1. © AberdeenGroup 2011
AMD’s Supply Chain:
Playing to Win
Supply Chain as a Sport
Michael A. Massetti
Corporate VP, Supply Chain
March 29, 2011

2. © AberdeenGroup 2011
Session Agenda
 Advanced Micro Devices (AMD) Company Overview
 Setting up the Challenge & Approach: The Game Plan
 The Game, The Rules, and The Statistics
 The Solution: The Play Book
 The Final Score
 Wrap-Up: Watching Film and The Next Game

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AMD: A leader in microprocessors and graphics!
Founded: 1969
HQ: Sunnyvale, CA, USA
Employees: ~11,000 worldwide
2010 Rev: $6.49B
Worldwide footprint
Major locations in the US, Canada, Europe, China, India,
Malaysia, and Singapore.
Leading the next era of vivid digital experiences with
ground-breaking AMD Fusion Accelerated Processing
Units (APU)

4. © AberdeenGroup 2011
The
Basics
The
Game
The
Rules
The
Stats
Offense /
Defense
AMD’s
Game
An innovative supply chain game plan starts with
several competitive elements
Understand the
Environment &
Competitors
Know the
Boundaries &
Field of Play
Definitions &
Understanding
are Critical
Performance
Management
Enables Victory
Setting Up the
Best Plays
Possible
AMD’s Game
Plan for SCM
“Victory”
“Perfection is not attainable. But if we chase perfection, we can
catch excellence.”
Vince Lombardi

5. © AberdeenGroup 2011
Winning the game requires understanding the basics and
key dynamics both on and off the field.
FROM … … TO
Globalization Localization
Supplier Push Operating Model Customer Demand Pull Operating Model
Transaction-based Relationship Solution-based Relationship
Influence of Direct Partners Influence End-to-End Value Chain
Price of the Silicon Value of the Platform
Component Level Support & Innovation Interchangeable IP Support & Innovation

6. © AberdeenGroup 2011
“The game” emphasizes a pure demand and supply value
chain seeking balance on both sides.
“Build up your weaknesses until they become your strengths!”
Knute Rockne
The Demand & Supply Management Value Chain
Market
Products /
Services
Sell
Products /
Services
Plan /
Manufacture
Distribution /
Service
& Support
Procure
Materials /
Services
Generate Demand Fulfill Demand
Develop-Introduce
Products /
Services
Manage
Product
Lifecycle
Execute
NPI /
Prototyping
Develop
Market
Intelligence
Understand
Customer
Demand
Generate
Demand
History
Procure
Materials
for Volume
Manufacturing
Generate
Supply Plan
Execute
Volume
Manufacturing
Manage
DC Inventory
Ship to
Customer
Procure
Materials
for NPI /
Prototyping
Key AMD Value Chain Participation Points
Drive Sales &
Operations
Planning

7. © AberdeenGroup 2011
The rules emphasize forward motion and innovation across
the field of play.
Product
Design
Marketing
SCM
Planning
Procure FAB ATMP Fulfill Channel
Finish Goods Flow Process
Feedback Loop
Feed-Forward Loop
MNC &
OEM
Customers
Suppliers
SCM
Platform
Facilities
Human
Capital
Competitive
Enablers
Business &
Run Rules
Planning
Manufacturing
Fulfillment
• Multi-Echelon Supply Chains & Segments
• Rapid Supply Chain Re-Configuration
• Flexible Supply Planning
• Global Virtual Manufacturing
Adaptable Supply Chain Elements
• Design for Manufacturing & SCM
• Quality Engineering & Lean Practices
• Predictive Indicators
• Revenue Enhancement
• Cost Containment
• Asset Productivity
Profitability “Sense & Respond”

8. © AberdeenGroup 2011
Critical Statistics highlight the effectiveness of our game
plan and drive towards each end zone.
S
U
P
P
L
I
E
R
C
U
S
T
O
M
E
R
SellHoldMoveMakeBuy Design
B2B Exchanges
External
Manufacturers
3PLs/4PLs
Channel
Partners & B2B
Planning
• Cycle Time
• Postpone Time
Forecast
• Forecast to Actual
• Long Lead Time
Inventory
• DB, WIP & Aging
• WIP/FG Turns
Fulfill
• On Time Delivery
• Customer Commit
Factory
• Yield & DPM
• Cost per KGD
“Generalities do not count and will not help you in football!”
Knute Rockne
Years
Quarters
Months
Weeks
Days
Hours

9. © AberdeenGroup 2011
High performance game plans rely on balanced offensive
and defensive approaches across the field.
S
U
P
P
L
I
E
R
C
U
S
T
O
M
E
R
SellHoldMoveMakeBuy Design
B2B Exchanges
External
Manufacturers
3PLs/4PLs
Channel
Partners & B2B
Offense
• Postponement
• Collaboration
• VMI versus CMI
• Simplify & Lean Up
Defense
• Time as an Ally
• Cycle Time Reduction
• Hard PO Reqs
• The “End Round”
• Sense & Respond
• The Diamond Model
• Protect Your “QB”
• Long Lead Time
“A lifetime contract for a coach means if you’re ahead in the third
quarter and moving the ball, they cannot fire you!”
Lou Holtz
Years
Quarters
Months
Weeks
Days
Hours

10. © AberdeenGroup 2011
 Key plays that determine supply chain success and
customer satisfaction.
AMD’s innovation playbook began in 2007 with emphasis
on Responsiveness, Agility, Velocity!
S
U
P
P
L
I
E
R
C
U
S
T
O
M
E
R
SellHoldMoveMakeBuy Design
B2B Exchanges
External
Manufacturers
3PLs/4PLs
Channel
Partners & B2B
Sales
Forecasting
Product
Allocation
Available To
Promise
Order
Management
In Transit & On-Hand
Inventory
Procure
Materials
Supply &
Demand Match
Distribution &
Lane MgmtShip
Planning
Transport
Mgmt
Master & Supply Planning
Material
Reqs
Planning
WMS &
Inventory Mgmt MES & Production
Control
Inv.
Targets
Line Item
Scheduling
Central Planning
Product Lifecycle Management Supply Network Design
Strategic Sourcing Customer Service
Play #1:
Offense: CTO /
Postponement
Play #3:
Defense: SOBR
Play #2: Special
Teams: I/EQSM
Years
Quarters
Months
Weeks
Days
Hours

11. © AberdeenGroup 2011
AMD’s Play # 1: Postponement strategies to enable the
“QB” to read the defense and adapt quickly!
 Forecasts will always be imperfect. Running a fast-paced
offense improves the SC ability to respond.
Play #1: Strategic FUM (CTO)
• Final SKU determination
occurs at the fuse & mark
• Postponing material at this
stage allows AMD to:
• Reduce cycle time &
improve SKU mix
• Run linear assembly and
test cycles
• Respond to mix changes
late in the ATMP cycle
• Deal with upside demand
faster
“Chalk Talk”
Die Bank /
Assembly
TMP (Test Mark
Pack)
FG
Assembly
Pack
Out
(KST / HST)
Fuse Mark
Pack (CTO)
ICL
1D 2D1 Week 2D
Wafer
Fabrication
Wafers
~13 Weeks
SFUM
(CTO)
(7-14 DOI)
Die Bank
(30 DOI)

12. © AberdeenGroup 2011
AMD’s Play # 2: Apply statistical thinking to the demand
signal for a better “read” of the opponent!
Play #2: IQSM
1. Map statistical model
against Billings/Backlog
• What we sell vs. What we
book!
2. Compare Ship Plan to
Billings/Backlog
• What we build vs. What we
book!
3. Map statistical model
against actual ship plan
• What we will sell vs. What
we will build!
“Chalk Talk”
 Watching film: historical patterns and in-quarter
backlog are great predictors of actual volume/mix.
-
SFC IQSM Orders Ship Plan
1. YtB
3. Slack
2. AtP

13. © AberdeenGroup 2011
AMD’s Play # 3: Knowing the rules and “timing” of the plays
improves customer responsiveness!
“The proper time to do the proper thing is before you have to do it.”
— Unknown
Play #3: SOBR
• Equips AMD to:
• Meet our product
demand requirements
• Increase supply visibility
• Verify channel position
• Accelerate PO changes
• Calibrate ship lead times
• Improve on-time delivery
• Accuracy of forecast
“Chalk Talk”

14. © AberdeenGroup 2011
A consistent Game Plan and balanced attack led to
significant Supply Chain improvements!
Inventory Turns (Finished Goods)
COGS %
Average logistics cost as % of revenue
% of orders delivered to first commit
Best in
ClassLeadingStandard
Key Performance Indicators
Supply/Demand Planning Cost as
% of revenue
Inventory Turns (Total)
If it doesn't matter who wins or loses, then why do they keep score?
Vince Lombardi

15. © AberdeenGroup 2011
Post-game wrap-up: team learning, effort recognition and
statistics measurement!
“When you win, nothing hurts!”
Joe Namath
Shareholder
Value
Enabling
Supply Chain
Basic Supply
Chain
“Blocking &
Tackling”
Postponement
Models
Integrated Supply
Chain Platform
Supplier
Collaboration
Multi-Segment
Supply Chain
Sense & Respond
Organization

16. © AberdeenGroup 2011
Thank you
Michael Massetti
Corporate Vice President, Supply Chain
AMD
512-602-6943
Michael.Massetti@AMD.com
Trademark Attribution
AMD, the AMD Arrow logo and combinations thereof are trademarks of Advanced Micro Devices, Inc. in the United
States and/or other jurisdictions. Other names used in this presentation are for identification purposes only and may be
trademarks of their respective owners.
©2011 Advanced Micro Devices, Inc. All rights reserved.

17. © AberdeenGroup 2011