WHITE PAPER HCL ERP Implementation in the Fabless Semi-conductor Manufacturing Industry
Table of Contents Introduction 3 Fabless Manufacturing Overview 4 Fabless Model in Semi-conductor Manufacturing 5 ERP Implementation by HCL in Fabless Semi-conductor Industry 6 References 8 2
I. Introduction Manufacturing is a process which takes in a fixed set of inputs and produces a fixed set of outputs. By this definition, there are many industries in today s dynamic world. Manufacturing can be classified into different types: Process Manufacturing Eg. Chemical industry, and food and beverage industry Discrete Manufacturing Eg. Automobile manufacturing industry and Consumer electronics industry Over a period, the manufacturing approach has undergone a lot of change. Initially, the focus was to carry out all production in-house and specialize in each. This approach was mainly fruitful until the time when producers provided their products into the market and customers chose from among these options. The approach has demanded end-to-end specialization in processes and the main focus was manufacturing efficiency and productivity. Product life-cycle was high in this kind of manufacturing. Then came the period when customers started demanding products of their choice and high value for the price being paid. This had a direct effect on the life-cycle of the products. Also, engineering departments faced the highest degree of challenge. This approach contributed to the stagnation of regular products and the inventory started piling up. On the contrary, the customer delight factor was rated high. This has driven the change in approach of manufacturing industries and the focus has turned to reducing inventory and gaining high customer satisfaction. There were many techniques developed to monitor and plan inventory, such as Two bin system, JIT, Min-Max, etc. This triggered the change in approach of engineering design as well. The engineering department designed intermediate components in a way that they could be used in any end product that the industry was dealing with. The focus was on productivity, efficiency, high customer satisfaction, and tight inventory control. At this time, manufacturing industries were still faced with high production costs and reducing profit margins. Additionally, customer demand for high value for price being paid still existed. Inventory cost, production cost and departments for which regular activities were not profitable, were the highest contributors to the high cost. Manufacturing industries reacted to this scenario, shuffled department roles and reduced man-power. They started focusing on main-stream processes and out-sourced other supportive activities. Thus, inventory was carried by the industry during a specific phase of production only, and the inventory carrying time and cost were largely reduced. 3
2. Fabless Manufacturing Overview As the manufacturing industry adapted to market changes, it started focusing only on addressing the customer delight factor. Engineering activities were intensified and regular production was sub-contracted. Thus, in the fabless scenario, the manufacturing industry does not have an elaborate facility for manufacturing products demanded by end customers. The facility is limited to only piloting the engineered product. After successful prototyping, products are sub-contracted for regular production. This helps to cut down the regular production cost and minimize inventory cost. Such an approach also contributes to robust planning for parts and production levels. Thus, a fables organization is essentially an engineering organization. As the fabrication facilities are not owned by the organization, this has assumed the name of Fabless manufacturing. Fabless Fabrication-less Fabless Manufacturing Business Model Subcontractor Sales Department 2nd Subcontractor Engineering Department Manufacturing Organization Planning Department Marketing Department Fig-1: Fabless Manufacturing Business Model The picture above depicts the fabless manufacturing business model. Activities flow from the manufacturing organization to the end users through different sub-cons. The manufacturing organization consists of Engineering, Marketing, Planning and Sales departments mainly, apart from Finance and Human Resources departments. The Bata Shoe Company is one classic example that can be easily visualized for this model. The engineering and planning activities are the core functions of 4
the organization. The actual manufacturing and distribution functions are outsourced and only monitored and controlled. 3. Fabless Model in Semi-conductor Manufacturing In today s world, the fabless industry is synonymous with the semiconductor industry. The reason for this is the intensive role of the Foundry in this industry. The Foundry is a manufacturing facility where the entire fabrication process is performed for making semi-conductors. The entire process spans the making of the wafer, masking, building the circuit, and dicing. The dies are then tested and packed before shipping to customers. The wafer fabrication process is highly specialized and cost intensive. Hence, subcontracting is widely chosen in this industry. The manufacturing strategy that universally applies to this model is make to order.the subcontractor may provide the whole range of services involved in the wafer fabrication or may specialize only in one or more of them. The layer formation process has multiple sub-divisions which are not dealt in detail in this paper. Making Wafers Masking Layer Information Packaging Testing Dicing Fig-2: Semi-Conductor manufacturing process For companies adapting to the fabless model, the following are the key drivers to make them competitive and deliver value in the market: Optimal planning of materials. Demand collaboration Engineering Change Order management Optimized planning and scheduling for delivery Effective and in time communication of requirements to sub-contractors Reacting quickly to new market requirements and developing the product. 5
Increasing the market reach. 4. ERP Implementation by HCL in Fabless Semi-conductor Industry ERP (Enterprise Resource Planning) packages in the market are seen as the enablers to achieve these key drivers. HCL has successfully implemented the Oracle ERP package in Fabless Manufacturing industries, enabling them achieve their business objectives. Inventory, Work-in-process (Shop floor manufacturing), Bill of Materials, Costing, Accounts Payable, Accounts Receivable, Purchasing, Sales, and ASCP are the chosen and recommended Oracle modules for preliminary (or) first implementation in this industry. The salient points of HCL s solution for fabless semi-conductor manufacturing is discussed below. Fabless semi-conductor manufacturing industries need to track driving demand, job card and inventory lots being used for each job. This requirement is achieved through a custom job order release workbench. Whereas, the standard feature in the Oracle suite can only map the demand to the job that is released. The custom workbench form is as below: 6
This form allows business user to: View the on-hand quantity details at summary level and at the detail level for a given organization, stage and device. Based on this detail, users can decide if a job could be released using that device. View the planned quantity from the plan that is specific to the organization. View all the possible finished goods (primary and secondary) that could be achieved using the input device. Choose only the targets that need to be produced. Allocate the available inventory of the input device in FIFO order to the job card being created. Selectively split the input lot and release job orders to different subcontractors (subcons). Enforce tracking of wafer IDs Vs. the quantity being allocated. Schedule the job completion dates based on fixed or variable lead time. Choose the production routing of choice Primary or Alternate. Enforce adherence to Blanket Purchase Agreements. Identify the routing that the subcontractors (subcons) should follow. Generate working and shipping instruction for subcons. This has helped achieve the following key differentiators: Optimized delivery planning and scheduling Effective and in-time communication of requirements to sub-contractors. Transparency in WIP data. Complete control and management of in-process and on-hand inventory. Secondly, the process of raw material procurement, its consumption and production of the final product is completely automated. Thereby, the inventory in the system is always the same as the physical inventory. This automation could address the following: Strong collaboration with subcontractors. Reduction of demand variability between each ASCP run. On time delivery of products to customers. Thirdly, the Oracle Advanced supply chain planning engine has been used for global material planning. Product cost is addressed through the standard Oracle costing module, with the cost data defined for each operation, material, and action. The Oracle purchasing module and sales module were implemented to automate purchase and sales activities. And standard Oracle Payables, Receivables and General Ledger modules were implemented to automate finance related activities. The extent of automation within these modules include Entire purchase cycle including inter-organization shipments. 7
The issue of component to the Job and the Job completion. A user interface has been provided to the users to correct the errors and reprocess the data. Lastly, the wafer ID tracking form (as below) provided to track wafers being transacted for production. Also, the user can create new wafer IDs for the devices. Users can query the existing data and update it too. 5. References Semiconductor industry evolution for 21st century, Tseng,F.C. VLSI Circuits, 1999. Digest of Technical Papers. 1999 Symposium on Volume, Issue, 1999 Page(s):1 4 Fabless-foundry partnership: models and analysis of coordination issues Chatterjee, A. Gudmundsson, D. Nurani, R.K. Seshadri, S. Shanthikumar, J.G. KLA-Tencor Corp., San Jose, CA; Semiconductor Manufacturing, IEEE Transactions, Feb 1999, Volume: 12, Issue: 1 Shop-floor scheduling of semiconductor wafer fabs: Exploring the influence of technology, market, and performance objectives Thomas W. Sloan, Semiconductor Manufacturing, IEEE Transactions, May 2003, Volume:16, Issue:2 Applying just-in-time in a wafer fab: A case study, Louis A, Semiconductor Manufacturing, IEEE Transactions, Feb 1989, Volume: 2, Issue: 1 Operations Management, Robert. http://www.future-fab.com/documents.asp?d_id=1228 http://www.advancedmanufacturing.com http://www.designchain.com/featurearticle.asp?id=1&issue=winter03 http://ieeexplore.ieee.org/xpl/recentissue.jsp?punumber=66 http://www.commsdesign.com/showarticle.jhtml?articleid=177103859 8
About the Author N. Jayasingan is a Lead Consultant in HCL Technologies Limited, Chennai, India. Previously he worked with Tata Consultancy Services. He has been offering consultancy in Oracle ERP suite implementation in various industries particularly for the discrete manufacturing industries in India, Europe, USA and Asia Pac. He specialized in Manufacturing Systems with a Master s degree in Engineering from Birla Institute of Technology and Science, Pilani, Rajasthan, India. His consulting interests include, the Manufacturing and Planning scope, and research interests include decision making theories, manufacturing strategies, Scheduling techniques, Forecasting techniques and rapid prototyping. Oracle Practice at HCL HCLs Oracle Universe (OU) is a 2500+ strong integrated services group developing high value solutions in Oracle, PeopleSoft, Siebel, JD Edwards, Hyperion, Agile, Demantra, Oracle Transportation Management, Stellent, and other Oracle Edge applications and technology products. HCLs OU has dedicated CoEs in CRM, SCM, ERP, HCM and Technology develops technology-based business optimization solutions on Package Applications, Fusion Middleware, and Business Intelligence & Data Warehousing. HCLs OU provides service delivery excellence through proven solution accelerators and proprietary tools, built to support the Oracle product suite. In addition to professional services, OU provides Product Engineering on Oracle Applications and Fusion Middleware, building connectors for Oracle's Content Management products, and testing services for Oracle product suites. Contact us : oracle.marketing@hcl.in 9