Supply Chain

Introduction

Identify at least 1 initiative being implemented (or has been implemented) by your business that supports SCM thinking. For each initiative:

Describe the aims (objectives) of the action being taken and outline the supply chain problem it seeks to address

Outline the proposal (or solution) and describe how it supports SCM principles

Identify any potential barriers to its successful implementation that could hinder the effectiveness of the initiative

1.1 Background information the company

The parent company of Possehl BESI Electronic Hong Kong Limited is Possehl BESI Electronics N.V. in the Netherlands. It is a joint venture between L. Possehl & Company mbH of Germany (50%), GHL Industries of Asia (25%) and BE Semiconductor Industries of Amsterdam in the Netherlands (25%). This combination has created a company that has been one of the top 10 players in the high-tech electronic semiconductor packaging and equipment sector in the world. In fact, it is the largest non-Japanese supplier in this field since 1992.

Possehl BESI Electronic Hong Kong Limited produce mainly two kind of products, one of them is semiconductor packaging, technically known as punched and etched, high-precision components, such as lead frames, contacts, punched parts, components & subassemblies that are intend to be consumed by the electronic industry.

Lead frames are manufactured from strip metal by means of stamping or etching, and microchips are then mounted on each of these lead frames. The thickness of each frame is no thinner that 0.1 mm. These carriers are vital for turning chip sets into state-of-art electronic components that will later be installed into computers, mobile phones or missiles.

Special required finishing are also available upon request, for example, electroplating full-face and spot technology lead frames or making endless plug-in connectors that can be as small as 0.07mm in width for special purposes.

Other than the semiconductor packaging, Machineries and tools that manufacture lead frames and assemble semiconductors are another major business at Possehl BESI Electronic Hong Kong Limited. We have not only the capability to produce top quality products but we can also help others to set up their own workshop, some of the most common machine categories are laser bonding machines, special machines for further lead frames processing, machines for producing and processing lead frames, and high-performance punching tools such as special tools parts and jigs. However, a list Customer’s requirement is essential when purchasing machines and tools since many of them are tailor made for special operations.

Since Possehl BESI Electronic Hong Kong Limited is an ISO-9000 qualified manufacturer; all products are shipped with our quality control inspector approval by random and are backed by a replacement guarantee.

Our major customer groups are targeted mainly in the semiconductor industry, electronics industry, electrical engineering, and plastic industry. In fact, companies like SGS Thomson, Motorola, Siemens, and Philips have been some of our strategic customers for decades and we have proved to be a reliable source in semiconductor packaging.

Although our company is an international company, we learned that problems that are beyond our production capacity may arise due to regional differences may result in delaying the production lead-time. Therefore, it is important for us to predict our logistic situation in order to prevent the worst cause from happening. We believed that the key to this success relays on a sound “Supply Chain Management” Scheme.

2 Supply Planning

The following items are essential during the lead frame production: 1. Alloy Copper 2. Photo resist film 3. Glass Mask 4. Chemical solution (Liquid Silver - for platting, Cuppic Chloride – etching reaction) 5. Microscope 6. Stationary (paper, pens, etc.)

The relationship between suppliers and customers is the important factor affecting information and material flow in supply chain. Supply chain includes several elements such as material suppliers, production facilities, distribution services and customers and form a chain by the forward and backward flow of information and materials. Nevertheless, the advantage of having a good supply chain management can help reduce purchase costs, inventory levels, and improve the quality of the products.

In our case, since our production facility is an ISO-9002 certified facility, periodic internal auditing and frequent machinery maintenance provide contributions towards top performance of this element. In addition, since we have been observing a consistent efficiency in our production facility, we tend to believe that it is a constant variable.

2.1 Supply Positioning

When we want to position our supply chain, classifying the resources into different stages and find out the most suitable strategies for improvement is most important. A Kraljic’s Matrix would best illustrate this scenario as follow:

Leverage Items- Chemical solution- Photo resist film Strategic Items- Alloy Copper Normal Items- Stationery- Microscope Bottleneck Items- Glass Mask

2.2 Optimizing Supply Base Size

The objective of optimizing a supply base size relays on continuation of rating our existing suppliers. In our case, each raw material has around three suppliers. We shall rated each of the supplier according to different criteria with different weight regarding the important that criteria is. The chart below is an illustration of what it may look like:

		Supplier A		Supplier B		Supplier C
Criteria	Weight	Score*	Total	Score*	Total	Score*	Total
Cost	10	1	20	2	20	3	30
Quality	20	3	60	2	40	1	20
Delivery on time	5	3	15	2	10	1	5
Service	5	2	10	2	5	1	5
Risk level	5	3	15	2	10	1	5
Flexibility	5	2	10	2	10	1	5
Total Score		130		100		70
Total score = 150

* Score are graded as follows: 1=poor performance 2=average performance 3=good performance

As we are looking for a supplier with reliability, we, therefore, would accept suppliers who perform above average, which they must receive al least a total score of 100 points. In the above example, supplier C is definitely eliminated.

3 Proposal

3.1 Supply Position

3.1.1 For strategic items:

Strategies: Build Strategic Partnership - a) By merging the companies; b) By investing in the supplier’s stock; c) By signing a long term contract and absorb price risk.

Company Acquisition - Through the wealth of our parent company, own the supplier by acquisition. By doing so, we, not only, will have a guaranteed supply; we will learn their technique and start another business, which may be a benefit to our parent company in a long run. Internal Supply - Study the probability of producing copper alloy and produce it.

3.1.2 For bottleneck items

Strategies: 1) Be a local dealer. Then, we can control the stock flow as well as to make profit out of it. 2) Keep more stock, such as maintaining a 2 months storage level. Although this may increase a inventory level, but bare in mind that these items are not expensive, but would affect our production if our supplier ran out of stock.

3.2 Optimizing the supply base

Strategies: We decide to reduce the supply base by continue to evaluating our suppliers, and to search for new suppliers. By doing this in a long term, we will accumulate a list of suppliers. In terms of expanding our business, we can exchange our information with our allies.

4 Potential Barriers

1) Permanently disqualified a supplier may not be wise because their technical aspect or services may improve in time. 2) Rating system may not reflect the exact performance of the supplier due to biased judgments. 3) Potential information flow failure between purchasing department and supplier without the end users’ opinion may cause misunderstanding that affects the rating of the suppliers.

5 Conclusion

Implementation a Supply Chain Management into our systematic management is important because fail of getting supply in one of our components may cause delays in delivery or even cause production seizure, and this is the worst thing that could happened to a production business. We should be aware of the local factor when planning a supply chain. We should also establish trust between our suppliers and conducting a periodic evaluation may be a possible way to describe a certain standard.

As we forecast a disastrous situation, we have to plot a solution to prevent a situation from happening. Some factors such as Strategic and Bottleneck items, instead of fear a potential supply threat, we can turn our fear into profit by joint venture techniques. In fact, in this era where giant corporations are forming Strategic alliances or through merging two or more giant companies into an even bigger giant company. Consequently, my propose solution may proved to be generating profit in a long term.

But be cautious while implementing the Supply Chain Management because there may be blind spots. Last but not least, I strongly suggest that we should include this system into our ISO-9002 Quality Manual as a matter of communication uniformity. In addition, may I also suggest a revision in no less than 3 months after the beginning of the system implementation follow by periodic revision as well as internal auditing in order to assure the well being of the system and the best interest of the company.