Breakout Session # 1810 Tim Ortel, CPCM, Materials Manager, Silicon Microstructures Date 12 April 2006 Time 2:25 PM

2. Tomorrow’s Lean Supply Chain Breakout Session # 1810 Tim Ortel, CPCM, Materials Manager, Silicon Microstructures Date 12 April 2006 Time 2:25 PM NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

3. Lean Supply Chain Leadership • Sales & operations planning, supply chain management • New product design, end of life exit • Replenishment trade-offs and material flow • Assessing efficiency and yields NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

4. Supply Chain Overview Solution Recipe Customer Needs Incoming Parts (Service) Post Sales Support & Service Enterprise Value Add & Test NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

5. What drives lean supply chains • Sales and operations planning • New product introduction • Current product optimization • End of life strategy • Outcome measurement (metrics) • Core versus non-core value add • Outsourcing • Offshore, near shore, on shore NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

6. Building the supply chain • Defining which activities are internal or external including design & logistics • Identify and control risk(s) • Outsourcing (also off shore, near shore?) • Design? (ODM) • Order management? • Build and test? (CM, EMS) • Post sale support? (3PL) NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

7. Process Discipline Plan Adjust Do Check NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

8. Sales and Operations Planning • Integrate firm orders & forecast • Preliminary business plan • New products, current models, end of life • Check: capacity, on hand, and on order • Firm up production schedules • Ensure on time delivery/completions • Ship to customers and measure results • Maximize leadership & minimize risk NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

9. Product Life Cycle Planning VolumeProduction Trade Offs Capacity Lead Times Inventory Cost structure Infrastructure New Product Introduction End of Life NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

10. # of customers Customer satisfaction Quality (# good/total) On time delivery % Process compliance Revenues # of new design wins % of revenue from new products Flexibility Value add Linearity Profits Supply chain metrics – “Up Trend” NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

11. Desirable leadership “up trends” After On time delivery Revenues Profits Quality (#good/total) Linearity (#actual/#plan) Before NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

12. # Late Shipments # Part defects Indirect cost $’s Total # of suppliers # Customer returns Lead times Inventory $’s Variance $’s These are good “down trends” NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

13. Desirable Leadership “down trends” Before # Late shipments # Customer returns Lead times Inventory $ Indirect cost $ After NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

14. What is “Lean”? • No “fat” – minimize overhead/waste • Simple – KISS principle • Visual – can see process, issues • Process speed and lead time control • Kaizen, continuous improvement • Process measurement/adjustment • Simplified flows of materials/process NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

15. “Lean” Manufacturing/Service • Work place organization • Process efficiency, discipline • Employee cross training • Common part/process utilization • Supplier integration • Simple and timely metrics measurement • Quick risk identification and control NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

16. Material Replenishment Issues • Reducing lead time between send and receipt of parts/service • Reducing inventories throughout the supply chain • Reducing indirect transactions and costs • Reducing total supplier base • Simplifying flows to reduce risk(s) NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

17. Replenishment tools • JIT – Just in Time • Kanban (Demand Flow) • Min/Max Stocking (Blanket Orders) • Safety Stock Provisions • VMI – Vendor Management Inventory • ATO – Assemble to Order • Outsourcing NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

18. Replenishment Success Need Send Streamline! Cost, Inventory Quality, OTD % Lead Time NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

19. Supplier Scorecards • Measure, analyze and improve • On time delivery • Quality, yields, and product returns • Lead times • Total cost of business • Flexible capacity and value add stream • Problem solving and resolution NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

20. Enterprise Supply Chain IT Tools • ERP • Sales and operations planning • Inventory, Financials • PLM • Drawings, Specifications, Bills of Material • MES • Work flow, control sequence • Data collection and measurement NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

21. Manufacturing Execution Systems • Known as “MES” • Translates design to process • Aligns with workplace and tools • Tie to factory automation • Used to capture/measure data • Assemble and analyze data NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

22. MES Data Measurements • Cycle time • Work content (total work times) • Yields and quality data • Equipment status and alert • Can generate paretos • A tool for risk identification, mitigation NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

23. MES For Tomorrow • An enabling enterprise tool • Is stand alone from ERP, or PLM • Can feed ERP (actuals, financials) • Can validate PLM (design effectiveness) • Can support customer audits NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

24. Process Discipline Adjust (PLM, MES, ERP) Plan (PLM, ERP) Check (MES, ERP) Do (ERP, MES) NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

25. Tools & Metrics Summary NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

26. Supply Chain Overview Solution Recipe Customer Needs Incoming Parts (Service) Post Sales Support & Service Enterprise Value Add & Test NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

27. Tomorrow’s Lean Supply Chain • Driven by effective sales and operations planning • Allows effective supply chain planning • Balances new and current products and services • Employs timely, effective replenishment • Enables timely success measurement • MES, ERP generate data/analysis/correction NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management

28. Tomorrow’s Lean Supply Chain • Questions? • tlortel@yahoo.com NCMA World Congress 2006 : Achieving High Performance in Global Business: Leadership, Outsourcing, & Risk Management