Post on 07-Mar-2018
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WHITE PAPER
HCL ERP Implementation in theFabless 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
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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.
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
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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
ManufacturingOrganization
SalesDepartment
PlanningDepartment
EngineeringDepartment
MarketingDepartment
rotcartnocbuS
2nd Subcontractor
End Customers End Customers
End CustomersEnd Customers
End Customers
End Customers
End Customers
End Customers
Fabless Manufacturing Business Model
Fig-1: Fabless Manufacturing Business Model
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.
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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.
Making Wafers
Packaging Testing
Masking Layer Information
Dicing
Fig-2: Semi-Conductor manufacturing process
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?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:
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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.
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?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
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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.
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