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Applied Materials: Invisible, But Everywhere

Jim White, vice president of central operations and CPO with Applied Materials, talks about the challenges his company faces in gaining full visibility of supply and demand, and in dealing with increasing supply-chain volatility.

Applied Materials: Invisible, But Everywhere

Applied Materials is a major player in the semiconductor equipment, display, solar and energy systems markets. Its broad customer base consists of “virtually anybody that makes a microchip,” says White. The company’s own brand, however, has a relative low public profile, despite the presence of its products in nearly all the major companies in its various markets.

In recent years, the industry has undergone a wave of consolidation, shifting more power to the customer. “We’ve had to be a lot more responsive than five years ago,” says White. Now, with the help of new planning technology, it can conduct demand modeling in real time.

Previously, Applied Materials couldn’t respond to customers on a timely basis when they reported a drop in demand. The company needs to match such requests with the capabilities and constraints of its own supply chain. “Speed matters for us,” says White.

The semiconductor market is highly volatile, yet cyclical as well, in step with larger economic trends. Complicating matters is the highly configurable nature of nearly everything that Applied Materials makes. It’s a low-volume, high-mix world – making accurate demand planning extremely difficult.

Plan deviations can be extreme, sometimes calling for the doubling or tripling of production with a quarter. The company needs to make tough decisions about whether it can meet customer demands for changes to the plan. It must prioritize requests, based on the service expectations of each account. “We want to make the best decisions about hitting new-product sales and the supporting market afterwards,” White says.

Despite its leading market position, Applied Materials isn’t complacent. It's working with Kinaxis to ensure continued progress. “We do not take any of our competitors for granted,” says White. If the company misses a narrow window of opportunity for serving a customer, “it can be two or three years before you can get back in and regain that market share.”

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Keywords: supply chain, supply chain management, high-tech supply chain, green supply chain, inventory management, inventory control, supply chain planning, supply chain services, semiconductor supply chain

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