As the world's leading supplier of process control and yield management solutions for the semiconductor industry, KLA-Tencor serves every major semiconductor manufacturer. Each customer's wafer fabrication facility typically costs $3bn, so these integrated circuit manufacturers rely on KLA-Tencor to ensure maximum uptime.
"Our customers depend on us to accurately track, distribute and support 60,000 spare parts on 20,000 systems from 38 stocking locations around the world," says Joe Chamberlain, vice president of service supply chain management. "Our supply chain touches every aspect of this business, and in the past four years, MCA Solutions has helped us transform our service supply chain into a competitive differentiator."
Total implementation time for MCA's SPO suite was under 100 days, and within two months ROI was positive. Specific benefits have included:
• Local fill rates improved an average of 18 percent
• Regional fill rates improved an average of 7 percent
• Service supply chain cost as a percent of revenue fell by 4
"Success often brings unexpected challenges," says Chamberlain. "In our case, implementing SPO Strategy helped us see that aligning SPO's forecasting and positioning methodology with our tactical planning legacy system would be vital. Unfortunately, our tactical planning still relied on a more traditional approach of distribution resource planning for allocation and transshipments, and made it difficult to close the execution gap between actual fill rate and target. As a result, we frequently rebalanced our inventory, resulting in additional transaction costs."
To leverage the advanced forecasting and risk management capability of MCA's strategy product, Chamberlain added SPO Tactics, which calculates a "service impact" for each part-location stock level below target, and then recommends and prioritizes supply chain decisions.
"We replaced our legacy planning system with SPO Tactics in March 2004," he says. Again, the impact and bottom-line benefit was immediate. Chamberlain was able to:
• Increase the ratio of field to distribution center inventory by 10 percent
• Reduce the execution gap by 3 percent on average, and
• Improve planner productivity by eliminating non-value-added transactions and providing supply chain exception alerts.
"We have every expectation of continuing to leverage MCA's SPO suite of products," says Chamberlain. "We are already upgrading to SPO 5.0, and are about to upgrade to the latest release of MCA software, and expanding SPO Tactics use to our spares manufacturing group."
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