Supply Chain Redesign Case Study: Streamlining the Supply Chain

This case study shows how successful redesign of a supply chain can dramatically reduce lead time and cost.

Background

The semiconductor industry is characterized by short product life cycles, therefore it is important to have fast and efficient supply chains as a source of competitive advantage. Subcontractor lead times and high costs will catastrophically erode margins on die and hybrid microelectronic product sales. Coupled with difficulties in establishing accurate customer forecasts, the result is a need for expediting and building higher than desired safety stock levels to meet demand.

A client was burdened with an inefficient supply chain. They engaged Gemba Consulting to identify waste and streamline the process.

Solution

A DMAIC process was followed:

D	Project was defined with specific cost and cycle time targets established
M	A Value Stream Mapping activity was undertaken to map the existing supply chain (current state), identifying the areas and causes of waste, and the desired supply chain (future state)
A	Analysis of reasons for costs and delays Process Capability Analysis was used to establish a baseline for qualifying the new supply chain
I	Consolidation of activities: - Process qualification - Capability correlation with existing vendors Updated process maps
C	Control plans were established

Results

By redesigning and controlling the supply chain annualized savings in excess of US $1M were achieved. Die cost savings were extended across other existing product lines to achieve additional US $250k in cost reduction and the new supply chain could be used for future product generations.

The streamlined supply chain resulted in 50% reduction in lead time, which allowed for lower safety stock levels and increased working capital.