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July 12, 2000

Zilog's Y2K Upgrade Yields Long-Term Benefits in Supply Chain

By Jennifer Baljko Shah

Electronic Buyers' News (07/12/00, 02:23:40 PM EST)

Y2K. Supply-chain management. While most people may not say the two in the same breath, Zilog Inc. has a different take. For a while, the two were closely connected at the semiconductor company.

Last year's Y2K preparations have enabled Zilog to develop more advanced supply-chain strategies and implement systems that better integrate the order, factory scheduling, and supply-chain planning functions, said Bob Ashworth, vice president of supply-chain management and business planning at the Campbell, Calif., maker of microprocessors and microcontrollers.

Although moving product more efficiently through the pipeline has long been a Zilog goal, replacing a home-grown ERP system with an Oracle platform that was Y2K-compliant forced the issue.

On July 5 of last year, we installed a new ERP system for several reasons, but mainly because our old system was not Y2K-compliant, Ashworth said. All the legacy supply-chain, scheduling, and purchasing systems were linked to the old system. The bookings, backlog, invoicing, inventory reports, and all of the corporate data had to move into a new environment.

The company installed more-robust tools to handle the different demands that customers were placing on the company, particularly in terms of handling demand-pull signals and just-in-time delivery.

Zilog books backlog at its test facility in the Philippines and pulls the devices through on a build-to-order basis. On the manufacturing side, however, the process operates mostly in push mode, with executives making decisions around spreadsheets and trying to determine what needs to be loaded into the fab to support backlog and product goals.

That's the only way to do it if there's no dynamic scheduling system in place, Ashworth said. You can't manage all of the information that changes so rapidly, so you have to buffer your service with inventory and tie up cash by pushing wafers through on the front end for just-in-case scenarios.

But building inventory stockpiles was no longer a satisfactory way of addressing those activities, he added. Zilog had to find a solution that provided for dynamic scheduling on the fab side and aligned the manufacturing process with the orders that were being booked.

Our challenge was to find solutions that make people work smarter, not harder, he said. The issues of cost and inventory are important, but the driving force for us was service and our ability to do what we said we'd do in terms of scheduling capacity and delivery, Ashworth said.

If an order comes in and we promise a date, that action has to be supported by our materials and capacity planning ability. ... If we want to do that well, we can't do it manually, Ashworth added.

To get to that stage of service, Zilog has signed on Adexa Inc., Los Angeles, and will use the software provider's iCollaboration solution.

The project -- encompassing not only more effectively moving data into the factory, but getting the orders scheduled on the production line as soon as they come in -- will be done in several phases.

The first phase is to provide more accurate scheduling information to the factories and test facilities as customer orders are placed. iCollaboration will help Zilog synchronize its manufacturing facilities and provide better visibility across its enterprise while reducing work in progress and cycle times.

Future phases entail improving the materials and capacity planning systems, which are responsible for creating a local, or factory-specific, blueprint for how the plant needs to be loaded and what products move through the lines at what time.

Eventually, Zilog is expecting another module of Adexa's software to integrate with the newly installed Oracle system and schedule an order at the same time it's being placed, according to Ashworth.

The [Adexa module] will hide behind the Oracle system. At the order entry point, instead of a query passing from Oracle to the planner, [the module] will answer the query online, Ashworth said.

Zilog will begin working off the initial Adexa tools at the end of this month, and expects the entire software program to be in place by the end of the year.

However, the biggest challenge remains on the human re-engineering side and educating employees on a new way of doing things. That process will take longer than the system rollout, according to Ashworth.

The vision is to do this one step at a time. These things don't happen over night, he said. Systems can be implemented quickly. It's the human side that takes some work.

http://www.ebnonline.com/digest/story/OEG20000712S0021

-- (Dee360Degree@aol.com), July 12, 2000