Armanino Blog

Overcoming ERP Supply Chain Integration Hurdles in Fabless Semiconductor Manufacturing

January 13, 2015

With so many of their critical supply chain operations happening outside the four walls of a fabless semiconductor manufacturer, it becomes crucial that they effectively communicate with partners to direct supply chain operations and receive timely updates from them to maintain full supply chain visibility in order to operate efficiently. So how can the supply chain operations and planning groups get real time visibility into their outsourced operations? The obvious answer here is that they need to establish a means of electronic integration with their supply chain partners. Read on for details on overcoming the hurdles in ERP supply chain integration.

Integration is easier said than done. In a perfect world, all partners would be able to adopt some sort of integration standard akin to the EDI standards set for the automotive industry in the US – but this is far from the case. The reality is, with the broad set of systems in use on both the fabless OEM side and the manufacturing services side, the attempts to establish and enforce an industry standard of communication have been challenging to say the least.

RosettaNet is the most prominent set of standards, but only the larger partners have the ability to support this XML based standard. The greater majority of subcontract manufacturers in the industry have settled on providing a WIP snapshot on a web page or transaction summaries generated through reporting tools, or in some cases even manually keyed into spreadsheets.

From our 20 years of experience implementing ERP for fabless companies, we understand the real world fragmentation of integration capabilities amongst supply chain partners. In fact, many contract manufacturers find it easiest to provide an XLS, CSV or flat file with the transactions.

To solve this problem, Armanino has extended Microsoft Dynamics AX by building a Supply Chain Interface module directly within the ERP application. This interface receives files in any of the various formats from our supply chain partners whether XML, CSV, XLS, etc. Rather than mandate a standard on our partners, we simply take the format they can provide, and map it accordingly to the fabless supply chain transactions in our transaction library. We find this approach significantly speeds up the integration process.

The Supply Chain Interface Module for Dynamics AX (SCI) is flexible enough to be configured from an end user perspective, so it doesn't require heavy developer involvement. One of the particularly advantageous features utilized by many users is setting up customer specific transaction maps. A partner specific cross-reference feature is also helpful for basic data transformation, to aid in the data cleansing process. For instance, if one of your partners refers to an operation in their MES as 'Op70 – ASSY', and you have it set up in Dynamics AX as 'Op10 – Assembly', the cross-reference tables can be set up accordingly. This speeds up the integration process and eliminates the need for enforcing rigid data standards across your supply chain partners.

Another important aspect of the SCI is that the transaction files are brought into the system and staged into a workbench for review or modification before executing the automated processing of all the supply chain transactions. This workbench not only performs validation on the files as they are loaded, but it also performs business logic validations on all the data prior to processing. This is an important step, because as anyone who has worked with overseas contract manufacturers before knows, the data that is provided by your partners is not always pristine. So if they reference the wrong service PO, incorrectly reference a lot number, or a quantity is out of whack beyond anticipated tolerance levels, etc., then that transaction line gets flagged for manual review, while the ones with correct data would flow through seamlessly.

By using the SCI, fabless companies have been able to rapidly implement integrations with their suppliers and contract manufacturers. Some of the prevailing supply chain transactions for fabless semiconductor manufacturers are:

  • Receiving PO Schedule updates from suppliers
  • Receiving notifications of PO receipts for inventory that lands at a contract manufacture
  • Notifications of production Lot Starts
  • Updates for Lot Moves/Operation completions – specifically the move out quantities from operations
  • Updates of inventory moves/completion of intermediate goods or finished goods into stock
  • Logistics transactions originating from one partner or site to another including transfer order shipments – generally into an in-transit location
  • The other side of the transaction of transfer order receipts
  • WIP status
  • ...and more, all updating the fully integrated ERP solution for both financials and operations.

Because pay-points drive the service costs incurred for a manufacturing service operation – e.g. only pay for goods that come out of an assembly or pay for all items that went into a test operation (final and error items), the timeliness and accuracy of the data received from the subcontractor is paramount to the overall success of managing the supply chain.

Learn more about Armanino's Supply Chain Interface Module for Microsoft Dynamics AX, or how we've partnered with fabless semiconductor companies to set up a best-in-class ERP.

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