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Driving Supply Chain Flexibility. Chris Armbruster Director Supply Chain Strategy Agere Systems. Waste Not Tolerated. Our Choice. or. “The quest for certainty blocks the search for meaning. Uncertainty is the very condition to impel man to unfold his powers.” --Erich Fromm.

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driving supply chain flexibility

Driving Supply Chain Flexibility

Chris Armbruster

DirectorSupply Chain StrategyAgere Systems

slide4
“The quest for certainty blocks the search for meaning. Uncertainty is the very condition to impel man to unfold his powers.”

--Erich Fromm

It’s also the driving force behind flexibility.

slide5

Foundry

Chip Maker

EMS

Ult. Customer

Phenomenon 1(Latency)

Phenomenon 2(Amplification)

Phenomenon 3(Interference)

Net Effect

Uncertain Demand

+

+

=

Demand can become out of phase or shift in time.

Changes in demand can become exaggerated.

Noise can superimpose onto the demand signal.

Solution = Visibility & Collaboration

Flexibility Can’t Do It All

slide6

Intelligence

Speed

Strategy

+

+

= Flexibility

business intelligence

The data exists, but must be mined for meaningful information.

Business Intelligence

Notwithstanding its fickle nature, uncertainty can be understood, characterized, bounded and modeled.

  • Key input to developing a relevant fulfillment strategy.
speed all about aligning windows

Certainty Window

Time

Risk

Risk

Execution Window

  • Speed of info stretches certainty window
  • Speed of operations shrinks execution window
SpeedAll About Aligning Windows
strategy

CustomerRequirements

Identify Key Flexibility Points

Where to buffer inventory & capacity (& how much)

Where to focus on speed, how often to plan & how to trigger execution

What to insource & what to outsource

Business Intelligence

Strategy

Speed

Product & Supply Chain

Architecture

Process & SystemBlueprint

Strategy
about agere
About Agere

$1.8B FY03 Revenue

  • No. 1 in chips for hard disk drives
  • No. 1 in chips for wired communications
  • No. 1 in 802.11b chips for PCs
  • Top ten customers: Apple, Cisco, HP, Lucent, Maxtor, NEC, Nokia, Samsung, Seagate, Western Digital

Employees: 6,800

Regional Offices:

Allentown, PA

Santa Clara, CA

Assembly & Test Sites: Bangkok, Thailand & Singapore

Ascot, UKHong Kong, China

about our supply chain
About Our Supply Chain

Package Assembly & Test

Wafer Fabrication

Circuit Assembly

4-10 Wks

2 Days

Hours

using business intelligence to manage uncertainty

Market Error

Forecasts are often based on uncertain markets.

Propagation Error

As demand propagates up the supply chain, the demand signal degrades.

Using Business Intelligence To Manage Uncertainty

+Error

-Error

Visibility & Collaboration

Flexibility

profiling uncertain demand

Short Horizon Volatility

  • How certain demand is over a short horizon
  • Finished goods inventory policy

Downsides

  • Long Horizon Volatility
  • How certain demand is over a long horizon
  • Semi-finished inventory policy

Upsides

Profiling Uncertain Demand

Demand Certainty

Probability

Our customers are somewhat certain about their demand over a quarter, but beyond the current week they are not sure when in the quarter it will materialize.

slide15

Speed

Lean Manufacturing

Package Assembly & Test Cycle Time

Shrink Execution Window for Package Assembly & Test Operations to Fit Inside Certainty Window

Certainty Window

Time(Weeks)

agere s flexibility strategy

Key Flexibility Point is just before Package Assembly & Test

Statistically size and locate buffers

Align Package Assembly & Test execution time w/ Certainty Window

Strategy

Process & System Blueprint

Daily PlanningCustom Built APS

Agere’s Flexibility Strategy

Customer RequirementsFlexibilityResponsiveness

Security

Business IntelligenceDemand Profiling

Leading Indicators

SpeedLean Manufacturing

Logistics

Supply Chain

Architecture

Insource Assembly & Test

Outsource Wafer Fabrication

slide18

Lean Manufacturing

Supports Multiple Manufacturing Locations

FedEx Partnership

Automation and eBusiness

Build to Forecast

Super Fast Cycle Times

JIT

Receipt of Customer Order

Order ProcessandPlanning

Wafer Fab

Buffers for Flexibility, Response andSecurity

Package Assembly and Test

Pick and Pack

Ship

Product on Customer Dock

Buffers for Flexibility, Response andSecurity

Buffers for Flexibility, Response and Security

Demand Collaboration

Supply Collaboration

DailyPlanning

Statistically Profiled

this stuff really works
This Stuff Really Works

100%

10

Shipping Performance to Customer Request Date

90%

9.5

Inventory Velocity (Turns)

80%

9

70%

8.5

60%

8

Shipping Performance

Inventory Turns

50%

7.5

40%

7

30%

6.5

20%

6

10%

5.5

0%

5

2001

2002

2003