Practical, risk management in high-tech industry, on example of semiconductor industry, including processes and tools for potential risk prevention within the supply chain

Abstract

The manufacture of semiconductors is a very volatile and changing industry. The cycle time for a product is around 3 months, and customers expect deliveries within few weeks after orders. Supplying to intermediate customers, who at the same time supply to other customers, makes the necessity of this industry to be highly flexible. Due to factors such as globalization, high pricing pressure, and short product lifecycles, it is very important for companies such as Infineon to focus on their core competencies. Some of these competences are effective Supply Chain Risk Management practices which can assess and proactively evaluate supply chain risks. The company in which the thesis is based on is a German company established in Munich; Infineon Technologies AG. Being number one manufacturer of semiconductors in Germany, number two in Europe and operating worldwide, makes Infineon a very interesting company in which to develop a Master Thesis. Supply Chain Risk Management is starting to gain more and more strength in most industries. A constant re-evaluation and assessment of current processes regarding supply chains is crucial to manage risks and take action accordingly. Supply Chain Risk Management is particularly important if we consider the semiconductor industry, and even more important if we take into consideration the many different threats that can be found in international-oriented supply chains especially with a high level of complexity within operations. Problems can arise from obtaining the raw materials from suppliers, undergoing the complex steps in Frontend and Backend, coordinating in-house operations with outsourcing and accomplish quality objectives as well as on time delivery to customers located everywhere in the globe. There are already numerous well-established processes in place to organize and control Infineon’s supply chain. One of the instruments used is the weekly Supply Chain Call (SC Call), implemented in year 2008 after the Financial Economic crisis started. Defined as a Risk Management Tool, the SC Call is still missing certain criteria that a Risk Management model should contain. Being a tool that enables verbal communication within Supply Chain Management partners makes it a tool that can ease the identification of risks, prioritizing accordingly and assessing and treating conveniently. Negotiating with customers, especially under allocation and tight supply situations is an important role played by the CLMs at Infineon. The better understanding of operational incidences can help in the CLM’s reliability towards Customers contributing to Infineon’s profit and overall image. The SC Call has a lot of potential as a tool thus making it quite interesting to study. The thesis not only aligns it with the already existing Enterprise Risk Management Manual of the Company but also compares it with the already existing bases of Supply Chain Risk Management found in literature. It enables a manual for the SC Call which establishes structured bases for its usage and understanding, and also suggests practical improvements based on detected weaknesses. Some of these suggestions were implemented by practical experience, and some others were proposals to take into account for future modifications in order to make the SC Call more valuable for Infineon.