The Introduction of Lean Manufacturing Concepts at Qualcomm

1
The Introduction of Lean Manufacturing Concepts
at Qualcomm
2
Introduction Agenda

• The Value Chain
• Lean Concepts
• Benefits of Lean Manufacturing
• 2 Oracle Instances
• The QCT instance
• The Quantum instance
• Why 2 instances?
• Separation of Production and Non-Prod
  Procurement
• 2007 Implementation Sites

3
The Value Chain
The Quantum value chain is driven by Qualcomms
leadership position as the developer of CDMA
technologies. QCT CDMA technologies accounts for
90-95 of QSCO demand, principally FFAs and
SURFS (test equipment used to test chip quality
and functionality). The remaining 5-10 of QSCO
demand is generated by QWBS (Qualcomm Wireless
Business Solutions), which manufactures
OmniVision and other wireless products.
4
Lean Concepts The 5S System
Japanese Meaning Translation
Seiri Organization Sort
Seiton Orderliness Set-in-Order
Seiso Cleanliness Shine
Seiketsu Standardized Cleanup Standardize
Shitsuke Discipline Sustain
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Lean Concepts
T O
F R O M
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Benefits of Lean Manufacturing

• Reduced inventory across the supply chain
• Greater predictability around lead times and
  on-time shipments
• Increased reliability ? the right product at the
  right time at the right price
• Better customer satisfaction due to greater
  accuracy in forecast delivery
• Better data, robust processes and systems ?
  management effectiveness
• Increase control over quality, defects and root
  cause of defects (6Sigma)
• Optimize operations between existing QSCO and
  shelter organization
• Better manage throughput with new Contract
  Manufacturing partner
• Position Qualcomm for rapid growth in emerging
  business and markets

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2 Oracle instances The QCT Instance

• QCT instance has two application servers 11.5.8
  and 11.5.9 (lot controlled)
• Quantum instance is an Oracle 11.5.10 instance,
  with min. customizations
• Each organization owns its own inventory
  common inventory items
• QSCO (manufacturing) has no PL, and will
  liquidate costs to other BUs

QCT Instance
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2 Oracle instances The Quantum Instance
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Why two instances?

• The QCT instance is geared to Qualcomms chip
  manufacturing business, is heavily customized,
  and uses lot control and other features that
  are not attractive to the Qualcomm discrete
  manufacturing businesses
• The QCT instance uses two application servers,
  one Oracle 11.5.8 and the other, an Oracle 11.5.9
  instance, primarily to support Oracles Advanced
  Supply Chain Planning (ASCP) engine
• The QCT instance does not include project
  accounting, nor does it make allowance for
  international rollout
• There is continuing discussion in the press
  about spinning off the chip business

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Separation of Prod Non-Prod Procurement
Indirect and Services
Direct and NPI
Shelter and Bldg M
Corp Procure
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Quantum Implementation Sites
Russia (2)
Canada (1)
UK(5)
EU (DE, ES, FR, IT, NE, SE) (6)
San Diego
Korea(2)
SD1
Japan(2)
QMT San Jose
China(3)
Israel(1)
Tijuana, Mexico
Taiwan (3)
SD2
QMT Taiwan
India(3)
Mexico(6)
Vietnam(1)
Singapore (1)
Indonesia (1)
Brazil (1)
Australia (2)
South Africa (1)
Argentina (1)
Actual sites, 2007 rollout
Potential sites, 2008 global rollout
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Lean Manufacturing Agenda

• Inventory Orgs Structure
• ASCP Overview
• Forecasts and Sales Order Drive Demand
• Business Processes
• SCO (Supply Chain Organization) Procurement
• Shelter Manufacturing and CM Procurement
• NPI Procurement
• Quality and RTS Highlights
• The concept of a Virtual MRB
• Lean Manufacturing to be Model
• Conclusion

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Qualcomm Inventory Orgs Structure
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ASCP Overview

• Demand driven by forecasts and Sales Orders
  (depending on OU)
• As Demand drops into the Planners Workbench,
  Planners route make orders to MES (Shop Floor
  Control), material requirements are identified,
  and POs are created and transmitted to Suppliers
  via EDI (Harbinger)
• Entire production procurement process is
  automated, end-to-end

Generate Baseline Forecast
Generate Constrained Long Term Supply Plan
Oracle Modules
Collaborative Demand Planning
Generate Short Term Manufacturing Plan
Generate Consensus Forecast
Release Work Orders to Contract Manufacturer
Capture Inventory Visibility
Release Purchase Orders to Component Vendor(s)
In addition, DBI may be used for KPI / Metric
reporting
Collaborate with Contract Manufacturer
Check Availability Capacity (ATP)
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Forecasts Drive Demand into QSCO

• Forecasts or SOs created in QCT, MUI, QMT OU
• Demand is placed against QSCO OU, 3 inventory
  orgs
• POs are generated and sent via EDI to suppliers

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Sales Orders Drive Demand
Forecasts entered via spreadsheet
Releases against Blanket PO (EDI 850)
Forecast (EDI 830)
Adjustments to Plan made with Arrow
Includes VMI, SOI, toll manufacture
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Sales Orders Drive Demand
Run ASCP Engine
SIM versus REGEN Run
POs using EDI 850
Forecast using EDI 830
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ICG Process Item is Planning Enabled
POs marked with an -NPI
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Oracle Configuration Item Master (1 of 2)
Indicates an Active Item
Create Supply to Match Demand
Defines period for which releases created
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Oracle Configuration ASCP Engine (2 of 2)
ASCP Plan is not Constrained Enforced
Demand Drives the Planning Engine
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Quality and RTS Design Highlights

• Uses standard Oracle hooks from Procurement to
  Quality
• 8 Quality Collection Plans developed for each
  state an NCed item may take
• Handles RTS for both Production and Ancillary
  Items
• Covers all RTS scenarios
• Credit
• Outside Rework
• SOI (Supplier Owned Inventory)
• Legacy Receipts
• Utilizes standard Quantum shipping process
  (custom, integration with RTS)
• Leverages standard Oracle WO/PO process to
  capture all relevant inventory consumption, item
  conversions, labor charges and other variances
• Improves A/P debit memo process using the AP Open
  Invoices API for automatic debit memo creation

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QUALCOMM Virtual MRB Process
Collection Plans
Material Receipt into MRB Inventory
Factory
Factory receives part, and after inspection
(reject), transfers NC part to MRB Inventory.
Rework Manually Create Work Order for internal
rework items

• RCV INSP

Work Order NC Rework

• Master Main

NC Process Start

• Audit

MRB Sub
NC part is retuned to MRB Sub-inventory

• Detail

Repair
Vendor

• Disp Master

Inv Move
OSP

• RoHS-WEES

RTS (Buyer)

• WFR Master

Accept, Use as Is
Disposition Sub (SQE)
Accept Use as Is
NC part is sent to outsourced repair facility

• RTS Master

Scrap

• OSP Master

Part is not salvageable and is scrapped.
RTS/RTV ( Credit/ SOI)
Hold
Supplier
Key
Automated
Scrap
RTS Process Create OM Shipping Lines from
Receipt Lines.
Manual
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Quality Automated Processes (incl. RTS)

• Automatic Creation of Sales Orders
• Trigger on RTS disposition
• Utilize Item set up
• Feed Shipping documents
• Create Vendor address (site)
• Automatic E-mail Notification to next Person in
  Chain
• Reports

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LEAN Process Flow To Be Model
On line Orders
ERPOrderMgmt
Costing
Resp
Qualcomm
CdeC Site
MPS Planning
Transfer FGI to Company
ROP Sizing
CM Dist Site 1
ERP
Supply Chain Partner
CM Pack-out
Contract Manufacturer
MRP Planning
CM Dist Site 2
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Conclusion