seruslogo

Case Study: IOM Enterprise

“With Serus, we have complete visibility into our outsourced manufacturing, aligning us more closely with our trading partners.”

-Director of IT

Accelerating Growth and Delivering Stellar Results

Global semiconductor company implements Serus’ Intelligent Operations Management Suite for supply chain visibility and control.

Customer Profile

This world leader in the design and manufacture of silicon solutions had $3 Billion revenue in 2006 and employed 4,000 in the Americas, Europe and Asia.

Business Situation

Relying on over 250 manually generated reports, supplied in varying formats from a dozen suppliers, this fabless semiconductor company had insufficient visibility into its supply chain. As a result, the company had a chronic problem of incomplete, outdated and often inaccurate data, making it difficult to accurately schedule backlog, and ship orders on time. In addition, the reconciliation of their inventory position as stated in their financials also was a challenge resulting from the lack of visibility into inventory located at subcontract manufacturing sites. Management experienced this lack of visibility as a lack of control, requiring staff to continuously monitor transactions to ensure business rules and manufacturing specifications we’re being followed.

Solution

Serus Intelligent Operations Management (IOM) Enterprise Suite gives end-to-end visibility and control of the manufacturing ecosystem and has four components:

Serus’ B2B Hub provides real-time data collection and collaboration with trading partners. It processes millions of manufacturing and financial transactions a day, seamlessly connecting to internal business and operational systems.

Serus’ Global Operations Execution provides real-time inventory management and operational intelligence. It provides financial inventory transparency, accurate calculation of inventory exposure, predictability, automated reconciliation and SOX compliance

Serus’ Manufacturing Process Management

is a product lifecycle management (PLM) solution that ensures up-to-date Bill of Materials (BOM) information and manufacturing specification changes are tightly integrated with partner manufacturing execution systems.

Serus’ Operations Execution Planning, bridges the gap between weekly or monthly planning and day to day execution. Using Serus B2B Hub ensures the supply-chain planning engines operate with complete information.

Benefits

Visibility: Since implementing Serus, inventory visibility at subcontract manufactures improved from 85% to 99.5%. Being able to trace the exact status of any lot in any location at any point in time has improved product quality, customer service levels and financial reporting.

Agility: Additional real-time operations data also helps with decision support, allowing for a quick response to supply and demand changes, dramatically improving the company’s ability to hit target ship dates – and to keep customers happy.

Quality: A supply-chain dashboard with embedded analytics enables management by exception improving decision making and ensures trading partners comply with manufacturing specifications.

The Challenge

Lack of Visibility - Fragmented and Discontinuous Inventory Data

To keep track of its manufacturing processes, this industry leader relied on more than 250 inventory reports from dozens of trading partners, including TSMC, ASE, STATS ChipPac, AMKOR, Jazz and SPIL in varying formats, including PDFs and Excel spread-sheets.

The manufacturer faced chronic problems of incomplete, outdated and often inaccurate information on its outsourced manufacturing operations.

The lack of any central reporting for work in process inventory at subcontractor manufactures resulted in various individuals, responsible for slivers of the manufacturing process, generating and reviewing a huge number of manual inventory reports.

Compounding the problem was the multiple inventory systems used by suppliers and manufacturing partners. A single assembly partner may have inventory spread across many factories. Each of which had multiple inventory systems in place. So, inventory from a single supplier could be spread across 3 or 4 inventory systems. As that inventory moved from one system to another, it could easily disappear from the view of any system for hours at a time.

At one time 15% of the 60 million components in the supply chain, valued at $150 million, were unaccounted for.

Regulatory Compliance Challenges

Reconciling and evaluating inventory by location took the company too much time and effort. After which, the company would routinely face discrepancies, resulting in inventory write-offs.

“This disconnection between supply chain visibility and fulfillment operations resulted in poor on-time delivery and an additional $5M in order fulfillment costs.”

–Vice President of Operations

Such inaccuracies in reporting inventory valuation put the firm in danger of falling out of compliance with regulations including Sarbanes Oxley, which requires public companies to have internal controls that ensure the accuracy of financial reports.

Customer Service Issues

The ill effects of inaccurate data didn’t stop with financial reporting, however. All the myriad tracking systems also made it difficult to properly coordinate the supply line with demand. “This disconnection between supply chain visibility and fulfillment operations resulted in poor on-time delivery and an additional $5M in order fulfillment costs”. Vice President of Operations

Forecasting delivery dates accurately and reliably was difficult without concrete knowledge of work in process and available capacity. Similarly, handling rush orders effectively was unworkable.

Lack of Systematic Enforcement of Business Rules

The manufacturer had no way of ensuring that suppliers and manufacturing partners complied with its business rules, leading to poor quality and customer satisfaction.

Binned die was managed inappropriately in downstream processes resulting in incorrect use. Erroneous manufacturing transactions which resulted in misallocated and incorrectly valued inventory within ERP system were very hard to detect.

The disparate data reporting mechanisms in place only compounded the problem. Once a finished product was found to be defective, staff had great difficulty pinpointing the problem’s source as it had limited data to fall back on. That, in turn, made it difficult to determine the extent of the damage, potentially forcing the company to recall products that were not, in fact, defective.

The Solution

The manufacturer found that the Serus Intelligent Operations Management (IOM) Enterprise solution implemented with Serus Global Operations Execution and Serus B2B Hub enabled it to address each of its challenges.

Serus Global Operations Execution

Serus Global Operations Execution provides real-time inventory and operational intelligence for the distributed or outsourced manufacturing environment. By providing visibility into the extended partner ecosystem, Global Operations Execution:

  • Provides financial inventory transparency, with accurate calculation of inventory exposure, predictability, automated reconciliation and SOX compliance.
  • Fulfillment planning workbench that matches lots to orders after validating manufacturing and fulfillment rules, resulting in faster, more precise fulfillment.
  • Decision support with real-time operations data for quick response to supply and demand changes improving on-time delivery.
  • Supply-chain dashboard with embedded analytics enabling management by exception and ensuring trading partners are complying with manufacturing specifications
  • Supplier collaboration with event-driven purchase order and purchase order receipt creation

Operation Financial Planning Systems Systems Systems

Serus B2B Hub

Serus B2B Hub provides real-time data collection and collaboration with trading partners. Serus B2B Hub has a flexible architecture enabling the use of three methods for gathering manufacturing and financial transactions from trading partners:

Serus Direct Connect: links high volume trading partners directly to the Serus B2B Hub message bus.

Serus Global Connect: collects and processes files from FTP locations. This approach was used for high volume suppliers that preferred to connect their internal systems indirectly

to the Serus B2B Hub.

Serus Web Client: transaction data is entered directly into the Serus web-based interface by suppliers. This approach is typically used for low volume suppliers.

The Serus B2B Hub has a scalable architecture with proven capability to process millions of transactions per day.

In addition to connecting to the trading partners, the Serus B2B Hub has standard connectors for integrating with internal Operational and Financial system.

CONTENT TYPES

Financial

In an age of regulatory compliance, it’s imperative to maintain complete visibility over inventory accuracy, including changes in value as inventory moves through the manufacturing process. Serus gives the Company’s staff confidence that its entire inventory is accounted for and changes in value are approved and justified. With Serus, it now takes half the time to perform period end accounting activities and less than a day to complete inventory valuation, with less than 0.5% variance.

Agility - Better Customer Service at Lower Cost

Having accurate real-time manufacturing data with embedded analytics also enables the decision support needed to react quickly to changes in supply and demand and the fulfillment of orders. As soon as cycle times and yields for a given process deviate from plan, management is immediately alerted so that the necessary changes can be made to ensure minimal impact on inventory targets and delivery.

Quality –Supplier and Quality Management

Serus IOM Enterprise provides a comprehensive framework for quality management and improvement. Serus improves quality in a global outsourced manufacturing environment by ensuing trading partners are adhering to agreed upon business rules, ensuring all manufacturers are working from the same controlled product and process definition, and providing root cause analysis with full lot transaction genealogy and yield analysis.

“With Serus, the time and effort to value and reconcile inventory is significantly reduced and the ability to meet stringent SOX compliance regulations is assured”

–Director of Manufacturing Cost Accounting

Business Rule Engine Validation

Serus provides visibility into outsourced manufacturing, through the Serus Business Rules Engine, ensuring that trading partners are adhering to their agreed upon manufacturing rules. Exceptions are addressed real-time and those responsible are alerted immediately by email or SMS, ensuring issues are caught and addressed before they cascade and become costly.

Some business rules are difficult for trading partners to comply without customer involvement. For example, a new product might be qualified for production by two trading partners. Prior to starting any production lots, however, the qualification lots must be completely tested at both sites. With Serus, neither partner can begin production runs until both processes are qualified, potentially stopping a supplier from using millions of dollars worth of unqualified materials.

Standardized Product Process Definition

Serus will ensure your extended organization, including partner ecosystem, have access to the correct and latest product and process definition, speeding new product introduction and improving manufacturing accuracy and quality.

With Serus you can finally bridge the information gap between product engineering, operations and your trading partner network by managing your product information including product lifecycle, bill of material, manufacturing specifications, part chains, and resources with change management together with your production data. It is the only solution that meets the unique business needs of semiconductor companies with out-of-the-box support for multi-level binning and downgrading.

By standardizing and downloading your product and process definition to your global manufacturing partners you are no longer relying on tribal knowledge and can:

  • Decrease scrap associated with engineering changes with real-time inventory visibility.
  • Reduce mask re-spins and costs through efficient management of mask changes and revisions.
  • Ensure regulatory compliance with product and process change control.
  • Validate manufacturing transactions against process specification.
  • Standardized process definition and management can substantially increase first-pass yield, and make it possible to quickly increase volume by ramping up new and existing processes globally.

Root Cause Analysis

With full process definition and complete lot genealogy, Serus provides all the information needed to improve quality through root cause analysis and the targeting of the top quality and defect conditions. It’s not enough to merely address the immediate obvious symptom when there is a quality issue. You need to find the root cause and take the necessary corrective action to ensure the likelihood of a reoccurrence is minimized. “Serus enables root cause analysis by providing a complete lot genealogy or manufacturing history so that when a customer or quality issue arises, it is easy to investigate to get to the source of the problem”. Director of Quality

Supplier Scorecarding

With all the business rules in place, the Company can now monitor all of its manufacturing partners and rate each on its performance. The Company can quickly determine whether subcontractors are meeting targets for yield, cycle times, throughput numbers and the like. Previously, it would only find out about such criteria weeks or months later, when it’s too late to remedy any problems. Having realized all of these benefits within just a couple of months, this major fabless semiconductor industry leader is anxious to continue to improve operations with Serus.