Matching Assets with Demand in Supply- Chain Management at Ibm Microelectronics

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Matching Assets with Demand in SupplyChain Management at IBM Microelectronics Peter Lyon
IBM Microelectronics Division 1000 River Road Essex Junction, Vermont 05452 IBM Microelectronics Division IBM Microelectronics Division IBM Microelectronics Division

R. John Milne Robert Orzell Robert Rice

In the early 1990s, the IBM Corporation decided that its microelectronics division should expand from producing parts exclusively for other IBM locations to producing a range of products for diverse customers. To overhaul its supply-chainmanagement applications to handle the new business, it developed intelligent models to match assets with demand to determine which demands it could meet when and to provide manufacturing guidelines. In 1994, the PROFIT team began applying OR techniques to build these tools, interweaving linear programming with a traditional material resource planning algorithm and a heuristic matching process based on clues established in the explosion algorithm. The team has deployed three core applications: a weekly division run that determines customer commitments and manufacturing requirements, daily manufacturing runs that identify the best use of manufacturing resources to meet division requirements, and a division available-to-promise application that facilitates fast response to customers placing orders (not described). This work has improved manufacturing utilization and customer-order response time. Copyright 2001 INFORMS 0092-2102/01/3101/0108/$05.00 1526–551X electronic ISSN INDUSTRIES—COMPUTER-ELECTRONIC INVENTORY-PRODUCTION—APPLICATIONS

INTERFACES 31: 1 January–February 2001 (pp. 108–124)



he IBM Microelectronics Division is a leading-edge producer of semiconductor and packaged solutions for the networked world supplying a wide range of customers in such market segments as application-specific components, embedded controllers, wireless, microprocessors, memory, and storage. Customers are divided into two major groups: internal and external. Internal refers to other IBM manufacturing facilities that produce such products as mainframes, workstations, storage devices, supercomputers, and controllers. External refers to all other customers. These customers make such products as workstations, video games, GPS trackers, medical equipment, and cellular phones. The core manufacturing flow for microelectronic parts is wafers to devices to modules to cards. The wafer is a round thin piece of silicon that looks similar to a CD. The wafers go through an elaborate process that has cycle times (time to complete the task) of 30 to 90 days in which thousands of circuits are carefully etched onto it. When the wafer is completed, it is cut into small individual rectangular shaped parts called devices. Typically cycle times are a few days. The devices are then placed on a substrate and packaged to create a module, which takes between five and 20 days. Modules are then combined together on a card. Depending on the customer, IBM Microelectronics may ship wafers, devices, modules, or cards. Within each major manufacturing activity are many individual operations and extensive testing. Operations are grouped into sectors, and sectors are grouped into levels.

The actual matching models deployed by the PROFIT team work with dynamically established levels as the core manufacturing activity or decision point. The number of levels ranges from four to 40, depending on the specific model. We will use four levels (wafer, device, module, and card) in all examples. Sullivan [1989] provides more details about the manufacturing process and how it relates to scheduling. IBM Microelectronics and its critical suppliers have between 10 and 15 manufacturing facilities in North America, Europe, and the Far East. Typically, a manufacturing facility will specialize in building

In 1999, it improved its use of assets by $80 million.
wafers, wafers and devices, devices and modules, modules, or cards. The...
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