JDA for Semiconductor Industry

8/16/2019 JDA for Semiconductor Industry

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JDA for

SemiconductorHigh performance supply chainsfor a volatile, rapidly changingmarketplace



The electronics industry is booming with ever-changing markets for computing, tablets,smartphones, GPS-enabled devices and gamingsystems, as well as for automotive, residentialand industrial applications. Increased mobilefunctionality, including higher integration at thechip level, smaller form factors, lower powerrequirements and bigger, brighter screens areseveral factors driving consumption decisions. This isgreatly expanding demand for semiconductors, but isalso creating new challenges for this asset-intensive

industry as increasingly volatile demand and ever-shorter product lifecycles require faster time-to-market. As a result, semiconductor manufacturersare struggling to optimize internal asset utilizationwhile balancing customer service commitments withappropriate inventory levels across complex, globalsupply networks.

These market dynamics and challenges are alsoincreasing supply chain risk. Only those companiesthat are agile and efficient will survive in thisenvironment. Leading semiconductor manufacturersrecognize that they need much more advanced

supply chain management technology to support

Semiconductor manufacturers can improve asset utilization, better

balance customer service levels with inventory positions, and minimize

supply chain risks with JDA® for Semiconductor.

both customer commitments and corporate goals forprofitability and agility in this rapidly changing marketplace.Specifically, they need an integrated supply chain platform thatwill enable them to:

• Better sense and forecast ever-changing global demand byregion and customer segment

• Satisfy customer order commit dates with high levels ofreliability

• Synchronize enterprise planning to optimize asset utilization

and delivery performance

• Balance customer service commitments with differentiatedinventory levels by segment

• Minimize supply chain risk while enhancing financialperformance



Customers who have deployed JDA forSemiconductor solutions to support these needshave achieved the following benefits*:

• Improved customer-requested delivery dateperformance by 10-15 percentage points

• Improved due-date stability by 15 percent

• Generated supply chain savings in excess of

US$20 million

• Reduced planning effort by 30 percent

• Cut forecasting lead time from four weeks totwo weeks

• Decreased planning errors up to 90 percent

• Reduced forecast adjustments by a factor of 10

• Increased finished goods inventory turns by 40percent

• Successfully instituted global sales andoperations planning for cross-functionalsynchronization

• Improved asset utilization with what-if scenario-based capacity planning

*Based on actual results reported by JDA customers

THE MANUFACTURING IMPERATIVE

To be successful in today’s volatile, consumer-driven marketplace, all manufacturers, includingthose in the semiconductor industry, mustembrace five core tenets of supply chainexcellence.

• Customer-centricity – The consumer is in

control and manufacturers must respond withdemand-driven, all-channel strategies.

• Segmentation – Supply chain strategiesmust be segmented by region, market sectorand customer profile to offer differentiatedproducts and service levels across segments.

• Synchronization – Supply chain operationsmust be synchronized internally and externallyacross increasingly complex networks ofglobal suppliers to drive efficiencies, preventsupply gaps and improve velocity.

• Optimization – LEAN principles, bestpractices and more sophisticated technologyare necessary to optimize supply chainand manufacturing operations to improveefficiency, cost and throughput.

• Business Agility – Semiconductormanufacturers must be able to quickly andeasily realign their supply chains to rapidlychanging business conditions.



The SemiconductorMarketplaceNew computing and mobile technologies, alongwith expanding gaming, automotive, residential andindustrial applications, are driving an ever-increasing

share of semiconductor consumption, pressuringsemiconductor supply chains to keep pace with rapidnew product introductions and shrinking productlifecycles. This new business normal – characterizedby extremely volatile demand, growing lead timesand scarce supply – is straining and challengingsemiconductor supply chains like never before.Companies across the globe, unable to keep demandand supply in sync, are struggling to maintaincustomer service levels. Constant fire-fighting andorder expediting are eroding hard-earned grossmargins while declining customer satisfactionlevels are threatening market share. Semiconductor

manufacturers must proactively find ways to worksmarter, faster and with reduced risk.

For leading global semiconductor manufacturers,this has meant investing in JDA for Semiconductor,an advanced supply chain solution that deliversglobal supply chain visibility, optimizes end-to-endproduction processes and enables more effectivevalue-chain partnerships.

Challenge: Forecasting Rapidly-ChangingCustomer Demand

While semiconductor manufacturing cycle times canbe as long as 60 to 90 days, customer order leadtimes are not. As such, production starts must bebased on forecasted demand. But rapidly-changingcustomer demand, especially from the mobile andconsumer electronics segments, makes accurateforecasting more difficult and increases productionrisks. Reconciling demand signals on thousandsof end-items from disparate customer segments,as well as from sales, marketing, distributors,and contract manufacturers, makes it extremelychallenging to forecast accurately. Semiconductormanufacturers need planning systems that can senseand evaluate demand from all sources, not justextrapolate historical trends, to form an accuratepicture of demand going forward for each customersegment.

Solution: Consensus Demand Planning

The volatility of consumer demand in the high techworld puts a premium on accurately sensing demand,planning production and optimizing distribution torespond quickly and profitably to each customersegment. JDA for Semiconductor solutions providevisibility into all critical functional areas for holisticoptimization across end-to-end supply chainprocesses.

Demand Planning – Advanced statistical forecastingtechniques support bottom-up and middle-outdemand forecasting from sales and supply chainpartners to better understand true end-pointdemand. This is coupled with top-down revenueforecasting with automated reconciliation acrossproduct and customer hierarchies. The forecastingalgorithms support lifecycle forecasting and newproduct introductions, and incorporate third partydata for causal forecasting. The result is a moreaccurate picture of demand across all operations andsegments.

JDA demand planning solutions deliver astreamlined, closed-loop forecasting approachproven to enhance accuracy and effectiveness.These solutions:

• Enable collaborative demand planning withbottom-up sales forecasting coupled with top-down revenue forecasting

• Leverage multiple, advanced statistical forecasting

techniques aligned with observed demand patterns

• Support consensus demand planning while stillenabling stakeholders to review the forecast fromtheir perspective—revenue, units, margins andwhat-if analyses

“JDA understands our business quite

well. They also understand thespecifics of the semiconductorindustry well, and that gave us a goodbasis to work from.”Wolfgang Keichel,

Vice President, IT Supply Chain Management,Infineon Technologies



FAIRCHILD SEMICONDUCTOR SUPPLY CHAIN

LEADS BUSINESS PLANNING DURING

RECESSION AND RECOVERY

Like others in their industry, FairchildSemiconductor experienced an unprecedented

dip in demand during the recession in 2009,followed by equally impressive growth during2010. Fairchild Semiconductor uses JDA’sdemand planning solution to develop a commonview of demand across the company that feedstheir integrated business planning and supplychain processes. These integrated processesenabled Fairchild Semiconductor to ensure theydid not over-commit to customers during thedownturn and the upswing, and to reserve theright capacity for key customer segments sothey could grow in line with their business plans.

“JDA solutions gave us visibility into how fastdemand can turn. We need to re-plan thebusiness very quickly when economic upturnsor downturns occur,” commented John Houser,Supply Chain Program Manager at FairchildSemiconductor.

Of significant note in this demand planning processis that Fairchild Semiconductor’s supply chainorganization was able to identify changing businessconditions four to six weeks before the company’sformal marketing and sales process signaled thedownturn. As a result, Fairchild Semiconductor was

able to rapidly adjust build plans and inventorystrategies and actually achieved record inventoryperformance throughout the downturn.

Similarly, the supply chain organization was ableto identify the need to ramp up production twomonths before the marketing and sales processformally signaled the economic turnaround. Asa result, Fairchild Semiconductor was able to hittheir inventory targets throughout the ramp upand subsequently achieved market share gainsin key markets. “We have had very significantimprovements to our inventory performance as a

result of the JDA systems,” said Kevin Chynoweth,former SVP of Supply Chain Management at FairchildSemiconductor.



Challenge: Meeting Increasingly DiverseMarket Expectations

Meeting the increasingly diverse expectations ofdifferent market segments across global operationsis a constant struggle. With shrinking productlifecycles and frequent revision changes increasingthe risk of inventory obsolescence, the one-size-fits-all approach to inventory management is no

longer appropriate for semiconductor companiesserving multiple high tech market segments, andcan negatively impact corporate balance sheets.Semiconductor companies must segment theircustomer base to balance customer commitmentsand inventory investments based on the value ofeach segment in achieving corporate goals.

Solution: Intelligent BusinessSegmentation and Inventory Optimization

The secret to meeting market expectations profitablyis not to attempt to be all things to all people—notall customer segments are the same, nor do theyexpect the same service levels. A one-size-fits-all approach from a semiconductor manufacturerrequires too much inventory, raising carryingcosts and unduly risking obsolescence. Instead,semiconductor companies must segment eachmarket’s needs based on long-term value and alignsupply chain policies to serve those needs cost-

effectively. Through such an exercise, a companymay determine that it chooses to serve its strategicsegments with a different inventory policy, forinstance.

JDA for Semiconductor provides an integrated suiteof applications enabling supply chain segmentationto balance market expectations with inventoryinvestments.

Segmentation – Each market can have uniqueservice, time-to-market and product lifecyclerequirements. To serve these diverse needs withdifferentiated products and services, manufacturersmust segment their markets and supply chainoperations accordingly. JDA’s planning and inventoryoptimization capabilities enable you to profitablytailor operations to deliver the right products at theright time to each market segment. This reducessupply chain costs while improving service levels foryour most valuable customers.

Inventory Optimization – Advanced algorithmsdetermine optimal inventory levels at each nodeof the multi-echelon supply chain based on miningcustomer order history to discern order lead-timepatterns. The system supports what-if analysesto plan inventory for new product introductionsand customer-specific variations to demand andsupply patterns. By right-sizing inventory levels,safety stock can be reduced, resulting in lower



“By using JDA Inventory Optimization to evaluate several different

sensitivity analyses – essentially what-if scenarios – TI was ableto choose the best set of circumstances and move into productionalmost immediately.”Ken Bean,

Former Director of Business Support Systems,Texas Instruments

capital requirements and improved cash flow fromoperations.

JDA’s solutions for segmentation and multi-echeloninventory optimization are driven by advanced,scientific algorithms to determine optimal inventorylevels for each market segment. The JDA solutions:

• Deliver the most comprehensive and easy-to-useframework for product and market segmentationbased on flexible criteria such as revenues,volumes, margins, etc.

• Support differentiated customer service levels foreach segment using what-if scenarios based onconfigurable input parameters

• Position inventory across multiple stages of thesupply chain with intelligence from customer orderlead-time patterns and automated mining of orderhistory

Challenge: Complex, Asset-IntensiveGlobal Supply Networks

Operating in an environment with asset-intensiveprocesses, it is critical for both fabless andintegrated device manufacturing semiconductorcompanies to optimize the utilization ofmanufacturing assets. Yet it is a constantchallenge—too little capacity threatens customerservice levels, while too much can erode profitmargins. And making this determination is just

the start as companies then must tackle whatto make, where, when and how much across itscomplex, global network of in-house and outsourcedmanufacturing facilities. Semiconductor companiesneed manufacturing planning solutions that optimizeproduction and distribution plans, and immediatelyalert management to exceptions.

Solution: Master Planning, DistributionPlanning and Production Scheduling

JDA’s suite of planning solutions provide industry-leading master planning, capacity planning,distribution planning and production schedulingcapabilities to address the challenges of complex,

global asset-intensive production.Master Planning – Aiming to deliver the highestcustomer service through on-time deliveries tocustomer-request dates, this solution optimizesmultiple business constraints and metrics, whilesynchronizing material flows and utilization ofresources across multi-stage, multi-site production.This comprehensive production planning solutionleverages advanced algorithms to constructa reliable, feasible master plan that can drivemanufacturing efficiencies while improvinginventory management. JDA’s master planning

solution features flexible and rapid scenarioanalysis capabilities that enable plan review withmultiple what-if scenarios. A user-friendly exceptionnavigator provides a guided analysis path tounderstand root causes of problems and resolveplanning exceptions. Plan analysis and advancedagile workbench features provide you with decisionsupport tools and resolution levers that allowsurgical human intervention to refine overall masterplans.

Distribution Planning – Delivering high customerservice levels through vendor-managed inventory

(VMI) programs requires careful distributionplanning across the supply chain network. JDA’sdistribution planning solution helps semiconductorcompanies optimize multi-tier constrained supplyallocations, while balancing replenishmentplans with transportation constraints and orderoptimization rules. The solution allows you toplan and control the entire supply picture — from



determining optimal product quantities, planningand scheduling transportation loads, to replenishingand optimizing inventory throughout the distributionnetwork. The distribution planning solution alsoenables item lifecycle transitions and productsubstitutions for optimum replenishment planning.

Factory Planning – Provides intelligent decisionsupport for production planning and schedulingacross a single facility, or multiple plants,departments, work cells or production lines.JDA’s factory planning solution helps you avoidmaking costly trade-offs between customercommitments and key financial objectives. Itstreamlines and aligns the activities of productioncontrol, manufacturing and procurement teams byautomating mundane tasks and shifting the focusto critical issues that may impact key service,operational and financial targets. Profitable,productive schedules are implemented based on

constraints and order requirements, includingcustomer priority, delivery commitments andproduct features.

JDA’s production and distribution planning solutionsenable optimized, integrated and executable plansacross supply networks with total demand visibility.This ensures that manufacturing:

• Represents physical reality with rich supply chainmodels for complex production networks, time-phased yields, alternate routes, components andresources

• Supports advanced planning capabilities such asattribute-based planning, optimized binning anddown-binning logic

• Leverages advanced order-by-order planning andlinear optimization-based planning solvers

• Delivers highest customer service levels with theright material, inventory sources and quantities

• Maintains high asset utilization levels and theright production capacity

“JDA is the heart of our planning and forecastingprocess at Altera. We have gained an increased ability toquickly identify the impact of demand changes to inventoriesand availability. Required changes can be made daily, ifneeded, to adjust builds and communicate order fulfillmentissues early to our distributors and end customers.”David Logan,

Director Supply Chain,Altera Corporation

Challenge: Rising Competition onCustomer Lead Times

Satisfying customer expectations for short andreliable delivery lead times has become morechallenging and competitive for semiconductorcompanies. The ever-increasing variability and

complexity in supply chain operations coupledwith lower forecast accuracy sometimes createsinfeasible commitments. Semiconductor companiesmust rely on available material and capacity toaccurately generate real-time promises that areachievable. They need visibility to orders andinventory across extended supply networks toaccurately promise deliveries, and subsequently,high performance supply chain execution to fulfillcustomer commitments.

Solution: Integrated Planning and

ExecutionJDA for Semiconductor offers industry-leadingcapabilities to create high performance supplychains through integrated planning and executionacross the supply network. To start with, acustomer’s order has to be promised in real-time,with an aggressive and reliable commit date asclose to the customer request date as possible.Thereafter, as this order is planned for delivery, itsexecution across warehouses and transportationnetworks must be managed effectively as well.JDA for Semiconductor solutions provide theseintegrated planning and execution capabilities:

Real-time Order Promising – Provides an in-memory, world-class order promising solutionthat delivers increased order capture, acceptanceof the right orders, excellent delivery confidence,full supply utilization and exceptional customerservice. When promising an order, the solution fullyleverages an accurate picture of available supply, aswell as an allocation planning framework, to deliverdifferentiated service to different market segments.This provides you the critical ability to model



many supply reservation rules to enforce differentcontractual service level agreements. The solution’savailable-to-promise (ATP) and capable-to-promise(CTP) search logic recognizes and respects detailedconstraints which are needed to deliver the rightpromise.

Warehouse Management – Significantly improveswarehouse and distribution center fulfillmentefficiency, accuracy and throughput. Taskinterleaving capabilities automatically assign thenext most productive task to each worker basedon task priority and the worker’s certifications,equipment and current location. The system alsohelps you direct movement of materials, parts andcomponents to and from production lines, throughdistribution and onto transportation in the mostefficient manner. Order fulfillment is accurate andtimely to satisfy customer commit dates whilereducing operational costs and improving financial

performance.

Warehouse Labor Management – Optimizesworkforce utilization and productivity inmanufacturing, distribution and transportation.The system helps you plan and schedule theworkforce based on customer order volumesand characteristics to ensure the right numberof workers with the right skills are available tomatch work content and priorities. It continuouslymonitors work completion by worker or teamagainst pre-defined engineered standards to alertsupervisors to performance problems and barriers

to success so immediate corrective actions can betaken.

Transportation Management – Rapid time-to-market and frequent product revisions canwreak havoc on transportation operations, ofteninvolving expediting and other costly options.JDA’s transportation management solutions enableshippers to more efficiently plan shipments to takeadvantage of least-cost modes, routes and carriers

while ensuring that customer delivery windowcommitments are met. The system optimizeseverything from global multi-leg, multi-modalshipments to local multi-stop fleet routing. Ithelps you track all shipment expenses, includingsurcharges and demurrage, for proper freight auditand payment. And JDA’s transportation, warehouse

and labor management solutions are fully integratedto synchronize operations based on priorities andconstraints. As a result, all supply chain operationsare more coordinated and efficient, reducing costsand the impact of customer demand volatility.

JDA’s integrated planning and execution solutionscan help semiconductor companies improvedelivery performance and reliably meet customercommitments by:

• Supporting flexible promising policies toaccommodate diverse customer needs

• Enabling intelligent allocation management withconfigurable allocation policies

• Maximizing inventory and fulfillment accuracy andthroughput

• Improving labor productivity in manufacturing,distribution and transportation

• Reducing transportation costs and improving on-time deliveries

• Supporting real-time packaged integration with

SAP and Oracle ERP order management systems

“The ability to perform workforceplanning and scheduling in anautomated process has driven ourbiggest savings. We’ve achieved a 62percent increase in productivity in justtwo years. We’ve also reduced

overstaffing and overtime, which helpslower our unit costs.”John McGowan,

Senior Vice President,Operations & Project Management,Avnet Logistics Services



Challenge: Disconnected Operationsacross Global Supply Networks

Profitable operations demand transparency andalignment between internal functional groupsand external supply chain partners. Today’ssemiconductor supply networks are so complex andinterconnected, but geographically dispersed, thattrying to synchronize and optimize network-widesupply chain operations is an enormous challenge.Major disconnects internally between Engineering,Sales, Marketing, Manufacturing Operations andFinance, coupled with misalignments betweensupply chain partners, are hampering visibility,agility and decision-making.

The lack of alignment across end-to-end supplychain processes slows down efficient operations,causes errors in execution and makes consensus andaccountability difficult to achieve. It also makesit virtually impossible to react to changes or newrequirements expeditiously. This can spell troublefor new product launches where quickly respondingto market acceptance trends can determine successor financial failure. Semiconductor manufacturersand partners must align supply chain processes andinformation to drive efficiency and agility across theentire business.

Solution: Integrated Business Planning

Sales and operations planning (S&OP) isan established business process by whichcompanies align operations across the enterprise.

Semiconductor supply chains must leverage S&OPto go beyond internal cross-functional alignmentto facilitate broader network-wide alignmentthrough integrated business planning (IBP). IBPutilizes global supply chain visibility, inline analyticsand what-if scenario planning to identify andresolve demand, supply or financial gaps relativeto the budgeted business plan. A well-executedIBP process helps you detect and remove supplychain disconnects, make network operations moreefficient and agile, and provides rapid analysis ofgaps, shortages and disruptions for faster, better-informed decision-making.

Sales and Operations Planning – Allows device anddie-level demand to be aggregated and reviewed atany level of granularity across regions and producthierarchies. An exception-based framework allowsyou to see supply-demand imbalances across theend-to-end supply chain. An interactive what-



if scenario planning framework, which includesrough-cut planning capabilities, allows you toexplore different resolution alternatives, examiningoperational feasibility and financial attractivenessat the same time. Leveraging Oliver Wight’s Class AS&OP process workflows and templates, JDA S&OPutilizes key-metric dashboards to visually present

the aggregated state of your supply chain for moreinformed decision-making and faster time-to-value.

Analytics – Provides a real-time view and analysisof supply chain operations across the semiconductornetwork. This continuous monitoring and real-timealerting of supply chain operations enables you toimmediately see and react to gaps, changes anddisruptions with agility and fact-based decisions. Itprovides a continuous feedback loop for planningand execution to harmonize operations across theend-to-end network.

INFINEON TECHNOLOGIES IMPROVES ORDER

FULFILLMENT AND ROI

Infineon Technologies AG offers semiconductorand system solutions addressing three centralchallenges to modern society: energy efficiency,mobility and security. The company’s ability to

sense and respond to demand changes, whilebalancing global production capacity across itsmore than 20 facilities, can be challenging intoday’s highly dynamic global markets.

“Our planning process was too complex, tooslow and the business-related figures such asturnover [revenues] and the operational topicssuch as utilization were hard to align,” saysAndreas Mätzler, senior director of supply chainengineering, corporate supply chain, Infineon.“Today’s perfect product will be out of themarket tomorrow. You have to react fast.”

Infineon decided to create a single integrated,multidimensional sales and operations planningprocess that promotes global collaborationand enables the company to quickly respondto market changes. After evaluating severalvendors for technology support, Infineon

selected JDA S&OP in order to create an integratedsolution that could provide both a reliable demandforecast and realistic production plans. Out of allof the solutions Infineon evaluated, JDA S&OPwas the only solution that fulfilled the functionalrequirements of volume planning and productionmaturity.

Since completing the worldwide rollout of JDAS&OP, Infineon has achieved a broad range ofresults across every dimension of its business. Thecompany has reduced its planning effort by morethan 30 percent, and is able to cut the lead timefor its volume rolling forecast from four weeks totwo weeks. Planning errors have decreased up to90 percent. Forecast accuracy has also improved.But the most important result of the JDA S&OPimplementation is Infineon’s new collaborativeplanning approach, which enables the business to bemuch more agile and responsive.

“We will always face the combination of avolatile market, long lead times and high capitalinvestments,” notes Mätzler. “JDA S&OP helps us seehow we can best fulfill every customer need, whilealso making the best use of our investments.”

The JDA for Semiconductor Advantage

JDA for Semiconductor provides a unique,integrated suite of supply chain planning andexecution solutions designed specifically withbusiness agility in mind. Built in consultation withthe world’s leading semiconductor companies,JDA for Semiconductor facilitates network-widecollaboration and alignment of supply chainplanning and execution processes to eliminateinformation gaps, production disconnects, andplanning misalignments that stymie rapid responseto changes in customer demand. With JDA forSemiconductor, end-to-end supply networks areagile, synchronized and optimized through sharedstrategic, operational and financial goals, objectivesand processes. That is the JDA advantage.

To learn how you can make your business moreagile, synchronize your supply chain networkoperations, and support profitable businesssegmentation, contact JDA.



About JDA Software Group, Inc.

At JDA, we’re fearless leaders. We’re the leadingprovider of end-to-end, integrated retail and supplychain planning and execution solutions for more than4,000 customers worldwide. Our unique solutionsempower our clients to achieve more by optimizingcosts, increasing revenue and reducing time tovalue so they can always deliver on their customerpromises.

Using JDA, you can plan to deliver.

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Deploy JDA forSemiconductorvia JDA Cloud ServicesProtect your JDA software investment and increasebusiness agility by having JDA experts manage,

monitor and maintain your JDA solutions. JDA CloudServices reduces your implementation time andrisk while enabling you to quickly and easily deploynew functionality to keep pace with your changingbusiness needs. With your software running in thecloud and upgrades included in your service, youwill benefit from solutions that are optimized foryour specific business requirements to help ensurethat you achieve and sustain a long-term return onyour investment.

“We estimate that we’ve achieved at least US$20 million in valuefrom JDA solutions. Additionally, we’ve generated more thandouble the amount of revenue per planner”

Director, Supply Chain Management,ON Semiconductor

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Copyright © 2014, JDA Software Group, Inc. All rights reserved. JDA is a Registered Trademark of JDA Software Group, Inc. All other company and product names maybe Trademarks, Registered Trademarks or Service Marks of the companies with which they are associated. JDA reserves the right at any time and without notice tochange these materials or any of the functions, features or specifications of any of the software described herein. JDA shall have no warranty obligation with respect tothese materials or the software described herein, except as approved in JDA’s Software License Agreement with an authorized licensee. 1.9.15

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JDA for Semiconductor Industry