Supply Chain Planning Blog

Why Lot Release is So Important in Semiconductor Manufacturing

Posted by Cyrus Hadavi on Thu, Jun 08, 2017

If I arrive on-time or early at the airport but there is a problem with the airplane and a long delay in the scheduled takeoff time, does it get me to my destination on time? Clearly the answer is No! Is it better for me to stay in the comfort of my home and go when I know the plane is ready to take off? Or even better, find another flight to my destination so that I get there on time. By going to the airport at the “wrong time” and waiting I am only increasing “WIP” or waiting time and I am also contributing to airport congestion which adds to the traffic and boarding of other flights possibly causing others to miss their flights.  Such problems can be avoided by an intelligent planner or, release strategy, that can figure out exactly what the right time is for me to leave home given the traffic situation, the speed of cars, the parking time and time it takes to go through security. This kind of predictive planning is ideal for releasing lots in a semiconductor manufacturing line where depending on the mix of products, availability of resources and masks as well as WIP, it can decide which lots should be released and which ones should be held back so that we meet the following three objectives optimally:

  • Cycle time
  • Equipment utilization
  • Delivery performance

The following diagram shows the relationship between these three parameters and how they change with WIP increase. In a high mix environment, increase in WIP does not necessarily imply additional wait times or delay in delivery because of multiple routes and balance of allocation of jobs by the system. The grey shaded area represents optimal region of operation where the desired objectives can be achieved.


In environments where there is a high mix of products, such as foundries, we can increase the number of lots released without increasing their waiting time by ensuring that they are balanced across different bottleneck equipment such as lithography equipment. Given the complexity of such environments where each process has 400-600 steps using hundreds of equipment requiring anything from 10 minutes to 10 hours with highly sensitive set up times (implanters) or batching requirements (ovens), one has to intelligently look ahead and look behind to ensure proper balance of lots re-entering the process and or entering the process with different priorities.

Unfortunately, sequencing engines with simplistic rules have been given too much attention in order to solve such a complex problem. Through years of R&D, we have concluded that unless a proper release strategy is deployed, sequencing would not be of much value. It is a reactive engine not a preventive one. But more importantly, in the presence of an adequate release strategy, sequencing can be a liability in the sense that it would try to resolve issues locally not being aware of the potential issues it might be causing 50 steps later! Can you imagine being at the gate, and the airline personnel try to sequence your entry into the plane when the plane is not even at the gate or being fixed!

One other myth is the use of simulation tools to plan fabs! Simulation tools look nice and show movement. It is like a video game, we all enjoy watching it. However, they DO NOT PROVIDE a strategy. They only show you where the problem might lie ahead without telling you how to avoid it. How could they? They do not look ahead; by definition simulation is one sequence at a time!

As in our opening example, a good release strategy is aware of the right mix of products in the fab as well as the work load of each equipment, now and future, and is constantly trying to balance what needs to go next such that the bottlenecks, as they are changing, will be fully utilized and at the same time keeping in mind which lots need to be ready and when for on-time delivery. In fact, our research shows that in the presence of a good release strategy, a simple FIFO is the best sequence for the resources. In the context of our airport example, if you left your home at the right time, as you approach your gate, without much waiting, you will show your boarding pass and get into your seat for takeoff.  No need to be sequenced!

Topics: Supply Chain, Supply Chain Planning, Supply Chain Performance Management, Manufacturing Software, Manufacturing Planning, Inventory Optimization, Semiconductor, Factory Planning, Fabrication planning

Spreadsheets and Planning

Posted by Cyrus Hadavi on Wed, Apr 06, 2016

Givspreadsheet.jpgen that more than 90% of the enterprises in the world use spreadsheets in one form or another, one may conclude that spreadsheets are the most desirable and successful enterprise software in the world! So, why would you want tospend so much money and effort to invest in planning software? The justifications to use spreadsheets are that they are simple, easy to manipulate and they “do the job!”  There are a number of reasons, discussed below, that make spreadsheets inadequate for planning purposes. Mostly the fact that just an ad hoc plan can be far inferior to other more optimized plans; and in the absence of suitable systems and algorithms, one cannot tell one from the other. I am sure you have heard of the expression: good is the enemy of great! In case of spreadsheets, it is merely the perception of good that is preventing companies to do something exceptional and distance themselves from their competition! It is amazing that companies invest hundreds of millions of dollars in people and equipment and then rely on a simple spreadsheet to run their business and make use of the resources that they have so heavily invested in. Every one percent improvement in plan can translate into millions, if not tens of millions, of dollars in inventory savings and higher utilization of resources. In fact, it is more than just savings that need to be considered; it is more relevant to know that there are opportunities for increasing revenue and market share, by deploying adequate planning systems. More recently companies have been investing more heavily in supply chain execution systems such as warehouse management and logistics or even shop floor sequencing. The problem is that executing without a good plan results in a more efficient way of doing the wrong thing! What is the point of building and delivering the wrong goods to the wrong place in an “efficient” manner? Planning prevents making costly mistakes, it makes companies more responsive, it shows where to spend money before it is spent and it creates opportunities to expand market share by having the right product at the right place at the right time. A multinational CPG customer of Adexa with over 100distribution centers reduced inventory by 33%, reduced material cost by 5% and improved delivery performance by deploying planning systems that enable optimization and improve visibility of the entire supply chain. ROI for the project was over 2100% realized within half a month! The point is that before deploying Adexa, they were running a successful and profitable business but could not see the hidden potential of their supply chain and opportunities that could be exploited using a more sophisticated system.

There are many reasons that make spreadsheets less than ideal for planning purposes. Spreadsheets cannot account for mix of products (different mix results in different capacity needs and different lead-times). They assume fixed lead-time whereas in reality lead-times are variable depending on the mix. In addition, they do not take into account availability and synchronization of material and capacity at the same time. Furthermore, there are myriads of other constraints such as tool availability, setup times, batching possibility, process and product attributes etc. that all need to be accounted for that spreadsheets cannot model. Many users are fond of spreadsheets because they can manually manipulate the plan.  The question is why is there a need for manual interaction? The answer lies in the fact that the plan that is being created is not accurate enough to execute therefore requires manual adjustments.  The planning systems create an accurate and near-optimal plans such that little manual effort is needed.  Finally, spreadsheets cannot perform incremental planning, dynamic allocation and ATP/CTP, and the underlying models are static, deviating from reality the more they are used. As an example, one of our clients used to take up to two weeks to figure out delivery dates of orders to respond to its customers. It would take about a week of spreadsheet planning in their HQ in US and another week with their subcontractors in Asia. After they started using Adexa’s planning engine, the commitment dates to their customers have been practically instantaneous and more importantly accurate and reliable.

With the recent innovations in processor speed of computers and advances in programming and Artificial Intelligence, we are now in a position to accurately predict inventory requirements at every level of the supply chain by considering the probability of usage of every part# from raw material to WIP to finished goods. This allows companies to keep the right amount and mix of inventory at different stages of supply chain to maximize responsiveness at lowest cost of inventory. Such disruptive technologies help to save tens of millions of dollars in inventory cost and improving responsiveness dramatically.

When it comes to efficiency, use of spreadsheets to perform planning function is probably as good and efficient as using a bicycle to travel from Los Angeles to New York city! It gets the job done but …

Topics: Supply Chain, Supply Chain Planning, Inventory Planning, Excel, Spreadsheets, WIP, Manufacturing Planning, Inventory Optimization, CPG, Factory Planning, Material Planning, Scheduling, Business Planning, MRP

Run Your Supply Chain Like You Are Selling Diamonds!

Posted by Cyrus Hadavi on Tue, Mar 02, 2010

Demand Planning with AttributesI want to encourage you to plan and sell your products like Diamonds!

Allow me to elaborate. Diamonds are sold based on attributes, not product-ID (i.e. SKU-number). Nobody goes to a jeweler asking for a piece of rock, spends lots of money, and walks out of the store with a smile. Instead they ask for a diamond based on the 4C's (Carat, Color, Clarity, and Cut). So the bigger, brighter, cleaner and nicer cuts get priced higher and higher. As logical as this may seem, it amazes me to see how many manufacturers still sell their products like a commodity--giving away valuable things for free. And the root cause is usually the fact that their supply chain planning systems are not capable of handling attributes, in the first place. We see many manufacturers that don't utilize attributes when it comes to planning their supply chain and inventories, and yet work with a mind-boggling number of SKU's. Most of them also complain about high inventory costs, and poor customer service, too. Let's see why that is the case, and how attributes can apply to your products and supply chain-unless you manufacturer the first generation Model-T cars.

The fact is that just about everything has attributes, people do (e.g. kind, tall, smart), Products do (e.g. red, non-combustible, fast), machines do (e.g. speed, efficiency, precision), customers do (e.g. VIP, International, new), materials do (e.g. high surface tension, low grade, hazardous), countries do (e.g. tariffs, sanctioned, no-child labor), Logistics do (e.g. Rail only, Air Express, hazardous route), etc. etc. Adding attributes to all of these objects is not too hard; just add new fields to your data base.

What is important is the ability to plan with these attributes for your entire supply chain, beginning with demand planning, to operations and inventory planning. The ability to have an algebra by which attributes are used and planned with is critical in supply chain planning systems. Imagine having an inventory of sweaters without knowing how many of them are Large, Med, or Small, and how many of them are Red, Yellow, or Green. Clearly you could not make efficient use of this inventory, or forecast and build the right products. As mentioned, there are a lot more attributes than just style, size and color. The following is a typical scenario for a top-retailer:

"A NEW customer is interested in a NON-COMBUSTIBLE product made using a HIGH PRECISION machine, from SOUTHEAST ASIA region. Also, it can not be built in any country with CHILD LABOR, and can only be transported using RAIL or SEA."

Can you imagine having hundreds of customers, with thousands of products, and then trying to forecast and commit with so many different attributes involved. Don't forget, raw material and inventories also need to be planned with just as many attributes. In its full sense, Attribute-Based planning means the ability to take all the relevant product parameters into account when forecasting, planning, sourcing, selecting, pricing, promoting, differentiating, allocating, building, storing, committing, transporting, pegging and more. Without a planning system that considers the attributes, it would be impossible to do the math, plan the supply chain, and commit orders accurately. In fact, lack of attributes in the planning process causes some level of "commoditization," which reflects a company's inability to correctly distinguish its products from the others. In turn, customer requests are undermined, and products' costs and prices are not represented accurately. In most cases, this hurts the profitability of the enterprise in the long run, even if it has a monopoly over the market.

There are a lot more benefits to Attribute-Based planning. I highly recommend reading the more comprehensive ePaper that we just published on this topic: Attribute-Based Planning: How to Avoid Commoditization. Also, Feel free to comment on how you use attributes in your supply chain, or if you are looking for any ideas on how to make better use of attributes specific to your environment.


Dr. Cyrus HadaviDr. K. Cyrus Hadavi is the president and CEO of Adexa, for more information about the author please click here



For more information about different types of Supply Chain Planning systems visit: Demand Planning, Inventory Planning, or Sales and Operations Planning.


Topics: Supply Chain Planning, Demand Planning, Inventory Planning, Attribute Based Planning, Manufacturing Planning, Operations Planning, Differentiate