Speed in churning out newer products and efficiency of operations has always been a characteristic of the high-tech industry. However, this is a highly-challenging task for semiconductor companies, as they are at the forefront of the technology value chain, and are involved in product design as early as two years before they reach the end customer.
Semiconductor companies operate in a rapidly evolving technology landscape — progression across wafer sizes and geometry, escalating design costs, shrinking product life cycles, a distributed and complex supply chain across the semiconductor value chain. They also face the formidable challenge of getting a meaningful return out of huge capital investment required for setting up a semiconductor fab. Continuously shrinking revenue recovery time from their products adds another dimension to this scenario. These factors make it a very challenging business environment and semiconductor companies have constantly been striving to achieve a faster and more efficient way of doing business.
Improvements in technology aspects like wafer sizes and geometry have always been an important aspect of improving efficiency and reducing cost, but operational improvements — whether it’s reducing time to market, finding efficiencies within the supply chain or increasing their manufacturing yield — have the potential for a much greater impact on the way semiconductor companies operate and compete. According to the International Technology Roadmap for Semiconductors (ITRS) 2011 report1, factory integration covering operational fields extending from design, mask, front end, back end to testing and packing, as well maintaining an optimum balance between manufacturing cost and cycle time, have been identified as one of the key challenges in having a cost-effective semiconductor manufacturing.
Semiconductor companies have pockets of excellence within their business operations, but fragmented and often outdated systems make real time intelligence a difficult proposition in the current landscape. This is why the concept of a connected factory that is supported by an analytical framework is critical for the semiconductor organizations and can truly result in efficiency improvements for the semiconductor manufacturers.
What is a Connected Factory?
A Connected Factory, as we envision it, represents an interconnected set of systems and processes which link the three core functions within the semiconductor company’s value chain; the innovation and design function, focused on ideation and conceptualization of newer chip designs; the transactional process of running the business operations by managing supply/demand and internal operations; and the manufacturing function, which controls the shop floor execution of the lots. Robust analytical capability and defined integration mechanisms would be an essential part of this ecosystem.
From a product lifecycle perspective, the connected factory lays out the framework to track a product idea from its conceptualization and design stage through GDSII, first silicon and production ramp-ups, before reaching its end of life stage.
Connected Factory Framework
It is crucial that design, manufacturing and supply chain teams come together to develop their own connected factory framework (CFF). The semiconductor industry is fragmented across multiple geographies, with outsourced partners serving as key participants in the value chain, which is why a successful CFF needs the support of the partner ecosystem, including the foundries and outsourced semiconductor assembly and test vendors (OSATs). Such intra/inter-organization participation ensures that any change to the chain is identified and reflected to the surrounding systems within the chain.
An important benefit to implementing this integrated approach is coming up with a common analytical framework and a well-defined integration mechanism in the background connecting the various systems in the chain.
Connected Factory Entities
In the semiconductor environment, there are essentially three important systems critical to the success of their organization.
PLM: A Product Life Cycle Management system manages the complete lifecycle from conceptualization, design, production and retirement. It provides the product information backbone for the organization and is the master product data management system across product versions and derivatives.
ERP: Enterprise Resource Planning is concerned with how the different business functions can be synchronized to efficiently and effectively run the organization. ERP controls all the transactional data, from customer orders, translating the same to a manufacturing order, shipments and invoicing.
MES: The Manufacturing Execution System manages the shop floor in the semiconductor manufacturing process, controlling the equipment as well as scheduling the lots across the different routings within a fab line.
A semiconductor company with robust PLM systems and processes, tightly integrated with their ERP and MES systems — be it the product BOMs (bill of materials), routings, demand/supply or inventory levels — enables better visibility into its overall business processes. This would translate to a faster time to market along with enabling innovation, and better manufacturing and supply chain efficiencies.
Benefits of a Connected Factory Framework
Following are the few areas where we feel the Connected Factory Framework could really have an impact in the business operations of the semiconductor companies
- Design Defect Feedback to PLM: Having an early feedback loop to PLM from the shop floor would help companies by reducing the re-spins — both in terms of avoiding costly mask errors and getting the product into the market faster — a key success factor considering that design cycle is getting shrunk along with the revenue recovery timeframe (typical design timeframe has reduced from 18 months in the 1990s and 2000s to about 6 months for the current generation). Having a closed loop between the engineering and production stage ensures that there is constant exchange of information that adds to faster prototyping and improves the overall quality of the products.
- Real Time Process Deviation Alerts: Mobility enabled alerts on the shop floor can help identify process deviations and instantly percolate the information across the manufacturing chain.
- Predictive Modeling and Co-relation Analysis: Analysis based on predictive models and parameter correlations can greatly reduce lot scraps in the shop floor. Whether it’s a design parameter, manufacturing process parameter or equipment/routing characteristic or a customer specific context, having a connected factory enables every company to get the right parameters across the value semiconductor chain to enable the intelligent decisions. This ensures end to end process visibility and helps in identifying root cause for a lower line yield, which may not be in-line with higher individual process yields.
- Supply Chain Visibility: Optimum inventory levels through proper inventory management in terms of product mixes, accurate demand forecasting and customer commits would require a real time supply chain snapshots throughout the dispersed supply chain. The interdependencies inherent in the semiconductor supply chain like quarterly foundry commits, weekly or monthly lot start plans and a weekly/daily material requirements planning plan makes the supply chain integration a key competitive advantage. As per the latest McKinsey study, revenue impact through supply chain improvements can be around 5-10 percent and inventory/working capital reduction can even up to 30 percent.
- Plug and Play Ecosystem: Another advantage we perceive semiconductor companies could benefit would be in terms of future-proofing against the ever-increasing outsourcing momentum seen in the industry. Companies could plug-and-play a new partner to their connected factory platform seamlessly without having to go through a long integration process.
- Master Data Management: The prominence of mergers and acquisitions in the industry make CFF very relevant for product rationalization and nomenclature synchronizations along with inventory management in supply chain through alternate product information.
Towards a Connected Factory
Semiconductor companies planning to move towards the connected factory would need to be able to standardize their process and systems along with having a collaborative ecosystem partnership. We feel that advent of new technologies like big data, mobility and application transformation to cloud platforms would play a critical part in enabling the connected factory framework. The following steps outlines the general direction companies would need to take towards making the connected factory evolve from conceptualization to reality within their organization
- Map the complete processes within their product life cycle and manufacturing to a common standard.
- Synchronize multiple PLM/ERP/MES as well as legacy systems, if they exist.
- Conceptualize an integrated supply chain framework.
- Choose the analytical, mobility and big data frameworks to enable real-time analytics.
- Standardized platform for integration mechanisms — be it an application-to-application integration or a B2B integration through RosettaNet or any other framework.
While most of the semiconductor companies have tried or been able to achieve efficiencies in certain areas in an isolated manner, be it product planning or supply chain excellence, the true benefits can be realized only if a common framework across the different entities and systems within the organization is implemented and embraced by partners in the semiconductor ecosystem.
Ramadurai Ramalingam, Vice President & Head of Semiconductor, Computing and Storage Vertical, Wipro: Ram, as he is popularly known, has over 2 decades of experience in the IT services industry focused on Telecom & Hi-Tech . In his current role he is responsible for executing the overall business strategy, customer acquisition, client satisfaction, global P & L and growth of Wipro’s Semiconductor, Computing and Storage vertical. Prior to this, he was head of mega accounts for Wipro’s telecom equipment vertical, involved in large transformational deals across R&D and IT for leading European companies. He has a Bachelor’s degree in Electronics from University of Madras and has undergone Executive Programs on client management from Wharton School of Business. Ram is based out of Wipro’s Mountain View office .
Manoj Ramanujam, Senior Consultant, Business Solutions – Semiconductor, Computing and Storage Vertical, Wipro: Manoj is part of the Presales and Solutions group in Wipro’s Semiconductor, Computing and Storage business. In his role, he is responsible for creating industry specific solutions and offerings within the Enterprise Applications space across the high technology domain. He has rich experience in architecting enterprise solutions in Supply Chain and Analytics area and has been involved in multiple large scale ERP implementations across industries spanning Semiconductor, Energy and Process Industries.
1 = http://www.itrs.net/Links/2011itrs/2011Chapters/2011ExecSum.pdf