The European Supply Chain Excellence Awards 2007, Hi-Tech & Electronics Winner: Infineon technologies

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A moment’s thought will reveal that, despite there being almost 40 shortlisted Finalists in this year’s Awards, the Overall winner can only be one of the sectoral group winners. So the judges were faced with seven possibles.

Representing FMCG/CGP is Novozymes; the baton for Telecoms is carried by Thomson Telecom TPS Division; and in Hi-tech the high-flyer is Infineon Technologies.

Looking to seal a win for the Aerospace, Defence and Industrial sector we have Trelleborg Sealing Solutions; the banner of the Public Sector, Services and Utilities is waved by TNK-BP; Tesco Direct is homing in from the Retail & Distribution category; and in Healthcare, Johnson & Johnson have the right prescription.

But when we come to the Overall Winner, not all are equal. One of the inescapable conclusions, after 11 years of these Awards run under a variety of qualitative and quantitative methodologies, is that while the best in any given sector are often very close, there are great differences between the supply chain performances in different sectors. (And if you don’t believe that, ask yourself why we don’t currently run a sectoral Award for Building and Construction – it’s not that supply chain performance isn’t critically important there, but….).

On the other hand, there may arguably be more virtue in rewarding an organisation that has come from nowhere to a fair performance, or one that far outstrips its competitors in the sector, rather than one, perhaps in a relatively new industry, that has had the luxury of starting from a good supply chain base and just piles incremental improvement on incremental improvement.

We don’t take these decisions lightly in the judging process, and we have continually to remind ourselves what we mean by ”excellence”. Of course, it includes total mastery of the basic supply chain processes; investment in infrastructure and technology may be relevant, but only if it is focused on the business goals; we want to see verve, drive and enthusiasm (which probably also means commitment to staff training, supplier and customer development, and leadership planning); we want to see not just how good an operation is today, but how it plans to be even better tomorrow and the day after; and perhaps above all we are looking for supply chain excellence that isn’t just an end in itself, but is an integral part and driver of the overall organisational or business strategy.

These points in mind, the judges identified three entries that exemplified most or all of these characteristics. And as is traditional with Awards, in reverse order they are:

Third, Novozymes, particularly for their innovative approaches to cultural and people change

Second, Tesco Direct, for a stunning performance from a standing start

And the Overall Winner of the 2007 European Supply Chain Excellence Awards – Infineon Technologies AG.

As regular readers may remember, the Germany-based international semi-conductor company was only narrowly defeated by Cisco in the Hi-tech sectoral Award last year (and with that the chance of the Overall Award). We know, as this year’s entry proved, that this disappointment has been merely a spur to greater endeavours, and the judges particularly praised ”this determined commitment to improvement, carried out in typically thorough German fashion”.

Infineon has a strongly customer-focused and well integrated supply chain, with outstanding customer service, and particular focus on transit, warehouse and order confirmation cycle times. This has been true for a long time, but a particularly impressive strength at Infineon is the relentless drive for continuous improvement. The IT group within Infineon is very much supply-chain oriented, and developments since last year have included the roll-out world wide of an order management system based on i2 and SAP SD; also a new i2 capacity planning system and an integrated Target Allocation Setting user interface (also based on i2 products) for advanced supply planning in the tight supply situations which are notoriously endemic in the semiconductor industry. On the physical side, a new distribution centre for Japan has been launched to better serve the special requirements of Japanese customers.

An important aspect at Infineon is the Supply Chain Planning Complexity Reduction Project, which does just what it says – continually striving to make an inevitably complex supply chain planning landscape ever more transparent and accurate, as well as leaner and faster.

But Infineon is also aware that its supply chains are inevitably part of the wider semiconductor marketplace, so they not only benchmark assiduously against the competition, and identify appropriate existing supply chain solutions, but actively contribute to raising the logistics game of the whole sector through activities such as the Semiconductor Logistics Forum.

Internally, the supply chain organisation is based on the SCOR model, and Procurement and Logistics have been merged to ensure that the whole Plan, Source, Make and Deliver/Return processes are all covered in one organisational unit.

Physically, regional distribution centres are deployed both to achieve the most competitive lead times and to cope with additional customer requirements such as holding buffer stocks and 24 hour consignment stock replenishment. EDI and RosettaNet link Infineon with key suppliers and all relevant customer sites, creating highly automated and effective order management and supply chain planning systems. At the same time, manufacturing has been intelligently ”de-coupled”; holding non-finished stock, permitting higher product variability through final assembly and testing and in the process reducing capital costs and lead times.

A comprehensive set of metrics are deployed, reported to and discussed at Board level on a quarterly basis and in almost all cases benchmarked within the Semiconductor Logistics Forum semi-annually. Interestingly, Infineon had no problems in volunteering to the judges (although perhaps not for publication) those few areas where is, or was temporarily during new systems implementation, slightly less than desired. (We can often spot such features in the mass of statistics that come with Award entries, but for a firm to be so upfront suggests massive and in this case deserved confidence in their ability to rectify and improve).

Collaboration and partnership
Collaboration and partnership with key customers is also a major area for Infineon, not just in the supply chain ”nuts and bolts” of B2B concepts, consignment stocking solutions and so forth, but more generally in product development projects, auditing activities and the development and maintenance of business service agreements. Key suppliers are also intimately involved in a volume rolling forecast process.

The judges were also impressed not only by the openness with which Infineon discussed and displayed their technical and organisational approaches, but the very real focus and enthusiasm that the entire supply chain organisation displays in what can be a very difficult business environment.

On behalf of Infineon, Gernot Bartonek says: ”We have built up a strong customer, as well as supplier focused and integrated, supply chain with outstanding service capabilities.

”Beside several projects and initiatives which have led to significant improvements in our supply chain, we’ve set the course for further development with our newly implemented Operations organisation and new strategies for Purchasing and Supply Chain. Within the new organisational set-up we reflect our focus on Product Partner Management which ensures that our company acts as one team towards customers and suppliers.

”Another key success factor is our integrated supply chain management approach which is reflected in using the SCOR reference model which involves comprehensive initiatives and projects. Another relevant pillar is the permanent assessment and identification of deviations across the entire supply chain through well implemented extensive controlling of all purchasing and supply chain relevant sub-processes. All these improvement initiatives are accompanied with intense benchmarking and best practice activities.”

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