Supply Chain

Supply Chain

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Supply Chain



Introduction
------------

We have identified that any initiative aimed at improving the
customer/ supplier relationship supports SCM - this is true from an
internal, individual organization perspective through to complex
supply chain structures.

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
--------------------------------------

Established in 1980, Possehl BESI Electronic Hong Kong Limited has
been famous in the Electronic industry locally and internationally for
its' precision skills and loyalty towards its' customers. Located in
Tsuen Wan, Hong Kong, we are currently employing over 600 staffs; they
include Management and Administration officers, engineers,
technicians, production operators and security guards, etc.

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.

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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
-------------------

At this point, it is obvious that the position of the leverage and
normal supplies are settled with the help of the continue evaluation.
But, strategic and bottleneck supplies are different mainly because of
the product nature as well as the quality intensity.


3.1.1 For strategic items:
--------------------------

Over the years, the supply of copper alloy has always been relay on a
single supply. The reason is because solely that company only
manufactures this item.

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
--------------------------

Although it represents a relatively limited value for the product, but
production cannot be processed without it.

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
------------

Possehl BESI Electronic Hong Kong Limited has a global network in
manufacturing semiconductor lead frames. We are also an ISO-9002
certified company, we understand the importance of a systematic
management.

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.
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