Supply Chain Issues in the High-Technology Semiconductor Industry

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Supply Chain Initiatives
High among the list of key initiatives that supply chain executives have underway is the desire to automate supply chain planning and execution processes. This way, supply chain planners can focus their efforts on managing exceptions and maintaining and updating the planning models as opposed to spending their time doing manual reconciliations.

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Since semiconductor companies rely on a plethora of outsourced manufacturing partners, it is no surprise that improving external supply chain collaboration is also a widespread initiative. Having real-time visibility into manufacturing and back-end operations can help mitigate order delivery or supply disruption issues before they become large enough to affect quarterly financial targets.

Companies are also working on automating the process of converting the unconstrained demand forecast and creating a capacity-constrained supply chain plan across foundry, assembly and test vendors. This capability allows planners to systematically balance or allocate steady-state demand based on back-end capacity constraints, while focusing their efforts on in-quarter customer orders. In order to improve inventory performance, reduce inventory cost and improve customer service levels, companies are increasing inventory visibility across the extended supply chain, including die banks, assembly/test facility, and distribution centers. Rounding out the top five initiatives, companies are also attempting to reduce demand-supply planning cycle times and improve planning frequency. Fast, frequent planning cycles reduce the negative impact of demand-supply mismatch.

Based on the macro trends within the semiconductor industry and Oracle’s work with multiple customers in the high technology sector, it is evident that effective, ongoing collaboration among globally dispersed employees and ecosystem partners must become routine across all functions. In order for key decision makers to execute efficiently, accurate business information must be provided in a secure, timely, and personalized way. Geographically far-flung operations must work in a synchronized manner so that companies can operate as a single, integrated global enterprise. They must be able to capture benefits from scale economies, yet retain the agility to respond to changing business requirements and conditions.

Automating key business processes and utilizing information and communications technology will be critical to businesses. However, in order to address the trends and challenges highlighted above, companies must assess and prioritize business needs and identify specific pain points related to global business processes, employee productivity and global operations. Companies can start by developing a prioritized solution roadmap to achieve new business and technology capabilities. A good business case typically guides prioritization of new capabilities.


Sanjiv Chopra is a Senior Director in Oracle’s Industry Strategy & Insight Group. If you would like to participate in the survey please send an email to sanjiv.chopra@oracle.com.

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