Inventory management is essential to providing customer satisfaction and optimizing financial performance for an electronic component manufacturing business. The way to create satisfied customers is to deliver products they need on time and every time. Unfortunately, one way to keep your CFO happy is to keep inventory as low as possible. Balancing these to demands takes a sophisticated system that makes it possible.
There are many kinds of inventory that need to be managed in the semiconductor business.
- Inventory that can quickly be delivered to customers
— Warehouse finished goods inventory
— Distributor inventory
- Work-in-Process Inventory
— Product in tape and reel
— Product in test
— Products in packaging
— Die banks
— Wafers in fab
The difficult problem is that all the inventory not in finished goods in the warehouse or in the distributor warehouse takes from 1 to 14 weeks to become shippable and has yield loss all along the way as it moves through the manufacturing process
NEHANET offers several modules to help you manage this complex inventory management problem:
Manufacturer’s Inventory tracks products in all the inventory locations of a manufacturer. As finished goods reach the warehouse, transfers take place between warehouses, regions, and even contract manufacturers — so keeping track of inventory movements between warehouses is a critical part of optimizing the products you have ready to ship.
- Distributor Inventory tracks inventory available in all the distributor warehouse locations based on reports coming from distributors. It allows you to keep just the right amount of inventory in the distributor without creating stranded inventory or having to build products for customers while you have inventory available in the channel that could support demand.
- Order Planning requires having a complete picture of what inventory is available now and what will be available in the future when the manufacturing process is complete. To plan new orders you need to know:
— What inventory is available in the warehouse and whether it is committed to customers or available to ship
— Inventory that will become available based on where material is in the manufacturing process, how much time is left before it finishes manufacturing, and what the expected yield is before material reaches finished goods in the warehouse
— FG inventory is imported from the ERP system in use in the company
— WIP inventory is imported from the WIP tracking and material planning system used by operations.
— When yields or cycle time are not typical you run the risk of not having product to ship to meet your commitment. NEHANET flags orders at risk of not shipping and makes it visible to planning teams to start additional product if needed or reschedule the order so customers don’t get surprised when you don’t ship.
When you manage the entire inventory process you can optimize your delivery performance to customers and keep the right amount of inventory by product to deliver on time without holding excessive high-value inventory which impacts the P/L. Keeping inventory under control takes a lot of time and planning. Having the right information available real-time is an essential part of building a successful electronic product company.