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
OEM Customer 1- Location 2
OEM Customer 1- Location 3
OEM Customer 2- 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
Risk IngredientsProduct Order Planning, Forecast,
Order Behaviour, Call-off, Production
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
Administration Financial, Customs,Permits, Customer Approvals
IT Availability, Networking,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
Risk IngredientsProduct Order Planning, Forecast,
Order Behaviour, Call-off, Production
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
Administration Financial, Customs,Permits, Customer Approvals
IT Availability, Networking,Execution
Further Extension of the Chain
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Risk IngredientsProduct Order Planning, Forecast,
Order Behaviour, Call-off, Production
Production Inputs
Materials, Supplies and Pre-Products, Capacity and Leadtime of Suppliers
Transportation,Storage, Lifetime
Supply Capacity, Storage Capacity (and Conditions), Schedule,Execution
Administration Financial, Customs,Permits, Customer Approvals
IT Availability, Networking,Execution
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
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
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
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
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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4-Tier Risk Management
4-Tier Risk Management
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
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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
14-Tier Risk Management
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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
34-Tier Risk Management
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
4
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