April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 2 Breakout Session # 1810 Tim Ortel, CPCM, Materials Manager, Silicon Microstructures Date 12 April 2006 Time 2:25 PM Tomorrow’s Lean Supply Chain

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 3 Lean Supply Chain Leadership Sales & operations planning, supply chain management New product design, end of life exit Replenishment trade-offs and material flow Assessing efficiency and yields

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 4 Supply Chain Overview Customer Needs Enterprise Value Add & Test Post Sales Support & Service Incoming Parts (Service) Solution Recipe

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 5 What drives lean supply chains Sales and operations planning New product introduction Current product optimization End of life strategy Outcome measurement (metrics) Core versus non-core value add –Outsourcing Offshore, near shore, on shore

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 6 Building the supply chain Defining which activities are internal or external including design & logistics Identify and control risk(s) Outsourcing (also off shore, near shore?) –Design? (ODM) –Order management? –Build and test? (CM, EMS) –Post sale support? (3PL)

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 7 Process Discipline Plan Do Check Adjust

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 8 Sales and Operations Planning Integrate firm orders & forecast Preliminary business plan –New products, current models, end of life Check: capacity, on hand, and on order Firm up production schedules Ensure on time delivery/completions Ship to customers and measure results Maximize leadership & minimize risk

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 9 Product Life Cycle Planning New Product Introduction Volume Production End of Life Trade Offs Capacity Lead Times Inventory Cost structure Infrastructure

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 10 Supply chain metrics – “Up Trend” # of customers Customer satisfaction Quality (# good/total) On time delivery % Process compliance Revenues # of new design wins % of revenue from new products Flexibility Value add Linearity Profits

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 11 Desirable leadership “up trends” After Before On time delivery Revenues Profits Quality (#good/total) Linearity (#actual/#plan)

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 12 These are good “down trends” # Late Shipments # Part defects Indirect cost $’s Total # of suppliers # Customer returns Lead times Inventory $’s Variance $’s

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 13 Desirable Leadership “down trends” Before After # Late shipments # Customer returns Lead times Inventory $ Indirect cost $

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 14 What is “Lean”? No “fat” – minimize overhead/waste Simple – KISS principle Visual – can see process, issues Process speed and lead time control Kaizen, continuous improvement Process measurement/adjustment Simplified flows of materials/process

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 15 “Lean” Manufacturing/Service Work place organization Process efficiency, discipline Employee cross training Common part/process utilization Supplier integration Simple and timely metrics measurement Quick risk identification and control

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 16 Material Replenishment Issues Reducing lead time between send and receipt of parts/service Reducing inventories throughout the supply chain Reducing indirect transactions and costs Reducing total supplier base Simplifying flows to reduce risk(s)

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 17 Replenishment tools JIT – Just in Time Kanban (Demand Flow) Min/Max Stocking (Blanket Orders) Safety Stock Provisions VMI – Vendor Management Inventory ATO – Assemble to Order Outsourcing

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 18 Replenishment Success Send Need Quality, OTD % Cost, Inventory Lead Time Streamline!

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 19 Supplier Scorecards Measure, analyze and improve –On time delivery –Quality, yields, and product returns –Lead times –Total cost of business –Flexible capacity and value add stream –Problem solving and resolution

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 20 Enterprise Supply Chain IT Tools ERP –Sales and operations planning –Inventory, Financials PLM –Drawings, Specifications, Bills of Material MES –Work flow, control sequence –Data collection and measurement

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 21 Manufacturing Execution Systems Known as “MES” Translates design to process Aligns with workplace and tools Tie to factory automation Used to capture/measure data Assemble and analyze data

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 22 MES Data Measurements Cycle time Work content (total work times) Yields and quality data Equipment status and alert Can generate paretos A tool for risk identification, mitigation

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 23 MES For Tomorrow An enabling enterprise tool Is stand alone from ERP, or PLM Can feed ERP (actuals, financials) Can validate PLM (design effectiveness) Can support customer audits

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 24 Process Discipline Plan (PLM, ERP) Do (ERP, MES) Check (MES, ERP) Adjust (PLM, MES, ERP)

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 25 Tools & Metrics Summary CategoryERPPLMMES CostYes Lead TimeYes QualityYes LinearityYes InventoryYes

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 26 Supply Chain Overview Customer Needs Enterprise Value Add & Test Post Sales Support & Service Incoming Parts (Service) Solution Recipe

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 27 Tomorrow’s Lean Supply Chain Driven by effective sales and operations planning Allows effective supply chain planning Balances new and current products and services Employs timely, effective replenishment Enables timely success measurement –MES, ERP generate data/analysis/correction

April 10–12, 2006 Hyatt Regency Atlanta Atlanta, GA NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management 28 Tomorrow’s Lean Supply Chain Questions?