Semiconductors have been a vibrant and growing industry for decades and there's still plenty of opportunity for smart organizations that evolve with the times. At the same time, new emerging markets, rapid merger and acquisition (M&A) activity, and the looming reality to a shift that will take us beyond Moore's law make the market challenging.
Although the semiconductor market remains solid, sales figures continue to erode. The Semiconductor Industry Association (SIA), using statistics from World Semiconductor Trade Statistics (WSTS) organization, said that worldwide sales of semiconductors reached $26.1 billion for the month of March 2016, a slight increase of 0.3% from the prior month's $26.0 billion total. Sales from the first quarter of 2016 were $78.3 billion, down 5.5% compared to the previous quarter and 5.8% lower than the first quarter of 2015, the organization said.
EBN sat down with Brent Wilson, senior vice president, Global Supply Chain Operations and Procurement at ON Semiconductor to talk about how the company is using technology to tackle business challenges and evolve the company's supply chain strategy. The company, which posted $3.496 billion in revenues in 2015, sells semiconductor-based solutions, including energy efficient connectivity, sensing, power management, analog, logic, timing, discrete, and custom devices. Wilson heads ON Semiconductor's Global Supply Chain Operations (GSCO), which includes worldwide planning, logistics, procurement and contract manufacturing.
EBN: Tell us a little about On Semiconductor's recent acquisitions. What challenges that have they presented in terms of supply chain management?
Wilson: ON Semiconductor has completed 10 acquisitions since 2008. Each acquisition has its own unique supply chain requirements and relationships with its existing customer base. The challenge is enhancing the customer experience while gaining efficiency throughout the supply chain.
EBN: Can you share a few of the lessons learned in terms of best practices?
Wilson: Keep an open mind when viewing an acquisition's supply chain practices and suppliers. We consistently find and adopt processes at the companies we purchase that improve our existing systems. Also, we are consistently exposed to new, high quality suppliers through the acquisition process, and we quickly form expanded relationships with those suppliers to a scope well beyond their previous engagement.
Another best practice is to continually strengthen the team with each acquisition. We look for employees who are aligned with our corporate culture and have the drive to improve, then we find assignments for them to enhance the team. Many times, these new assignment are not the same function the employee had under the previous company structure.
EBN: What pitfalls would you say are most common when attempting this type of consolidation?
Wilson: The root cause of most of our integration issues has been communication. Communication is critical in the integration space because both companies are trying to learn history, process, products and terminology in a short amount of time. It's like learning a new language in one semester of college.
EBN: What supply chain tools and processes has your organization adopted most recently?
Wilson: We are transitioning several of our enterprise-wide supply chain software systems. Planning and sales and operation planning (S&OP) are moving to Kinaxis' Rapid Response. Factory capacity planning is moving to Llamasoft's Supply Chain Guru. Product data management is moving to Agile, and we continue to standardize across more modules in the Oracle ERP suite.
EBN: How does the availability of technology solutions (such as Kinaxis) increase the ability of the supply chain function to contribute strategically to the organization?
Wilson: Rapid Response will make current supply chain information more readily available across our global operations. Our test of the software shows a greater than 10X improvement in scenario run times over our existing platform. This enhanced speed will allow several scenario iterations toward better solutions for our customers and ourselves, before we commit to executing a plan. Also, this enhanced scenario capability can greatly improve the time required to solve supply interruptions.
EBN: Looking forward, what challenges and opportunities do you see in the coming year as a semiconductor company?
Wilson: At ON Semiconductor, our challenge is to continue the transformation toward best in breed software systems, while continuing to execute acquisitions and serve our existing customers at the high levels of service they have come to expect from us.
— Hailey Lynne McKeefry, Editor in Chief, EBN
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