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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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