Semiconductor Companies Teach Logistics Lessons
-- Semiconductor International, 1/1/2001
A research team from three universities and IBM's Thomas J. Watson Research Center has analyzed detailed service, location and shipment data for seven global semiconductor companies that are part of the International SEMATECH Semiconductor Logistics Forum. Participating forum members were AMD, Intel, National Semiconductor, and the semiconductor divisions of Texas Instruments, IBM, Hewlett-Packard (now Agilent) and Motorola (including the since spun-off ON Semiconductor group).
The research team looked at the challenges affecting semiconductor logistics, how the industry was meeting those challenges, and what strategies companies were using to improve performance. The findings from this work can be condensed into six key lessons that are applicable to any company serving the fast-moving global marketplace:
- Lesson 1: Where customer service is involved, industry matters. Customers that use chips in their products insist on high service levels even at high cost; resellers accept lower service levels for lower cost.
- Lesson 2: Global companies may have uniform customer classifications, but these may not translate into global service standards.
- Lesson 3: For high-tech industries in the new global economy, logistics may have little influence on location decisions. But these decisions can drive companies to adopt high-cost transportation alternatives.
- Lesson 4: In fast-paced global industries, using inventory to improve service is prohibitively expensive and, for new products, impossible. Fast transportation and better information and processes are the only realistic alternatives.
- Lesson 5: Geography matters, even when high-speed transportation is used. Next-day service usually requires in-country (or at least in-customs-union) inventory.
- Lesson 6: For short-lifecycle products manufactured and sold globally, scheduling discipline is critical at all points in the supply chain all the way through to the customer.
Further explanation of these six lessons was published in Supply Chain Management Review.To read the article click here.
