Hans ehm

12.0 0.0 8.9 12.0

Business Forecasting and Planning
7.18
6.80 summit 7.18
6.80

6.20 6.20

5.00 5.00

Challenges and innovative
solutions of Business Forecasting
and Planning

Amsterdam,
March 12th 2010

6.40 6.40

Hans Ehm
8.60 8.60

9.20 9.20

12.0 0.0 8.9 12.0

7.18
Table of Contents 7.18
6.80 6.80

6.20 6.20

  The semiconductor industry - the global production network is the
5.00
new “Fab”
5.00

  Learning how to put a dollar sign next to S&OP projects to get
upper management approval

  Spending less time on data problem discussion and more on
decision making

  Implementing executive level S&OP education and change
management training

  Promoting the use of what-if scenario analysis to help manage
risk and optimise decision making

6.40 6.40

  Executive summary

8.60 8.60

9.20 Mar-15-10 Copyright © Infineon Technologies 2006. All rights reserved. Page 2 9.20

12.0 0.0 8.9 12.0

7.18
Infineon – products – we produce chips 7.18
6.80 6.80

6.20 6.20

5.00 5.00

NO
6.40 6.40

Zero Calories and 100 Percent Innovation!
8.60 8.60

9.20 17.09.2009 Copyright © Infineon Technologies 2009. All rights reserved. Page 3 9.20

12.0 0.0 8.9 12.0

7.18
Infineon at a Glance 7.18
6.80 6.80

6.20 6.20

The Company
5.00 5.00

  Infineon provides semiconductor and system solutions, focusing
on three central needs of our modern society:
Energy efficiency, Communications and Security
  Revenue in FY 2009: 3.027 billion EUR
  Some 26,000 employees worldwide (as of Sept 2009)
  Strong technology portfolio with about 22,900 patents and
patent applications
  More than 30 major R&D locations
  Germany‘s largest semiconductor company
6.40 6.40

8.60 8.60

9.20 11/19/2009
17.09.2009 Copyright © Infineon Technologies 2009. 2009. All rights reserved.
Copyright © Infineon Technologies All rights reserved. Page 4 9.20

Focus Areas and Target Markets
Revenue Split by Focus Area
FY 2009 revenue split
Industrial &
Multimarket

Automotive

Energy Efficiency: EUR 1744m

Communications: Security:
EUR 917m EUR 341m

Wireless Chip Card
Solutions & Security

11/19/2009
Mar-15-10 Copyright © Infineon Technologies 2009. All rights reserved. Page 5

12.0 0.0 8.9 12.0

The Semiconductor Environment – an Industry Comparison
7.18
(not really serious … but easy to memorize) 7.18
6.80 6.80

6.20 6.20

5.00 5.00

If the automotive and aircraft industries
developed at the same rates as semiconductors
in the past 30 years:
  a Rolls Royce would cost $2.75 and get 3
million miles a gallon
  a Boeing 767 would cost $500 and circle the
globe in 20 minutes on five gallons of gas.

Source: Jeffrey Rayport, professor at Harvard Business School; Co-author of books on strategy in the network economy.
6.40 6.40

Why?
8.60 8.60

9.20 Mar-15-10 Version 1.1 Copyright © Infineon Technologies 2006. All rights reserved. Page 6 of 51 9.20

12.0 0.0 8.9 12.0

Innovation of the First Transistor on Dec 23rd 1947.
7.18
The Starting Point of the Semiconductor Industry 7.18
6.80 6.80

6.20

5.00
Because and
6.20

5.00

6.40 6.40
Bell Labs
600 Mountain Ave.
Murray Hill, NY, USA
8.60 8.60


12.0 0.0 8.9 12.0

Enormous development of semiconductors –
7.18
costs per function decline 30% each year 7.18
6.80 6.80

6.20 6.20

Moore’s Law:
5.00
5.00
Doubling time
is 18 months 512 Mbit
"
109

minimum feature size [µm]
256 Mbit

at microprocessor-chips
"
108 ♦

64 Mbit
" 0,1
♦

Pentium IV
16 Mbit
" ♦

Pentium III
107
transistors /

" ♦

Pentium II
4 Mbit
♦

106 80286 " ♦

"
♦

1
chip

105 Pentium ®
♦

4004 80486
68000
♦

104 8086 80386
♦

8080 6.40
6.40
♦

10
103
1970 1975 1980 1985 1990 1995 2000 2005 2010
8.60 8.60

Copyright © Infineon Technologies 2009. All rights reserved.
Mar-
9.20 Page 8 9.20

12.0 0.0 8.9 12.0

Semiconductor Characteristics: Steep ramps,
short life cycles and long Lead times
7.18 7.18
6.80 % of semiconductors of final product: 6.80

6.20 6.20

2% 12 % 30 % 35-40 %
5.00
5.00
1000 m
TV
color PC GSM

100 m VCR
TV
b&w   Steep Product Ramps
10 m
  Short Lifecycle
1m
Ipod

1950 1960 1970 1980 1990 2000 2010
Sources : Dataquest, ST shown at IEF 2005, Malta (some wording changed)

~ 3 months

Suppliers Semiconductor Customer Custo
Industry mer of
our   Long Lead Time
Custo
mer &
6.40
Consu   Early in Value Chain 6.40
mer

8.60
~ 4 months 8.60

9.20 Mar-15-10 For internal use only Copyright © Infineon Technologies 2006. All rights reserved. Page 9 9.20

12.0 0.0 8.9 12.0

The challenge beyond managing steep ramps is to differentiate
between booming products and those slower ramping as
7.18
forecasted - Infineon examples 7.18
6.80 6.80

6.20 6.20

5.00 5.00

40 m
P1 ramped faster than forecasted

 Risk of missing Business
30 m chance

P1
20 m

P2 – ramped slower than forecasted 
10 m Risk of Stock;
Scrap;
& Idle Capacity
6.40
6.40
0
Mar 07 June 07 Sep 07 Dec 07
FC Actuals
8.60 8.60

9.20 Copyright © Infineon Technologies 2009. All rights reserved. Page 10 9.20

12.0 0.0 8.9 12.0

The Main process acc. To SCOR in the Semiconductor
Industry is Make “Produce and Test”. It is Grouped into
7.18
Front End and Back End Process Separated by a DieBank 7.18
6.80 6.80

6.20 6.20

5.00 5.00

Front End & Back End

Front End (CT 40-100d) Back End (CT 5-20d) CT:
Cycle Time

FAB SORT DIEBANK ASSEMBLY TEST DC

Furnace Sawing
Up to 500
Implanting
process Deposition Wafertest Die Bonding Chiptest
6.40 steps Stepper Wire Bonding (Burn In) 6.40
Etching Moulding
Wetting Trim & Form

8.60
Stock Stock 8.60


12.0 0.0 8.9 12.0

Front End Consists of a Series of Chemical and
7.18
Physical Processes - Basic Process Steps 7.18
6.80 6.80

6.20 6.20

5.00 5.00

Lithography

Etching
Chemo-Mechanical-
Polishing (CMP)
Doping
(Ion Implantation and
Layering: Physical Diffusion)
Vapor Deposition
Layering: (PVD)
Layering:
Oxidation
Chemical Vapor
Deposition
6.40
(CVD) 6.40

Cleaning and control
8.60 8.60


12.0 0.0 8.9 12.0

Up to 35 Revolving Lithography Steps per Wafer
7.18
Transform the Design via Masks to the Wafer … 7.18
6.80 6.80

6.20 6.20

… generating a three dimensional" landscape on the wafer surface
5.00 5.00
Lithography method: one chip after

7
6
another is exposed

5
4
3
2
1

Other processes as etching,
doping, layering can change
the surface of the wafer
permanently on the places
that were exposed within
Next exposure step – up to 35 revolving steps lithography.

6.40 6.40
Layering,
Doping or
Etching
8.60 8.60


12.0 0.0 8.9 12.0

The Frontend SC consisting of 500 process steps+ (many
are revolving). It runs at a Flow Factor of 2,5 to 3 times the
7.18
raw process time (base is 365 days a year 24 hours a day) 7.18
6.80 6.80

6.20 6.20

FURNACE - Oxid IMPLANT Defect Density DRY ETCHING PVD - Sputtering
5.00 5.00

START   CT: Cycle Time SORT
  RPT: Raw Process
Time

6.40 6.40

CMP WET METROLOGY * LITHOGRAPHY CVD

* one test step after lithography
8.60 8.60


12.0 0.0 8.9 12.0

Backend Process:
7.18
From Chip at Die Bank to Finished Good 7.18
6.80 6.80

6.20 6.20

5.00 5.00

Wafer &
Material

Die Wire Trim Mark Tube
Saw Mold Plate Singl Test Pack
Attach Bond Form Scan

ASSEMBLY PROCESS TESTING PROCESS
Tray

Tape
6.40 6.40
Finished
Goods

8.60 8.60


12.0 0.0 8.9 12.0

IFX today has a global production network comprising
Frontend, Backend, Sifos and Subcons
7.18 7.18
6.80 6.80

6.20 6.20

5.00 Malacca 5.00

Wuxi
ALTIS SMIC Nantong ASE AMKOR

Zarlink
UMC

Dresden Kulim Batam

Triquint TSMC

Singapore
Regensburg Warstein Cegléd Villach
PSI

IBM

STATSChipPAC Unisem CHRT Carsem UTAC
6.40 6.40

SIFO
SUBCON
FE
8.60 8.60
BE

12.0 0.0 8.9 12.0

Fast product ramps in the past required mainly to manage
internal Frontend SC fast and cost efficient
7.18 7.18
6.80 6.80

6.20 6.20

FURNACE IMPLANT Defect Density ETCHING PVD
5.00 5.00

Fab Dresden - GE
START SORT

6.40 6.40

CMP WET METROLOGY * LITHOGRAPHY CVD

8.60 * test step according to lithography 8.60


12.0 0.0 8.9 12.0

Today’s ramps benefit from a global production
flexibility – The global SC is our new “Fab”
7.18 7.18
6.80 6.80
May08 additionalchain wasSORT(ASE) ~(sort at WOPW 6000 out
Aug07:(Plan): otherfabcapa ~(sort at subcon 000 SIN)WOPW via
July07: ", additional assy and Test(ASE)Assy9000 Wafer
Sep07: Flex:technical possiblestep inWafer 200winWOPWout WOPW
April07:flexbumpingASE (Altis)~ DDWaferproductive out
Mar07: only 2ndbumping &2nd(UMC8D) WaferAMKOR and
July07: and additional Fab flexibilityis
June07:additional routes + 3600 &
Bump alternative
Fab
Each new supplyFE test subconbump SIN 103100 customers
6.20
Feb07:Wafer out assy capaa 1600forwardout 10 SC
July07: additional with this ~ 170 Wafer ~ to out 000 Wafer
Aug07: aditionnaltest + subcon 5300 ~ out 2800
June07:", and other routes first (AMKOR) out ~ Wafer ~
Jan08: ASE
… WOPW ALTIS)
delivering (Unitive was the bottleneck)
~ 300
~ 7500 established ALTIS
6.20

capa increase in less than one year
5.00 5.00

Fab Germany Fab Bumping B) Taiwan Assy Philipines
SORT after Assy SIN Ship from SIN
Taiwan
Bump Altis - FR

Start

DCA

DCU

DCE
6.40
Bumping A) SORT after SORT after Assy Final Test SIN) 6.40
Fab France Taiwan Bump Germany Bump SIN Stock DCx
Taiwan

IFX Asset Fab Test (SORT&FinalTest) Not shown is
Final Test Flex
Bumping Assembly within
8.60
Subcon or SiFo 8.60
Singapore

12.0 0.0 8.9 12.0

A Top to Bottom S&OP Process is a key enabler to
7.18
master this complexity, flexibility and speed requirements 7.18
6.80 6.80
Actuals (Billings,
6.20 6.20
Orders, Reservations)
Customer -Target: unconstrained FC
Unconstrained
Forecasts
1) S&OP Demand Marketing -Horizon: 12m
Planning Marketing
5.00 Sales Planning Forecasts
-Gran: m/Rroduct (=Requests)
(PPOS)
5.00
PLANNING
Sales Forecasts (VRFC)
(Actual & Past)
-Target: constrained FC
committed capa.
-Horizon: 12m
-Gran: w/FPOS/PL Sales Forecasts of next
Volume & Capacity
3) S&OP CAPACITY -Target: supply plan for order commit
month & Constrained
Planning (VRFC) Forecasts
PLANNING -Horizon:Constrained
26w, >26w infinite Forecasts
Forecasts &
-Gran: d,w/FP
(=Promises)
Capacity Allocation
Allocations <= Today / GIT (d/FP)
<= BE FF (w/FP) &Orders
Process
Reservations
<= FE FF (w/FP based on Die Rep)
Operational Planning 26w (w/FP based on FPOS) -Target: order
<=
Requests
confirmation to
Promises
Production Delivery customer
Requests Promises -Horizon: 52w
4) S&OP SUPPLY from plants
-Gran: d/SP
PLANNING -Target: min & max target SAP
FEST Sub- BEST Sub-
stocks
Process Process Module SD
-Horizon: a) 12m; b) 12w
-Gran: a) m/FPOS; b) w/FP

6.40
-Work-In-Progress Master Master
Orders &5) ORDER
Reservations
Confirmations 6.40
-Actual DB/DC Stocks Plan FE Plan BE
2) S&OP PRODUCTION
-Min/Max Stock Targets MANAGEMENT
MANAGEMENT & INVENTORY
Frontend
HANDLING Backend
8.60 8.60


12.0 0.0 8.9 12.0

7.18
6.80 6.80

6.20 6.20

5.00
new “Fab”
5.00


decision making

management training


6.40 6.40


8.60 8.60


12.0 0.0 8.9 12.0

Improved F/C Accuracy is the target of S&OP and by far the
cheapest way to handle Uncertainty
7.18
1) A $ Sign of missing forecast accuracy 7.18
6.80 6.80

6.20 6.20
Time
horizon 1-3 months 4-6 months 7-12 months
5.00 5.00

Wrong product mix: Backend capacity: Frontend capacity:
-  increased stocks - underutilization - underutilization
Mechanism -  scrap - subcontractor cost - foundry cost adder
-  missed adder
opportunities

Cost vs
100%
FC accuracy ~xb’ € ~ yb’ € ~ zb’ €

Cost
Vs 100% FC
6.40 accuracy 6.40

~xxb’ €

8.60 8.60


12.0 0.0 8.9 12.0

cheapest way to handle Uncertainty
7.18
2) Measure Forecast Accuracy 7.18
6.80 6.80

6.20   FC accuracy is the deviation of the Sales FC vs actual billings. 6.20

5.00   Symmetric Mean Absolute Percentage Error (SMAPE): 5.00

  Example:
1.) Calculation of
positive & negative
balance
2.) Summation of
Forecast, Billings
4.) F/C Accuracy acc.
and Balance is 100% minus
absolute of positive
and negative
Percentage

6.40 3.) Percentage of 6.40

Balance to Sum of
Forecast & Billings

8.60 8.60


12.0 0.0 8.9 12.0

cheapest way to handle Uncertainty - a $ sign helps
7.18
3) Set up a process – an example 7.18
6.80 6.80

6.20 6.20

1.  Analyze historical data per division, region, sales planner and
5.00
customer. 5.00

2.  Set target based on experience/best engineering judgment
(e.g. 30% of sales planner achieve 80% accuracy, why not the
rest?)
3.  Calculate the potential Euro savings if target is achieved per
division, region, sales planner and customer.
4.  Monthly reporting (performance, potential Euro savings and
rough analysis per customer and per sales planner)
5.  Monthly alignment Division/Sales/Supply Chain and definition
of major action items.

6.40 6.40

8.60 8.60


12.0 0.0 8.9 12.0

cheapest way to handle Uncertainty – a$ sign helps
7.18
4) Implement process and reporting 7.18
6.80 6.80

6.20 6.20

5.00 5.00

FC – accuracy FC – accuracy
per DIVISION per REGION

Target Potential per Sales Planner in region AP

Over-planning Target Potential

6.40 per DIVISION per SALES PLANNER 6.40

8.60 8.60


12.0 0.0 8.9 12.0

cheapest way to handle Uncertainty – a$ sign helps
7.18
5) Get achievements and … 7.18
6.80 6.80

6.20   FC accuracy improved by ~10% within 15 months 6.20

5.00   The improved FC accuracy leads to a saving of XY’ Euro 5.00

Time
horizon 1-3 months 4-6 months 7-12 months

~ xa‘ €
~xb‘ ya‘
~ yb‘ € ~ za‘ €
~ zb

Cost
Impact after
impact
Improvement
reference
6.40 xxb‘ €
xxa‘ 6.40

* gross stock value DB+DC @ 15% capital cost
8.60 8.60


12.0 0.0 8.9 12.0

7.18
6.80 6.80

6.20 6.20

5.00
new “Fab”
5.00


decision making

management training


6.40 6.40


8.60 8.60


12.0 0.0 8.9 12.0

One responsibility to manage the whole supply chain. S&OP
within the SCC SCORE process is within Plan
7.18 7.18
6.80 6.80

6.20 Plan 6.20

Source Make Deliver
5.00 5.00
Return Return

Customers
Wafer stock FAB SORT DIE BANK ASSEMBLY TEST DC Consi

Furnace Sawing
Implanting
Deposition Wafertest Die Bonding Chiptest
Stepper Sawing Wire Bonding (Burn In)
Etching Molding
Wetting Trim & Form

Buffer / Up to 500 process Buffer / Buffer / Buffer /
steps Stock Stock
Stock Stock
Infineon Supplier

Operations: Market:
  Efficient use of resources   diversification of product types
  Capital cost reduction idle costs/excess inventory   small batches
6.40   no scrap, damage & relocation   fast time-to-customer/market 6.40

ONE RESPONSIBILITY
8.60 8.60


12.0 0.0 8.9 12.0

Integrated Master Data Elements is a Key enabler
for efficiency between S&OP and Production
7.18 7.18
6.80 6.80

6.20 Production View 6.20

Planning Item PPOS
5.00 aggregated identifier Manufacturing Item 5.00

that reflects capacity product & manufacturing route,
and demand planning used in for capacity planning
requirements FPOS
Die-Representative
FREP Aggreg. supply
RFP element; diversification
RFP Product
not yet decided
planning product being
DREP
not capacity relevant
SP
Sales Product
can be ordered
by a customer
FP
Finished Product
independent of DC-BNR
storage location
6.40
DC BNR finished product 6.40

S&OP View by storage location

8.60 8.60


12.0 0.0 8.9 12.0

7.18
6.80 6.80

6.20 6.20

  The semiconductor industry - the global production network ist
5.00
the new “Fab”
5.00


decision making

management training


6.40 6.40


8.60 8.60


12.0 0.0 8.9 12.0

7.18
6.80

6.20
Supply Chain Academy 7.18
6.80

6.20

5.00 5.00

The next generation of learning, teaching and knowledge gaining:

  Training modules for the needed Know How for all personnel
  Globally same Processes, Tools and Know How
  Common understanding of S&OP and the entire Supply Chain

6.40 6.40

8.60 8.60

9.20 9.20

12.0 0.0 8.9 12.0

7.18
Basic Set Up of IFX SC Academy 7.18
6.80 6.80

6.20
  Highest level Structure is according to Demand to Cash = SCOR 6.20

5.00 Model – the international Standard for Supply Chains: 5.00

Plan - Source - Make - Deliver – Return – Enabler

  Most detailed level is usually an intranet based e-learning
module – called the Training module (TM):
  “intranet session” (about 20 min) with voice and animation.
  Training Modules are pushed via an e-Learning Tool to the
employees. There are checks, if the target of training was
achieved via review questions.
  Each TM is owned by an expert. He defines the target of each TM,
usually produces it and defines the review questions.

6.40 6.40

  Group of training modules will be supplemented via a class
room training including serious games
8.60 8.60


12.0 0.0 8.9 12.0

Each Classroom training includes a „Serious Game“
Most often the Beer Game for the Bullwhip effect
7.18
http://davinci.tamu.edu/beergame/v2/ 7.18
6.80 6.80

6.20 6.20

5.00 5.00

6.40 6.40

8.60 8.60


12.0 0.0 8.9 12.0

Supply Chain Academy embedded in a Partnership
Concept ensures executive level attention and trust in
7.18
necessary changes 7.18
6.80 6.80

6.20
  The SC Academy uses internationally available training modules for 6.20

5.00
Supply Chain (incl. S&OP) for semiconductor and operations research. 5.00

Input from the Network Output to the Network

Training sessions; Consulting Set standards; be part of
academic education

  The SC Academy works on integrating the courses into academic
programs with the target to extend the internal appraisals (Career
development) to external academic recognition – for a contribution
6.40
to a bachelor’s, master’s, or Ph.D. degree. (ECTS – European Credit 6.40

Transfer and Accumulation System).
  Bachelor of SC from University of Limerick starting April 12
8.60 8.60


12.0 0.0 8.9 12.0

Get executives to conferences to exchange
7.18
ideas Trust in standards is increasing 7.18
6.80 6.80

6.20 6.20

  is just great
5.00 5.00

  Supply Chain Council – the SCOR standard

Key note from Prof Hau Lee –
6.40
Stanford: 6.40

His paper: “Information Distortion in a
Supply Chain: The Bullwhip Effect”
voted as one of the most important papers in business
8.60
science ever 8.60


12.0 0.0 8.9 12.0

7.18
6.80 6.80

6.20 6.20

  The semiconductor industry - the global production network ist
5.00
the new “Fab”
5.00


decision making

management training


6.40 6.40


8.60 8.60


12.0 0.0 8.9 12.0

What – If scenario
Could have a significant scrap be reduced based on
7.18
available information?  No, people did a good job 7.18
6.80
Example of real and simulated inventory of one product with a sudden 6.80

drop of demand - simulated based on available Forecast and a given
6.20 6.20

5.00 leadtime of 16 weeks  Despite best out of the given situation XY’0 5.00

€ needed to be scrapped
Real Stock Development
(16w FE+BE leadtime)

Simul stock development
€

Scrap of
>XY‘0 €
6.40 6.40

Time
8.60 8.60

9.20 22.05.2007 Page 36 9.20

12.0 0.0 8.9 12.0

What – If scenario
but a significant scrap could have been reduced if we
7.18
were faster  Start a speed program 7.18
6.80 6.80

6.20 Inventory development – real/simulated of 16 weeks 6.20

compared to 8 weeks one product  80% less scrap
5.00 5.00

Real Stock Development
Simul. stock development (16w FE+BE leadtime)
(8w FE+BE leadtime)
Simul. stock development

€

>80% less Scrap
if 8 weeks faster
 2 weeks
6.40
faster ~ Z‘0 € 6.40

for scrap
Time
8.60 8.60

9.20 22.05.2007 Page 37 9.20

12.0 0.0 8.9 12.0

Speed program - Strategy is to increase our speed to
7.18
customer and reduce FG inventory levels (postponement) 7.18
6.80 6.80

6.20 6.20

„All mistakes in forecasting end up in an inventory problem -
5.00
either lack of products (allocation) in an upturn or excess 5.00

inventory in a downturn“

  ~50% value add in
Backend

  Reduce Finished
Wafer stock FAB SORT DIE BANK ASSY TEST DC
Goods inventory
Buffer/ Buffer/ Buffer/ levels.
Stock Stock Stock

  Further increase
Build to Forecast Make to Order speed from Diebank
to customer.
Inc. SPEED from DIEBANK
  Reduce overall
CT Frontend: 2-3 Months CT Backend: 3-5 Weeks leadtime.

6.40 6.40

Diversification is taking place during
Backend Production!

8.60
Diebank (Semi 8.60
finished Goods Finished Goods
9.20 22.05.2007 Page 38 9.20

12.0 0.0 8.9 12.0

7.18
6.80 6.80

6.20 6.20

5.00
new “Fab”
5.00


decision making

management training


6.40 6.40


8.60 8.60


12.0 0.0 8.9 12.0

7.18
Executive summary 7.18
6.80 6.80

6.20
  The (semiconductor) innovation race extends further to global 6.20

5.00
collaborative supply chains; Past challenges amplified and became 5.00

future ones (Globalization, Flexibility, Speed)
  Improved S&O Forecast is by far the cheapest way (a$ sign helps!)
to save costs and increase revenue – significant improvements are
possible via systematic measurement, root cause analysis and
operational excellence - solved data and process problems
improves decision quality
  Education, simulation and serious games are key enablers to bring
theoretical possible improvements into business success

6.40 6.40

8.60 8.60


12.0 0.0 8.9 12.0

7.18 7.18
6.80 6.80

6.20 6.20

5.00 5.00

Questions ?

6.40 6.40

8.60 8.60


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