Characterization of products and demand determine strategic decoupling points and therefore the buffer location
      • Fill rate strategy plays an equally important role in determining buffer distribution
    • 6. Key management practices in fulfillment Some End Items Have Continuing, High Volume Demand: Moderate Stock, Build to Forecast Fabrication Fabrication Fabrication DB FGS Customer Customer Customer Customer Customer Disti Push-Pull (Decoupling) Point Backend Some End Items Have Unreliable, Sporadic Demand: Minimum/Zero Stock, Build to Order Some End Items Have Persistent but Uncertain Demand: Significant Stock, Build to Replenish Higher Fill Rates Lower Fill Rates
    • 7. Uncertainty
      • It is all about guessing
      • Guess on the high side and you have the consequences of overstock
      • Too conservative and you incur the wrath of the affected customer base
      • Guessing is a cross functional exercise
      • Corporate strategy should be clear to every level with clearly defined metrics to judge performance
    • 8. Uncertainty: the Costs of Overstock and Shortage Total Economic Costs ($) Inventory Investment Lost Design Wins Obsolescence Revenue Lost Competitive Inroads Learning Curve Improvements Holding Costs Just Right! Shortage Overstock 83
    • 9. In Closing
      • Two important variables:
        • 1. Time is the predominant cost lever of the supply chain (transport times, cycle-times, ...)
        • 2. Managing uncertainty is fundamental to successful supply chain management
      • Reduction in time will follow a reduction in uncertainty
      • Reduction in uncertainty will follow a reduction in time
      • Total supply chain cost reflects both
      • Postponement , well planned buffers , is a key supply chain strategy for reducing both time and uncertainty
    • 10. About Dean Strausl [email_address] 408 438 8800
      • Consults to companies throughout the electronics supply chain
        • Helps semiconductor companies and their customers rationalize months long semiconductor manufacturing cycle with dynamic consumer demand
        • Make sense out of new emerging Integration driven supply chain model
        • Implementation of collaborative and scalable planning process
        • Training and business simulations
      • Collaborates with and advices providers to the electronics supply chain
      • Highlights
        • Founder of four contract manufacturers
        • Architect/implementer of the semiconductor planning model
        • Semiconductor Supply Chain Orientation Lab – training school
        • Founder Electronics Supply Chain Association
        • Pioneer in supply chain integration for the fabless industry

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