challenges of a global semiconductor supply chain · · 2017-09-23challenges of a global...

Challenges of a Global Semiconductor Supply Chain

Rainer BuschkeVP Strategy and Chief of Staff

Eindhoven, September 19, 2017Challenges of a Global Semiconductor Supply Chain

Nexperia at a Glance

A new force in Discretes, Logic & MOSFETs

• A dedicated company for Discretes, Logic and MOSFETs with leadership positions in all product areas

• Over 1.1 billion US$ revenues (2016)

• More than 12% market share

• High volume production of 85 billion units annually

• 11,000 Employees supporting customers globally

• 2 own frontend, 3 own backend manufacturing sites

• Over 60 years of expertise in semiconductors, the former Standard Products division of NXP

• Headquarters in Nijmegen, The Netherlands

• CEO: Frans Scheper, heading a successful and established leadership team

With a long history, broad experience and a global customer base.

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Key Facts

company confidential

Our manufacturing footprintVertically integrated for maximum efficiency

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Manchester

Nijmegen Hamburg

Guangdong

Cabuyao

Serembam

Front End Hamburg, GermanyManchester, UK

HeadquarterNijmegenThe Netherlands

Back End Guangdong, ChinaCabuyao, PhilippinesSeremban Malaysia

5 owned front and back end factoriesVery high degree of automation in backend factoriesOwn specialized equipment designerHighly efficient supply chain and secure capacity

85 billion products every year

Nexperia: Some more FactsGlobal leadership positions

• #1 in small-signal diodes and transistors

• #1 in ESD protection devices

• #1 in small-signal MOSFETs

• #2 in PowerMOS Automotive

• #3 in Logic devices

• Over 12% market share

Our promise

Nexperia stands for quality and efficiency in the world of Discretes, Logic and MOSFETs

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Consistent delivery of high volume products

Products efficient in small size and low

power consumption

Highest Automotive quality standards

Experienced and dedicated team

bringing full focus

Portfolio

More than 10,000 active types

Largest customers and distribution partners

AppleAsusBBKBoschContinentalDelphi

DeltaHellaHuaweiLenovoLGMicrosoft

NokiaPhilipsSamsungSiemensTCL

ArrowAvnetFutureWPI

A Semiconductor Supply Chain and its Risks

company confidential

TESTWafer test

WafertestSawing

DIE BANK ASSEMBLYAssembly

Die BondingWire Bonding

MouldingTrim & Form

FABWafer Fabrication

FurnaceImplantingDepositionStepperEtching Wetting

Stock:Semi-finished

goods

Final Test

TESTFinal Test

IWH/Customer

Stock: Finished goods

6 – 9 wks 1 – 2 wks 1-2 wks

Industrial Structure & Lead times

From Finished Product to Final Consumption

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OEM Customer 1- Location 1




IWH1

IWH2

IWH3

GDC

CSW

EMS Customer 1- Location 1

DIsti Customer 1- Location 1

DWH

OEM Customer 1- HQ

Risk IngredientsProduct Availability Planning, Forecast, Order Behaviour, Call-off, Production

Transportation Capacity, Schedule, Execution, External Conditions

Administration Financial, Customs, Permits

IT Availability, Networking, Execution, Customer Systems

From Production Order to Finished Product

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Risk IngredientsProduct Order Planning, Forecast,

Order Behaviour, Call-off, Production

Production Capacity

Machine Capacity, Staffing

Production Inputs

Materials, Supplies

Transportation Capacity, Schedule,Execution

Administration Financial, Customs,Permits, Customer Approvals

IT Availability, Networking,Execution

Production Inputs Front End

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Wafer Fab = Front End

Epi-WafersRaw Wafers

Litho Masks

TechnicalGases

OtherChemicals

Metal (Targets)Water,Energy

Machines

Spare Parts

IT

Manpower

Security

DesasterProtection

+ all pre-products of those



Production Capacity

MachineCapacity,Capacity and Leadtime of Suppliers, Staffing

Production Inputs

Materials, Supplies and Pre-Products, Capacity and Leadtime of Suppliers

Transportation,Storage, Lifetime

Supply Capacity, Storage Capacity (and Conditions), Schedule,Execution



Production Inputs Back End

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Assembly Fab = Back End

EncapsulationMaterial

Stamped Lead Frames

(Tested)Wafers

Chemicals

Water,Energy

Machines

Spare Parts

IT

Manpower

Security

DesasterProtection

+ all pre-products of those



Production Capacity

MachineCapacity,Capacity and Leadtime of Suppliers, Staffing

Production Inputs






Further Extension of the Chain

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Production Inputs






Stamped Leadframe

Raw Leadframe

Metal Alloy

Raw Metal 1

Raw Metal 2

...

Epoxy Tablet

Epoxy Materail

Resin1 Resin 2 ...

Competitive „Web“ and Problem Propagation

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Customer A

Customer B

Customer C

Semi Supplier A

Semi Supplier B

Semi Supplier C

Pre-Product Supplier A

Pre-Product Supplier B

Pre-Product Supplier C

Material Supplier A

Material Supplier B

Material Supplier C


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Customer A

Customer B

Customer C

Semi Supplier A

Semi Supplier B

Semi Supplier C




Material Supplier A

Material Supplier B

Material Supplier C


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Customer A

Customer B

Customer C

Semi Supplier A

Semi Supplier B

Semi Supplier C




Material Supplier A

Material Supplier B

Material Supplier C


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Customer A

Customer B

Customer C

Semi Supplier A

Semi Supplier B

Semi Supplier C




Material Supplier A

Material Supplier B

Material Supplier C

Practicle Examples

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Desasters...

...Demand Fluctuations....

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Market Demand for all Small Signal Diode Categories

...Fab Fires...

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...Production Process Problems

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Mitigation

PurposeTo project the market demand for Nexperia, match demand forecast and capacity and have one agreed plan for making business decisions

R: Nexperia Business Planning and Fulfilment Mgr

A: BG SCM ManagersS: BG Demand Planning, Operations SCM,

BG Controller, S&M Mgr , S&OP Planning

C: Regional Marketing, Account Managers, BG Marketing, R&D, industrial Management (manufacturing sites)

I: BGs GMs, Regional Sales Managers

ToolsQuinteq demand planner, JDA SCP, SAP BW, Power Pivot

KPI’s – Deliverables and ProcessForecast AccuracyCapacity gapsFeasible sales gapPlan Quality

Process ReviewQuarterly review of the effectiveness of the process in the SCM LT meeting

Main Tasks 1. (S&OP) Demand Management• 18 months demand plan gathered and

reported per BG and Sales Region2. (S&OP) Supply Management• 18 months' supply plan matching the

available capacity per manufacturing site

• 18 months demand plan used to create capacity requirements per manufacturing site

3. (S&OP) Business Review• Execute weekly/monthly cadence

covering demand review , supply update and review, gap closure and alignment

• Risk evaluation approach• Plan quality check

Input • Business decisions• Financial plans• Market expectations• Technology roadmap• Sourcing strategy• Business Plan• Design in plans• Product roadmaps• Sales forecast• Capex decisions• Fab capacity and loading• Planned orders• WIP• History/actual sales

Deliverables (output)• Sales and Operations plan per BG• Documented deployment actions• Capital investment Plan• Aligned demand plan• Input for RFF and LTP• Loading plan per manufacturing site• Capacity allocations

Referenced DocumentsS&OP Documents

Thorough and detailed planning ...

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PurposeTo accept, fulfil and deliver customer orders as requested (quality, quantity, time, location)

R: Director Customer Supply ChainA: Global Supply Chain ManagerS: OFC mgrs, CSC, W&D, Factories

logistic mgrsC: BGI:Sales/marketing

Tools• Supply planning: i2 SCP• Order acceptation: i2 DF• Man. Fact Order propose: i2 SCP• Order execution manufacturing: SAP Nexperia• Purchasing: SAP Nexperia• Order execution distribution: SAP Nexperia

KPIs – Deliverables and ProcessCLIP1, RLIP, NPSInventory KPIsAutocommit and Autoplan2

1 KPI for effectiveness, 2 KPI for efficiency

Process Reviewis done based on results of the process measured in KPIs as listed under BBSC

Main Tasks •Operations Planning•Order acceptance & confirmation•Customer Order Management•Customer program management•Supply to the customer•Customer Stock Management•Supply Chain Data Management•Allocation Management•Trigger to logistics team for shipping•Manage invoicing to customers

Risk evaluation approachCustomer program early warning report (CP05++)

Input • S&OP• Static & Dynamic data • Planning data & parameters• Purchase Order/Stock Transport Order

(PO/STO)• Orders & agreed forecast (aligned

demand plan)• Constrained supply plan• Contingency plans• Customer orders & forecast

Output (Deliverables)• Customer supply plan• Delivered orders / Invoices

Referenced DocumentsClass i2 Application OFC-CSC S&P and MDM Wiki OFC Standardised Processes (avail Q2)

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...thorough and detailed execution

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4-Tier Risk Management

Social Responsibility

Supplier Quality Mgt

Material Sourcing

Board

Supplier Tiering

Supplier Rating System Total Cost

Approach

Value Engineering

Strategic Supplier ManagementGlobal Procurement

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Social Responsbility

Supplier Quality Mgt

Material Sourcing

Board

SupplierTiering

Supplier Rating System

Total Cost Approach

Value Engineering

Strategic Supplier Management

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Cov

erag

e

Raw materials suppliers actively engaged in supplier rating system:• Self assessment BCM survey• Supplier performance rating

for BCM maturityAlso:• BCM included in VDA audits• BCM included in new supplier

selection process

• Event alerts evaluated on daily basis

• Multiple customer account manager request answered on an annual basis

Currently assessing all key, strategic and selected sustaining suppliers

• Managing sourcing and production location risk for all Frontend and Backend materials.

• Actively manually linking the Raw Materials risk to final products, BG’s, Customers, S&OP and more

Supply Base Crisis Management Supplier Level Risk Part Level Risk Supply Continuity Risk

Des

crip

tion • Process to assess supplier’s

business continuity maturity

• Project teams addressing known sub tier risks

• Timely impact assessment following disaster events

• Proactively address supply continuity and potential Nexperia impact

• Mitigation actions taken collaboratively

• Addresses viability of suppliers by assessing Financial, Contractual, Phase out, and Geographical risks

• Flexibility and ability to support Nexperia’s global footprint in a global matter

• Drive sourcing strategy and make portfolio decisions

• Sourcing risk & Supplier production location risk

• Sole/Single/Multi

• Actions to mitigate/ eliminate risk

4-Tier Procurement Risk Management Program

SharePoint: https://nexperia.sharepoint.com/teams/18/SitePages/Home.aspx

https://nexperia.sharepoint.com/teams/18/SitePages/Home.aspx

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Supply Base Crisis Management

• Global crisis events monitored daily with factory and supply base impact assessment.• To date, there were 22 crisis events, 26 materials and 77 suppliers assessed.

Only 1 crisis event affecting 1 supplier had an impact to Nexperia supply.• The power shortage in Texas affected production of Globitech for 2 days.

Material supply risk was mitigated by swapping capacity. Globitech was able to immediately recover and no issue reported in its succeeding shipments.

Feb-Apr ‘17 Crisis Material Supplier Impacted

Earthquake 8 17 32Flood 5 6 15Heavy Rain 3 8 19Snow 1 1 1Tornado 1 5 16Storm 1 2 3Fire 1 18 22Explosion 1 3 2Power Outage 1 2 2 1Grand Total 22 26 77 1

109

8

3 3 3 32 2

7

10

5

12 2 2 2

1 1 1 1 1

9

4

8

4

1 1

32

1

9

2

8

1 1 1

Typhoon/Flood/Heavy rain

Fire /Explosion

Earthquake Political /Government

Discontinuedproduction

Planecrash

Snowstorms

Terrorism Financial Shortageof supply

Volcaniceruptions

Epidemic Labor strike Powershortage

Productionproblem

Tornado Watershortage

Crisis Events2014 2015 2016 2017


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Supply Continuity Risk

• Assessment of suppliers’ business continuity maturity and their risk management initiatives

• Formal survey is done every 2 years. Next survey scheduled Q3 2017.

• Regular updates of suppliers’ business continuity plans are covered in the quarterly or semi-annual SRS.

Policy & Governance:

Presence of BCM/BCP in corporate manuals shows a clear Management focus to build further upon.

Business Recovery:

While disasters are not always avoidable, time to recover operations is a key aspect of Business Continuity which is influenceable.

Incident Management:

Proactive crisis management.

Risk Assessment:

Risk for their factory operation.Supply Chain Continuity:

Mere identification & awareness is not sufficient, we need proactive risk mitigation of sub-tier raw materials –like the Nexperia 12nc risk program.

Focus of Suppliers’ Business Continuity Survey

BCM in Supplier’s Rating System


Part Level Risk Tree (Nexperia)

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Source: All BOM Parts2017 forecasted demand

Sole Sourced

Parts

Sole Qualified

Production Location

Nexperia Sole

Customer

Multiple Customers

Awaiting supplier feedback

Single Qualified

Production Location

Multiple Qualified

Production Locations

Single Sourced

Parts

Multi Sourced

Parts

SOLE SOURCED PARTS: Only 1 supplier is qualified to produce this part for Nexperia and there are no other sources available in the market

SINGLE SOURCED PARTS: Only 1 supplier is qualified to produce this part for Nexperia but there are other sources available on the market that can be qualified

MULTI SOURCED PARTS: At least 2 suppliers are qualified to produce this part for Nexperia

SOLE QUALIFIED PRODUCTION LOCATION: 1 production location is qualified to produce this part for Nexperia and no other locations capable to produce this part

SINGLE QUALIFIED PRODUCTION LOCATION: 1 production location is qualified to produce this part for Nexperia but there are other capable locations that can be qualified

MULTIPLE QUALIFIED PRODUCTION LOCATIONS: At least two of this supplier’s production locations have been qualified for Nexperia

NEXPERIA SOLE CUSTOMER: Nexperia is the only customer for this part

MULTIPLE CUSTOMERS: Supplier has multiple customers for this part

UNKNOWN: Supplier did not share the information if Nexperia is the only customer for this part

SourcingSituation

Supplier Manufacturing

Situation

UniquenessSituation

• Managing supply risks based on sourcing strategies and manufacturing locations.

All BOM Parts

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