STMicroelectronics was formed in June 1987 by the merger of two money losing state owned semi- conductor companies SGS Microelectronic of Italy and Thomson Semi- conducters, the semiconductor arm of Frances Thomson. It is an Italian French electronics and semiconductor manufacture headquartered in Geneva, Switzerland. In 2001 it become the no. 1 Europe based chipmaker in sales and no.3 in all over the world after Intel and Toshiba.
In December 2001 it was named as the “Best French Company of the Decade”. It has a wide array of product line. Specializes in memory chips, discrete components and many types of analog and mixed signal integrated circuits used in communication technology .
A proper supply chain management strategy has always been essential for ST to manage its broad range of product portfolio and processes as well as its strategic partnerships. In 1998, the premises of the e-chain optimization (eChO) project with one of the ST‟s major trading partners were settled . This project was a joint effort to streamline the company‟s planning and renew the current operations.
• Short product life cycle• Rapid price decline• Imposing customers• Costly operations with different facilities• Supply chain challenges• Inaccurate forecasting of the product demand• Lack of communication between the trading partners
Prior to ECHO project, ST and its trading partners were using manual processes Process started by email or fax spreadsheet containingweekly product demands in advance Demand forecasts were entered manually Production plan would reconcile with the information received Trading partners were notified by email of any manufacturing discrepancies that demands presented Planning process disconnected, time consuming and inaccurate.
each planning cycle took several weeks to complete inflexible and unresponsive to changes in market demands. Isolated planning and lack of integration High inventory levels and low capacity utilization reduced STs return on net assets production was planned two months in advance High level of inventory was kept to mitigate the impacts of demand variability
higher rate of capacity utilization and better service level can be provided To provide best in class supply chain management, four processes were needed for demand satisfaction : Planning Sourcing Making Delivering
MILLIONS OF UNITS SHIPPED EVERY HOUR. NEEDED A TOTAL SUPPLY CHAIN SOLUTION IN 1998 TRIED TO DEVELOPED A B2B STANDARD. IN 1999 ROSETTANET WAS THE BASIS
SHIPMENTS ON CONSIGNMENTS. ROBUST COLLABORATIVE FORECASTING DYNAMIC REPLENISHMENT TOOLS SYNCHRONIZATION OF DEMAND AND SUPPLY
RIGHT INVENTORYAT RIGHT PLACEAT RIGHT TIME OBTAINING “LOWER COSTS”
A non-profit consortium - Supports the high-tech manufacturing (end-to-end processes within vertical industry supply-chain) - Supports industry segments (electronic components, information technology, and semiconductor manufacturing) - Global in presence, participation and adoption A standards body - Creates standards which seek to … standardize the interaction process (public process) … standardize the data exchanged to support a business process An XML Implementation - Ready-to-implement XML implementation - PIPs are ready to download and implement today - High visibility, momentum, and adoption - Supported by broad set of software providers
WAS THROUGH PIP(PARTNER INTERFACE PROCESSES) PIP4A4:- NOTIFIES EXCHANGE OF DEMAND FORECASTS PIP 4B2:- NOTIFIES RECEIPT OF SHIPMENTS PIP 4C1:- NOTIFY DAILY INVENTORY REPORT PIP 3B2:- NOTIFY ADVANCE SHIPMENT PIP 3B3:- NOTIFIES SHIPMENT STATUS
FOUR MONTHS DEVOTED TO R&D 2001 FEB, NEW SYSTEM STARTED MONTHLY PLANNING CAPACITY MODEL FIRST ITERATION CHECKED MPS UPDATED SEVERAL TIMES DAILY PLANS RESET AT FINAL STAGE.
EVERYTHING AUTOMATED TOOK 4 TO 5 HOURS EACH REPORT SENT TO ST‟S B2B SERVER EACH FEED CONVERTED TO STXML FORMAT FED TO DRP(DISTRIBUTED REQUIREMENTS PLANNING) MODULE. OUTPUT OF DRP IS REPLENISHMENT PLAN
Vendor Managed Inventory is the process where the vendor assumes the task of generating purchase orders to replenish a customer‟s inventory.
CollaborationThe collaborative stage is critical in establishing the goals and key performanceindicators for the VMI relationship. Periodically, this stage is revisited to reviewcurrent performance and adjust or reconfirm the goals and constraints. The impactof this strategic collaboration is a commonality of metrics and focus betweensupply chain partners. PlanningThe key to automating a replenishment process, and achieving world-classinventory /service performance is employing comprehensive, dynamic, exceptionsbased replenishment software. Software tools that are comprehensive enough toeffectively manage a variety of demand patterns. Dynamic enough toautomatically detect and adjust to changing demand patterns, goals andconstraints. Exceptions based to allow for an automated flow of information andproduct when the outcomes are within expectation. If exceptions are detected, theyare analyzed for degree of importance and the user is automatically prompted foraction.
ExecutionIn dynamic, volume intensive supply chains inventoryconditions can change suddenly. Each day the current supplychain are analyzed against the plans to automatically determinethe course of action.When the Collaboration and Planning stages are done properly,the Execution stage becomes automated with very fewexceptions, requiring scant human interaction on a daily basis. AssessmentThe old adage holds true in VMI, what gets measured gets fixed.The Assessment stage tells the VMI partners how they are doingagainst the goals. And within the software, diagnosticinformation is fed back into the planning stage in a continuouseffort to close the gap between theory (plan) and reality (result).
Benefits Of ECHO•common and convenient Platform for B2B messaging between ST andits trading partners.•Improved ST‟s process efficiency•VMI model resulted in a significant reduction in inventory levels. Bufferinventory was no more required.•ST was able to cut out totally the four weeks of planning cycle time andthereby reduce the total planning and manufacturing cycle time by50%, from eight to four weeks•To achieve the required short lead times and high degree of flexibility, STarticulated clear goals for each step in its Plan to Delivery process re-engineering.
• ST has become 10 times more responsive due to improved inventorymanagement.• Identified bottlenecks and worked to mitigate them to improve supplychain efficiency.• Accurate forecasts allowed the company to serve more customers andincrease its capacity utilization by 30%.• ST could capitalize on rush orders, and thus provide an identifiable value-added service to the customer.
Challenges and Costs Associated With the ECHO Project• the benefits were not realized without a cost• while it was expected that in the long run the higher degree of automationwould lower the company‟s Labour „in practice the echo project led to anincrease in the required man-hours for planning activities at ST.• Implementing the Rosetta Net standards was also quite complicated andrequired substantial resources• Correct security infrastructure to protect the highly sensitive informationthat was being exchanged.
Expanding New Processes to Other Trading Partners• ST achieved the intangible benefit of increased customer intimacy andlow inventory cost.• However, it was clear that to maximize the return on its investment, ST hadto expand the implementation of the new processes to additional tradingpartners• Tremendous infrastructure and knowledge base was in place, each newimplementation would likely require much smaller investments while yieldingsimilar benefits, thus significantly increasing ST‟s return on investment.• However, there was a lot of uncertainty in the extent to which ST couldexpand this to new trading partners so the work is in progress.
THUS ST MICROELECTRONICSREVOLUTIONIZED THE SEMICONDUCTORMANUFACTURING AREA BY OPENING IT‟SGATE TO ROSETTANET AND MINIMIZED IT‟S EXPENSES ADDING ULTIMATELY TO IT‟S PROFITS.