engineering your supply chain for exponential growth
DESCRIPTION
Larry Sladewski, Senior Director of Materials at NVIDIA and Intrigo, will give you an update on NVIDIA's supply chain initiative. This presentation will focus on critical operations and the need to dynamically reallocate build plans, WIP, and inventory across the supply chain. [Presented at the 2012 SAP Summit on Suppy Chain Management in Palo Alto, CA]TRANSCRIPT
Engineering Your Supply Chain for Exponential Growth
July 25, 2012
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
2
Agenda
� NVIDIA overview
� Intrigo overview
� State of the industry
� Business problem
� CODE solution overview
� Complete
� Optimized
� Data
� Engine
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
3NVIDIA FactsFounded in 1993
Jen-Hsun Huang is co-founder, president, and CEO
Listed with NASDAQ in 1999, under the symbol NVDA
Invented the GPU in 1999, more than one billion shipped to date
FY12: $4 billion in revenue
7,500 employees worldwide
5,000 patents issued, allowed or filed
Headquartered in Santa Clara, CA
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
4From Super Phones to Super Cars
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
5
GPU Mobile Cloud
GeForce®
Quadro® , Tesla®Tegra® VGX ™
GeForce® GRID
Core Technologies and Brands
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
6About Intrigo
We are a Premier Enterprise Consultancy, focused on orchestrating Customer
Value Networks at the confluence of Demand, Supply and Innovation.
OUR SERVICES
Advisory
Re-architect the planning processes
Usability / workflow re-model
Enterprise Architecture and Software components
Implementation
Complete turnkey implementation
Assemble to deliver
Support
Offshore project/engineering delivery
Planning Analytics
Supply Respond Sense
Innovate
Source: AMR
Create
Demand
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
7Intrigo Systems’ Clients
“The ability of Intrigo’s leadership team to execute
in a complex, multi-party environment directly
contributed to the success of our project."
-- John Hanna,
Director - iPlan Project, Clorox
“Intrigo's deep industry domain knowledge and
their expertise in SAP made for an effective
implementation of our Business Systems. Their
commitment and focus to making us successful
make Intrigo a key partner for Aptina.”
-- Joe Passarello, CFO, Aptina Imaging
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
8Outsourced Manufacturing
NVIDIA selects proven subcontractors and processes
Capacity is allocated through a forecast : commit
communication cycle
NVIDIA may invest in testers and custom hardware
Vendor process stability and execution are monitored
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
9Capacity Alignment
Every month, NVIDIA provides a
6-month rolling forecast
Vendors respond with a commitment to
the 6-month plan
NVIDIA places purchase orders
as requiredVendors respond with acknowledgements
and delivery commitments
Weekly meetings review loading flexibility, WIP, delivery status, and action plans
Quarterly Business Reviews scrutinize goals and develop improvement plans
NVIDIA provides an annual
forecast to vendors
Vendors respond with an annual
capacity commitment
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
10State of Supply Chain Planningin the Semiconductor Industry
• Discrete vs. attribute-based part numbers
• Multiple postponement points
• Optimization planning models
• Long lead time materials (finished wafers)
• Capacity-constrained, high value materials
• Test equipment, allocation to multiple subcons, cost
• Heuristic planning models
• Order-based planning (customer centric models)
• Lead time assumptions for fabless firms are vague
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
11
Field Sales Forecast
FiscalSales Plan
Customer / Sales
Monthly Cycle
Demand
APO System
Boards Supply
Chips Supply
Supply : Demand Planning Cycle
Demand Planning (Sales & Business
Units) place a demand on Operations
Planning commits supply to
specific dates, recorded in SAP
SAP/ APO System
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
12
Supply Chain Planning Evolution
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Demand planning
(SAP APO)
Unconstrained supply plans
(SAP APO – PPDS heuristics)
GATP with product
allocation (SAP APO)
VMI deployment
FCD improvementsCODE
• Constrained planning• Optimized planning• Scenario planning
Inventory forecasting and
supply-demand alignment
(SAP APO with BO dashboards)
Postponement planning
12-month supply commitAggregate wafer
Planning
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
13
Business Problem
NVIDIA's business has grown more complex
Our ability to project, manage and optimize our wafer supply has
entered the critical path of our growth
Existing spreadsheet-driven processes cannot scale to the growth of our business (market segments, number of SKUs, product complexity)
Today’s focus is to align supply to marketing demand by SKU
Tomorrow, beyond alignment, we want to employ production plans optimized for flexibility and efficiency
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
14
MANUFACTURING STEP
TO BE PLANNED
Excel
Planning
single user
Excel
Planning
multi user
Complete
Planning
Scenario
Planning
Optimized
Planning
Integrated
Planning
Wafer Production
(GPU, interposer)done 1 3 10 16 -
Post Fab Wafer Processing
(bump, sort, backgrind)2 4 12 17 -
Assembly BOM Components
(substrates, interposer die)done 8 - - -
Assembly Services
(die mounted into a package)done 5 15 19 -
Post Assembly Validation
(ATE, burn-in)done 6 14 20 -
Configuration
(SLT, tape & reel)done 7 11 18 -
FG BOM Components
(kitted memory)done 13 - - -
Logistics
(factories, hubs, EOQ)9 21 - -
Excel planning on a single user systemExcel planning using a shared drive Complete planning: all data elements visible in the system, must have at least MRP II capabilities Scenario planning: extracting data from the system, manipulating data in a structured way, and saving resultsOptimized planning: system generated best answers for problems contained within the Chip Ops siloIntegrated planning: active links with Sales, BU, & Finance tools; i.e., mutual plans re-align at least daily
Planning Priorities for System Development(Summer 2011)
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
15Wafer Planning in Multi-User Excel
Shared Drive Folder for Virgin Data
Shared Drive Folder for Data Cleaning Workbooks
Shared Drive Folder for Calculation & Analytics Workbooks
One workbook per file is archived each week.
18 files pulled out of systems of record.Large files exceed 50,000 rows.
Supply and demand are consolidated at the wafer level and the global location level.
Supply–demand matching occurs in APO. It does not optimize and is a deterministic model.
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
16Functionality Comparisons- Business(Fall 2011)
Criteria SAP i2/JDA
Data input / management Satisfactory Satisfactory-excellent
Engine – LP TBD – may not be needed Excellent
Engine – heuristics Satisfactory Satisfactory
Integration with SAP ERP Excellent Satisfactory
Scenario management Satisfactory Satisfactory-excellent
Analytics Satisfactory-excellent Satisfactory
i2 is the better product in terms of core functionality required for Chips Planning
APO has seamless integration with our SAP ERP system
A custom user interface ‘skin’ will be required for APO to ensure data input accuracy
A custom report writer for analytics will be required for APO
Add-ons to the APO LP Optimizer may be required (TBD)
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
17Risk Factors- IT Judgment(Fall 2011)
Criteria SAP / Intrigo i2/JDA
Perceived quality of solution
(‘completeness’ of functionality)
Medium Low
Implementation experience
(semiconductor industry)
Medium Low
Financial viability of vendor Low Low
Integration challenges Low Low-Medium
Vendor ‘depth’ of bench Medium Low-Medium
Overall risk of moving forward with
vendor
Medium Low
i2 has the LP Optimization, Scenario Analyzer and Planning Data user interface
deployed in multiple semiconductor companies. But we have no i2 expertise in house
and we have to manage the seamless integration with SAP .
SAP has less semiconductor experience than i2 and a user interface ‘skin’ that needs
to be custom-developed for ease of use. TCO is significantly less than i2.
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
18Design Guiding Principles
• NVIDIA challenges are vanilla
• Manufacturing flows are “typical” semiconductor, including binning
• Goals: no planning in Excel & improve the data quality
• Master data must be capable of being easily maintained
• Planning rules maintained in Business language
• Transparent for other NVIDIA teams to use
• Results must be explainable to executive management
• Models must enable postponement strategies & buffers
• Scenario & bridge analysis support will be required
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
19Planning Solution Overview
Optimization
for wafer
planning
Wafer allocation by
product:
constrained for
backend planning
Backend planning
to determine
assembly starts &
PFG starts to
support the forecast
PFG supply:
constraint for SLT
planning
SLT planning to
determine PFG
starts for demand
signal
Projected
finished goods
for order
commitments
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
20Planning Solution Overview
Optimization
for wafer
planning
Wafer allocation by
product:
constrained for
backend planning
Backend planning
to determine
assembly starts &
PFG starts to
support the forecast
PFG supply:
constraint for SLT
planning
SLT planning to
determine PFG
starts for demand
signal
Projected
finished goods
for order
commitments
Wafer Planning by SAP APO
Optimizer
Wafer Planning by SAP APO
Optimizer
Backend planning by SAP APO
Optimizer
Backend planning by SAP APO
Optimizer
Backend SLT planning by
SAP CTM
Backend SLT planning by
SAP CTM
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
21Planning Solution Overview
Optimization
for wafer
planning
Wafer allocation by
product:
constrained for
backend planning
Backend planning
to determine
assembly starts &
PFG starts to
support the forecast
PFG supply:
constraint for SLT
planning
SLT planning to
determine PFG
starts for demand
signal
Projected
finished goods
for order
commitments
Wafer Planning by SAP APO
Optimizer
Wafer Planning by SAP APO
Optimizer
Backend planning by SAP APO
Optimizer
Backend planning by SAP APO
Optimizer
Backend SLT planning by
SAP CTM
Backend SLT planning by
SAP CTM
Custom UI for Data ManagementCustom UI for Data Management
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
22Reference Model Example
Sort
Back grind
Assy Test SLT
Tape &
Reel
FG
Bump
PFG/FGAssembly
BackgrindedDie
DieSorted WaferUnsorted WaferUn bumped Wafer
Fab
Three supply plans are generated:Fab to die (2 year horizon)
Die to FG (1 year horizon)
SLT / T&R ad hoc runs (4 week horizon)
Focus on data, priorities, rules, and system generated supply plans
Modular locations- easily added or removed as supply chain evolves
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
23CODE Inputs & Outputs
CODE
SAP
Platform
Product Data
Demand
Unconstrained Supply
Factory Loading Strategies
Product Priorities
Inventory Strategies
DATA OPTIMIZER
FG Supply Commit
Die/Capacity Max Supply
Scenarios – What-if’s
Execution Instructions
RESULTS
Capacity
Materials
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
24Business Rules for Planning
• Demand segmentation priority
• BOM priority
• Subcon loading priority
• SKU selection
• Lean rule
• BOM downbinning
• Buffer stock
• Subcon quota
• Product substitution
Rules
Strategies
Priorities
• Ease of maintenance• Excel like interface• Master data scenario management• Time phased data
• Yields• Resource availability• Resource consumption
• Time phase priorities• Product• Demand segmentation• BOM• Routing
• Max and Min volume constraints
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
25Planning Data Flow Overview
APO Planning Engine
Core InterfaceStandard SAP component to transfer planning input data (Master &
Transaction Data) and output data (planning results)
APO Planning Engine
Transaction Data
Data Warehouse
APO Master Data transfer
Data Repository
Input Screens Planning Data Management Tool
Publish to Output
ECC
EC
C
Ma
ste
r D
ata
tra
nsfe
r
Execution instructions to subcon
Confirmations from subcon
APO Master Data transfer
Build Rules
Build Strategies
Time Phased Data
Planning Results
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
26Planning Scenarios Overview
POR version
Backend material and capacity-constrained version
Wafer capacity-constrained version
Wafer capacity-unconstrained version
Backend material-constrained, capacity-unconstrained version
Backend constrained, push production
SLT material and capacity-constrained version
SLT material-constrained, capacity-unconstrained version
Scenario solves as per the requirement
Wafer Plan
Backend Plan
SLT Plan
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
27Problem Data SetEngine: SAP SNP Optimizer
Solve Type: linear
Horizon: 2 years
Cost Model: relative cost model engine
NVIDIA Confidential SAP Supply Chain Summit July 25, 2012
28
Thank You