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Direct Procurement Lean Manufacturing and Indirect Procurement ...


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Direct Procurement Lean Manufacturing and Indirect Procurement ...

  1. 1. The Introduction of Lean Manufacturing Concepts at Qualcomm
  2. 2. Introduction: Agenda <ul><li>The Value Chain </li></ul><ul><li>Lean Concepts </li></ul><ul><li>Benefits of Lean Manufacturing </li></ul><ul><li>2 Oracle Instances </li></ul><ul><ul><li>The QCT instance </li></ul></ul><ul><ul><li>The Quantum instance </li></ul></ul><ul><li>Why 2 instances? </li></ul><ul><li>Separation of Production and Non-Prod Procurement </li></ul><ul><li>2007 Implementation Sites </li></ul>
  3. 3. The Value Chain The Quantum value chain is driven by Qualcomm’s leadership position as the developer of CDMA technologies. QCT CDMA technologies accounts for 90-95% of QSCO demand, principally FFA’s and SURFS (test equipment used to test chip quality and functionality). The remaining 5-10% of QSCO demand is generated by QWBS (Qualcomm Wireless Business Solutions), which manufactures OmniVision and other wireless products. Value Chain Processes Market Products / Services Sell Products / Services Plan / Manufacture Distribution / Service & Support Procure Materials / Services Generate Demand Fulfill Demand Develop-Introduce Products / Services
  4. 4. Lean Concepts: The 5S System S ustain Discipline S hitsuke S tandardize Standardized Cleanup S eiketsu S hine Cleanliness S eiso S et-in-Order Orderliness S eiton S ort Organization S eiri Translation Meaning Japanese
  5. 5. Lean Concepts T O : F R O M : Inconsistent Inventory Kanbans, Min/Max and Safety Stock Demand Triggers Disconnected Forecasts Intelligent Forecasts Inconsistent Signal to Partner Defined Signal to CM Partner Complex Processes Radical Simplification Predominately “Push” “ Pull” from the Partner
  6. 6. Benefits of Lean Manufacturing <ul><li>Reduced inventory across the supply chain </li></ul><ul><li>Greater predictability around lead times and on-time shipments </li></ul><ul><li>Increased reliability  the right product at the right time at the right price </li></ul><ul><li>Better customer satisfaction due to greater accuracy in forecast delivery </li></ul><ul><li>Better data, robust processes and systems  management effectiveness </li></ul><ul><li>Increase control over quality, defects and root cause of defects (6Sigma) </li></ul><ul><li>Optimize operations between existing QSCO and “shelter” organization </li></ul><ul><li>Better manage throughput with new Contract Manufacturing partner </li></ul><ul><li>Position Qualcomm for rapid growth in emerging business and markets </li></ul>
  7. 7. 2 Oracle instances: The QCT Instance <ul><li>QCT instance has two application servers: 11.5.8 and 11.5.9 (lot controlled) </li></ul><ul><li>Quantum instance is an Oracle 11.5.10 instance, with min. customizations </li></ul><ul><li>Each organization “owns” its own inventory; common inventory items </li></ul><ul><li>QSCO (manufacturing) has no P&L, and will liquidate costs to other BU’s </li></ul>QCT Instance Qualcomm SAT Organizations FAB Suppliers PO for DIE items Service PO for FG items 3B2_C-I message from FAB 3B2_C-O message to SAT 4B2 message from SAT
  8. 8. 2 Oracle instances: The Quantum Instance
  9. 9. Why two instances? <ul><li>The QCT instance is geared to Qualcomm’s chip manufacturing business, is heavily customized, and uses “lot control” and other features that are not attractive to the Qualcomm discrete manufacturing businesses </li></ul><ul><li>The QCT instance uses two application servers, one Oracle 11.5.8 and the other, an Oracle 11.5.9 instance, primarily to support Oracle’s Advanced Supply Chain Planning (ASCP) engine </li></ul><ul><li>The QCT instance does not include project accounting, nor does it make allowance for international rollout </li></ul><ul><li>There is continuing discussion in the press about “spinning off” the chip business </li></ul>
  10. 10. Separation of Prod & Non-Prod Procurement Direct and NPI Shelter and Bldg M Indirect and Services Corp Procure
  11. 11. Quantum Implementation Sites SD1 SD2 Actual sites, 2007 rollout QMT Taiwan San Diego Tijuana, Mexico QMT San Jose India(3) China(3) Japan(2) Korea(2) UK(5) EU (DE, ES, FR, IT, NE, SE) (6) Mexico(6) Israel(1) Australia (2) Argentina (1) Brazil (1) Canada (1) Potential sites, 2008 + global rollout Indonesia (1) Russia (2) Singapore (1) South Africa (1) Taiwan (3) Vietnam(1)
  12. 12. Lean Manufacturing: Agenda <ul><li>Inventory Orgs Structure </li></ul><ul><li>ASCP Overview </li></ul><ul><li>Forecasts and Sales Order Drive Demand </li></ul><ul><li>Business Processes </li></ul><ul><ul><li>SCO (Supply Chain Organization) Procurement </li></ul></ul><ul><ul><li>Shelter Manufacturing and CM Procurement </li></ul></ul><ul><ul><li>NPI Procurement </li></ul></ul><ul><li>Quality and RTS Highlights </li></ul><ul><li>The concept of a “Virtual MRB” </li></ul><ul><li>Lean Manufacturing “to be” Model </li></ul><ul><li>Conclusion </li></ul>
  13. 13. Qualcomm Inventory Orgs Structure
  14. 14. ASCP Overview Generate Baseline Forecast Oracle Modules: In addition, DBI may be used for KPI / Metric reporting Collaborative Demand Planning Generate Consensus Forecast Capture Inventory Visibility Collaborate with Contract Manufacturer Generate Constrained Long Term Supply Plan Generate Short Term Manufacturing Plan Release Work Orders to Contract Manufacturer Release Purchase Orders to Component Vendor(s) Check Availability & Capacity (ATP) <ul><li>Demand driven by forecasts and Sales Orders (depending on OU) </li></ul><ul><li>As Demand drops into the Planners Workbench, Planners route “make” orders to MES (“Shop Floor Control”), material requirements are identified, and PO’s are created and transmitted to Suppliers via EDI (Harbinger) </li></ul><ul><li>Entire production procurement process is automated, end-to-end </li></ul>ODP ASCP Collaborative Planning iSupplier Portal Order Management
  15. 15. Forecasts Drive Demand into QSCO <ul><li>Forecasts or SO’s created in QCT, MUI, QMT OU </li></ul><ul><li>Demand is placed against QSCO OU, 3 inventory orgs </li></ul><ul><li>PO’s are generated and sent via EDI to suppliers </li></ul>
  16. 16. Adjustments to Plan made with Arrow Forecasts entered via spreadsheet Releases against Blanket PO (EDI 850) Sales Orders Drive Demand Forecast (EDI 830) Includes VMI, SOI, “toll manufacture”
  17. 17. Sales Orders Drive Demand Run ASCP Engine SIM versus REGEN Run PO’s using EDI 850 Forecast using EDI 830
  18. 18. ICG Process: Item is “Planning Enabled” PO’s marked with an “-NPI”
  19. 19. Oracle Configuration: Item Master (1 of 2) Defines period for which releases created Create Supply to Match Demand Indicates an “Active Item”
  20. 20. Oracle Configuration: ASCP Engine (2 of 2) ASCP Plan is not Constrained Enforced Demand Drives the Planning Engine
  21. 21. Quality and RTS Design Highlights <ul><li>Uses standard Oracle hooks from Procurement to Quality </li></ul><ul><li>8 Quality Collection Plans developed for each “state” an NC’ed item may take </li></ul><ul><li>Handles RTS for both Production and Ancillary Items </li></ul><ul><li>Covers all RTS scenarios: </li></ul><ul><ul><li>Credit </li></ul></ul><ul><ul><li>Outside Rework </li></ul></ul><ul><ul><li>SOI (Supplier Owned Inventory) </li></ul></ul><ul><ul><li>Legacy Receipts </li></ul></ul><ul><li>Utilizes standard Quantum shipping process (custom, integration with RTS) </li></ul><ul><li>Leverages standard Oracle WO/PO process to capture all relevant inventory consumption, item conversions, labor charges and other variances </li></ul><ul><li>Improves A/P debit memo process using the AP Open Invoices API for automatic debit memo creation </li></ul>
  22. 22. QUALCOMM “Virtual” MRB Process Automated Repair Vendor Disposition Sub (SQE) Scrap Factory Part is not salvageable and is scrapped. NC part is sent to outsourced repair facility Supplier MRB Sub RTS/RTV ( Credit/ SOI) Factory receives part, and after inspection (“reject”), transfers NC part to MRB Inventory. Scrap OSP Material Receipt into MRB Inventory RTS Process: Create OM Shipping Lines from Receipt Lines. “ Accept, Use as Is” “ Accept Use as Is” NC part is retuned to MRB Sub-inventory Rework: Manually Create Work Order for internal rework items NC Process Start RTS (Buyer) Hold Manual Work Order NC Rework Inv Move Key Collection Plans <ul><li>Master Main </li></ul><ul><li>Detail </li></ul><ul><li>Audit </li></ul><ul><li>Disp Master </li></ul><ul><li>RoHS-WEES </li></ul><ul><li>WFR Master </li></ul><ul><li>RTS Master </li></ul><ul><li>OSP Master </li></ul><ul><li>RCV INSP </li></ul>
  23. 23. Quality Automated Processes (incl. RTS) <ul><li>Automatic Creation of Sales Orders </li></ul><ul><ul><li>Trigger on RTS disposition </li></ul></ul><ul><ul><li>Utilize Item set up </li></ul></ul><ul><ul><li>“ Feed” Shipping documents </li></ul></ul><ul><ul><li>Create Vendor address (site) </li></ul></ul><ul><li>Automatic E-mail Notification to next Person in Chain </li></ul><ul><li>Reports </li></ul>
  24. 24. LEAN Process Flow “To Be” Model ERP Order Mgmt Resp MPS Planning Contract Manufacturer ERP Qualcomm Supply Chain Partner MRP Planning ROP Sizing Costing CM Pack-out CM Dist Site #`1 Transfer FGI to Company CM Dist Site #2 CdeC Site On line Orders Customer Health Monitoring Eng Change Mgmt Bad Board/ Virtual MRB Process Pack-out Transit SLC Kanban/ROP Component Mgmt Kanban/ROP Kanban/ROP Kanban/ROP
  25. 25. Conclusion