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.

graph.png

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

In-Memory Computing—Only the beginning

Posted by Cyrus Hadavi on Thu, Jul 21, 2016

In-Memory_Computing.jpgIn a few recent sessions with industry analysts, we were surprised that we were asked if our software is in-memory computing! Given the fact that for over 20 years we designed our applications to have all the data in-memory for computation, our immediate response was: Is there any other way of doing it? The response was, yes, there are others which bring in the data from the database when they need it but now they are changing and they are getting orders of magnitude improvement in speed! This improvement in speed must have caught the attention of the analysts which brings us to the core subject of this article. There is more to speed of application than just having all the data in memory. The latter is the easy part. There are also some vendors, try to improve speed by abstraction and over-simplification. I am sure you are aware of quite few who deploy “Spread-sheet” type of capacity planning in their S&OP applications. That is forming weekly or monthly buckets with fixed lead-times! This approach typically either dumbs down how to deal with capacity, or ignores it altogether. It is the old method, with NO notion of product mix and real processing time, that has been around for decades but with a new user interface which makes it slightly more attractive. Therefore, any gain in speed is offset by a very inaccurate and unrealistic plan. In addition, it has no order level information OR any order level pegging functionality. You might as well use your spreadsheets since they give you even more control!

 

To gain real improvement in speed with proper representation of capacity of resources and equipment, deep modeling capability is needed and the mix of products must be taken into account. In addition, to IMC, one needs to have data representations and algorithms that provide real-time answers to very complex supply chains at order level. As an example, if one material is not available, does the system go back to search all over again for a new method of making or will it just backtrack one step to find an immediate substitute pegged to that order? If a resource is a bottleneck, will it look for a whole new routing or will it look for an alternative, process or equipment. How this data is represented and how the algorithms divide and conquer in parallel processing is what makes the application fast. Just using IMC is only the beginning, there is a lot more that goes into a comprehensive planning system that can analyze tens of millions of data points from material availability to resources and tools and skill levels, to say a few, in almost real-time.

Topics: Supply Chain Performance Management, Planning Data Integration, Supply Chain Data, Spreadsheets, Attributes, Sales & Operations Planning, SCP System, S&OP, Adexa

Run Your Supply Chain without a Bullwhip!

Posted by Cyrus Hadavi on Thu, Feb 26, 2015
bullwhip

Bullwhip or Forrester effect is result of uncertainty and changes in demand that magnify as we move upstream in the supply chain. The farther upstream the supplier is, in the supply chain, the more variations in inventory levels.  Unfortunately this behavior is taken for granted for most industries. Some advocates of Kanban and JIT believe that using these techniques would eliminate such behavior and makes the supply chain more predictable to the extent that large variations are avoided. This is not a true assumption for the following reason. Kanban and JIT are not planning tools, they are execution methods. Hence they cannot be used to dynamically plan ahead of time when there are inevitable variations in demand. When you design your supply chains with a certain demand in mind, then as the demand goes down, Kanban would react accordingly unless your buffers are too large such that much of the inventory will remain unused between stages resulting in excess inventory. If the buffers are NOT big enough to avoid the excess inventory problem, then it is likely that shortages will occur when there is a surge in demand? The buffers are all used up and the pipeline will sit empty resulting in shortages and loss in revenue etc.

Here are some observations and reasons why we no longer have to run our supply chain under the assumption of bullwhip phenomena. We all know that plans are not perfect however re-planning is the key and doing it fast and in parallel is the reason why we can avoid BW effect. This is explained in more detail below. 

From Serial to Parallel

Bullwhip happens because of the serial behavior of the supply chains. In other words each downstream stage tells the stage before it until it gets to the first stage. This delay is one of the reasons for the rise in the amplitude of the inventory. However this behavior can be changed by providing multiple levels of visibility upstream using collaboration tools. Such tools can be set up to send signals to suppliers as far back as needed in order to share with them the trends in demand that are observed in the consumer behavior. Using point of sale information as well as demand signaling and demand planning technologies, the information shared can save suppliers much cost as well as make them a better and more reliable supplier.

Whole vs Segments

Another notion related to parallel analysis of the supply chain has to do with how the buffers are set up at various stages of the supply chain. In contrast to the traditional techniques of each stage deciding on their own inventory levels before, during and after that stage, Multi Echelon Inventory Optimization (MEIO) technology looks at the entire supply chain and each layer thereof in parallel, not in an isolated and serial manner. Using probability and queuing theory it can make fairly accurate predictions as to how much inventory of each item should be at every stage of the supply chain to avoid shortages and/or excesses yielding unprecedented delivery performance while minimizing cost. Such a parallel treatment of the supply chain would eliminate the BW effect and change it to a “stick effect.” MEIO takes into account both the cost and service levels at every stage given the lead-times and interactions between stages to produce a holistic solution not an isolated serial solution. 

Responsive vs Predictive

The more responsive we are the less predictive we need to be. Widespread use of cell phones have made all of us a lot more responsive. As a result we do a lot less planning. How many times have you heard someone saying “I will call you when I get there.”  In the past you had to specify exact time and location to meet up with someone! Today’s S&OP technology allows real-time planning to be more responsive. In other words within hours a new plan can be generated if and when there is a change in demand or supply. Obviously faster planning does not eliminate the time it take to physically build and transfer goods, however it does significantly shorten the cycle time to delivery. Hence it can reduce the potential amount of inventory quite considerably resulting in a more stable supply chain rather than a BW supply chain. This is more of a responsive planning in contrast to predictive planning. 

Risk Factor

The value of an item at the most downstream point in the supply chain is several times higher than the cost of an item at the most upstream location! So if you look at the weighted variation of inventory taking into account cost factors, then the variation in value is fairly constant and not as variable as the quantity depicted in the BW. This is a key issue in balancing the supply chain and risk management. In order to ensure the availability of parts, the upstream locations can take higher risks than the downstream locations. However, the way the supply chains are set up today, the reward/risk ratio is a lot higher for the downstream companies than the upstream suppliers. By making this ratio more equitable, much better and more efficient supply chains can result in terms of adaptability and responsiveness. One way to do this is a commitment to buy a minimum amount within a defined window of time. With this level of confidence, suppliers can assess their own risk and not only ensure delivery of what is needed but take additional risk knowing that they have some level of downside protection.

Although BW effect may not be completely eliminated however the size of the waves can be significantly reduced resulting in a much more stable and predictable supply chain.

Topics: Multi Echelon Inventory Optimization, Supply Chain, Supply Chain Planning, Supply Chain Performance Management, MEIO, Inventory Management Software, Inventory Management, Sales & Operations Planning, S&OP

Retune your supply chain planning from JIT to Available-on-Demand

Posted by Cyrus Hadavi on Thu, Nov 12, 2009
demand planningHere is a question for you, is JIT a push-system or a pull-system? For decades you have been lead to believe that it is a "pull" system, but in fact you are "pushing" to make parts available, thinking that the resource will need it or use it. Just because the resource used the previous supply does not mean that it will use the next. In other words, the past is not necessarily an indication of the future. You may have already known that, and may argue that just filling buffer-zones is the best way to minimize inventory, especially if the buffers are not owned by your company.  However, you are just passing the responsibility of holding the supply to some other point in the supply chain, along with the associated cost-of-capital that goes with it. Naturally, the buffers need to be able to handle the largest tolerable demand surge.  So, if the past demand is more than the future, then inventory will sit there until it is needed or written-off. 

With that in mind, I think it's logical to say that a JIT system that looks at historical demand is really a push-system, but we want to do better than that.  We want to be able to look to the future in order to have a real pull-system.  At the end of the day, JIT is a cost-reduction system to keep up utilization and reduce inventory levels in a supply chain that has fairly steady demand.  What happens if the demand changes all of a sudden? What if red-widgets are more popular than green ones, today? How fast can you propagate the changes by resetting all of the buffers?  Undoing the buffers is like pushing the proverbial tooth paste back into the tube!  It will stay out until you finally use it, or wash it down the sink.  Of course as long as the supply chain is simple, with a linear flow, flat demand, and just a few constraints, fixed buffer-based inventory planning will still work well.  But it will also come down crashing if you have tens of different products sharing resources, constant changes in demand patterns, or supply lead-times.  These factors, and many others, change the production "rhythm" to the market.  Should the supply rhythm on a certain product be bang-bang-bang-bang, or would it be bang-----bang-----bang---.bang?  Which rhythm would generate the most revenue and profit while satisfying your customers?  

In the final analysis, JIT is a system of Available-on-Supply and it pushes based on a fixed rhythm associated to the speed of a machine or inventory availability. In that case, you better prey the historical demand does not change.  Why would you want to be held hostage by your supply?!  So what should we do if we want a system that is Available-on-Demand, that is more responsive to changes in the market place.  A system like this would change the "beat" and buffer-allocations based on the actual demand, and would be more attuned to the market-whether it be bang-bang--bang, or bang-bang...bang-bang-bang---bangbangbangbangbangbang--------bang.   For each product you would have a different "bang" profile.  The combination of all the profiles sets the rhythm for your entire supply chain.  Hence, when you put it all together, the result is a beautiful orchestration of drum-beats harmonized to the tune of the market demand.

To dynamically re-tune and reallocate material, capacity, and buffers is not easy but it's being done by many best-in-class companies out there.  You basically need two critical components, visibility and control of your supply chain.  That means visibility into your demand, inventory levels, and the ability to quickly control your production capacity, and suppliers' capabilities.  It is not a near sighted system that only looks at one level down the stream.  You must understand what needs to be done in all areas of the supply chain as the demand conditions change. To have this kind of control over your supply chain, it takes some reexamination of your processes and advanced technologies in the areas of Demand Planning, Multi-Echelon Inventory Optimization, Production Planning, and Performance Management.  Demand Planning will focus on making sure you are getting accurate demand signals from the market, MEIO will help you manage the right buffers for the expected demand, Production Planning will control your supply flow to those buffers, and Performance Management will give you dashboard like visibility over all of these critical points in your supply chain.  Again, I have said this many time before, but it's very hard to do this with spreadsheets and pure experience.  So take a little time to see how advanced technology can help you in one or more of these areas and you maybe surprised how quickly you can retune your supply chain from JIT to Available-on-Demand.  

If you are interested in this topic, I also suggest reading: How-to-Guide: Justify A Supply Chain Planning System, or feel free to contact us at any time.  

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

Topics: Supply Chain, Supply Chain Planning, Demand Planning, Supply Chain Performance Management, Inventory Planning, JIT, Adexa, Multi-Echelon Inventory Planning

Is Your Profit-Driven S&OP Solution Market Ready?

Posted by kameron hadavi on Tue, Sep 29, 2009
S&OP Report Adexa Co-Sponsors Aberdeen's S&OP Benchmark Report--(read below for your complimentary copy)

Adexa, Inc. has co-sponsored Aberdeen Research's premier benchmark report, entitled "Sales and Operations Planning: Integrate with Finance and Improve Revenue," for a second consecutive year. The study highlights the result of 214 companies participating in a survey on Sales and Operations planning-related initiatives. The goal of this study is to compare and contrast the view points of supply chain and finance organizations relating to S&OP processes, and puts a special emphasis on implementing the ability to express the S&OP plan in terms of financial impact.  Adexa makes a complimentary copy of this report available by visiting: http://web.adexa.com/aberdeen-s-op-report09-front-page-banner/ 

Managing supply chains have become much more complex with further volatility in the markets, and the growing global expansion of manufacturing.  It's more difficult than ever for companies to plan what, when, and where to make and store their products, while meeting their financial objectives.  Most manufacturing companies utilize the S&OP process, which encompasses Demand Planning (for orders), Supply Planning (for production), and Inventory Planning, to manage a very tough worldwide balancing act between supply and demand--but the financial planning is done separately. 

"This Benchmark study confirms Adexa's direction for the past two years toward Profit-Driven S&OP© solutions, which facilitate for a tight integration between supply chain planning and financial visibility." stated Kameron Hadavi, VP of Global Marketing & Alliances, at Adexa.  "Now you will know the financial consequence of every move made, or more importantly about to be made, in your supply chain. This is the key in achieving high levels of customer service, as well as profitability," continued Hadavi. 

"Best-in-Class companies are focusing more towards a holistic consideration of supply, demand and financial plans whereas the vast majority of the market place is still grappling with the traditional supply chain issues such as managing demand forecasts within the S&OP plan," Said Nari Viswanathan, VP/Principal Analyst, SCM Practice, at Aberdeen Research.  "Without financial optimization, scenarios cannot be compared on an apples-to-apples basis.  Adexa's S&OP solutions have shown one of the highest levels of market readiness in this area."

 

 

About AberdeenGroup, a Harte-Hanks Company

Aberdeen is a leading provider of fact-based research and market intelligence that delivers demonstrable results. Having benchmarked more than 30,000 companies in the past two years, Aberdeen is uniquely positioned to educate users to action: driving market awareness, creating demand, enabling sales, and delivering meaningful return-on-investment analysis. As the trusted advisor to the global technology markets, corporations turn to AberdeenTM for insights that drive decisions. 

Topics: Supply Chain Planning, Demand Planning, Supply Chain Performance Management, Inventory Planning, S&OP, Benchmark Report

Pharma/Chemical Industry: Tie-in Supply Chain Planning And Financials

Posted by Bill Green on Thu, Jul 23, 2009

Pharma Supply Chain PlanningPharma and Chemical industries have to worry about managing increasingly complex multi-stage manufacturing networks that span the globe in order to stay cost competitive.  The supply chain decisions in these networks have become more difficult and intertwined.  There is pressure to turn to multiple production sites; while some are low cost producers, others are needed to hedge against product quality and production issues, or other risks.  These challenges are driving these industries to need more sophisticated capabilities in managing their supply chains, especially when it comes to protecting their margins.

In order to squeeze more profit from a tough market, Pharma and Chemical companies need the ability to manage their supply chain network based on the financial impact of every decision.  The Sales, Operations, and Financial plans need to be monitored, in order to see if actual sales and operations numbers are coming in according to  the plan, so that corrections can be made quickly.   Any time a new plan is created, the financial impact of the changes must be highlighted and compared to the budgeted plan. If done effectively, a company will be able to quickly and accurately determine what the market is ready to buy, and effectively align the whole company to meet market demand at the lowest cost.

Having the above mentioned capability requires a company to be able to link the areas of Demand Planning, Inventory Planning, Operations Planning (i.e. Network Optimization), Performance Management (i.e. visibility), combined with the ability to do Financial Analysis.  Some key points to look for in each of these areas are as follows.  

The Demand Planning systems need to be able to consolidate the expected demand from the many business units that sell product all over the world.  Chemical and Pharma companies sell to many types of businesses, but the resources required to build these products are shared.  This means the Demand Planning system needs to be collaborative, scaled on a world wide basis, with ability to predict not just demand, but expected revenue.

The Inventory Planning systems need to be able to set buffer inventory in multi-stage supply chains, and determine the necessary inventory required to meet the sales plan.  The ability to predict inventory levels into the future is critical along with the capability to measure the value of the expected inventory over time. 

The Operations Planning systems need to be able to take into account, capacity, key material constraints, production costs and transportation costs and required dual sourcing for contingency management when optimizing the network.  The operations planning system should be able to differentiate the cost of running the same product on different resources, in order to accurately predict future expected operations costs. 

The Performance Management system needs to be able to extract key measures from the Demand Plans, Inventory Plans, and Operations plans in order to be able to monitor Key Performance Indicators and create dashboards to manage the enterprise.  The system has to understand the financial goals of the Budget Plan created at the beginning of the year, and monitor the plan against actuals and update to the plan during the S&OP process.

Want to talk more about what best in class companies are doing in these areas, or discuss some thoughts on the subject.  Drop me a line.    

For information about the author please click on Bill Green, VP of Solutions, at Adexa.  Or email him at wgreen@adexa.com. Or visit http://www.adexa.com/.

 

Topics: Supply Chain Planning, Demand Planning, Supply Chain Performance Management, Chemical Planning, Pharmaceutical Planning