TBM Case Study - Business Process Improvement in the Semiconductor Industry
TBM Consulting Group, March 25, 2010
Business Process Improvement in the Semiconductor Industry
Implementing Continuous Improvement to the Change Management Process in a Highly-Customized Technology Environment
Client: A leading provider of innovative silicon, systems and software. The company engages in the design, development, and marketing of semiconductors and storage systems through its US headquarters and worldwide operations. The company had full-year revenues just over $2 billion in 2009 – down nearly 20 percent from 2008. The company is utilizing continuous improvement to make significant improvements in revenues, gross margin, operating income and cash flows.
Challenge: The company offers a broad portfolio of capabilities and services including custom and standard products—working with their customers to create the performance and design flexibility they need to achieve outstanding storage capacity, speed, reliability, and power savings. One key challenge was managing the engineering change order (ECO) process to deliver products that met customer requirements accurately and on time. They were experiencing long lead times in releasing and implementing ECOs and were creating too many ECOs to correct errors of previously inaccurate change orders.
Solution: The client asked TBM to help them apply lean thinking to minimize and eliminate non-value-added activities in business processes of generating, releasing and implementing engineering change notices.
The key improvement priorities were as follows:
- Clearly define roles and responsibilities to eliminate waiting and expedite ECO flow
- Simplify process steps and eliminate unnecessary reviews
- Standardize all process steps and use one software system, Agile, to manage ECO workflow
Results: The lean approach helped drastically improve the engineering change order process to better meet customer requirements on a timely basis. The company made significant improvements by reducing hand-offs between departments, eliminating unnecessary steps and reviews and reducing loop-backs. They applied lean tools including business process mapping, standard work, and 5S. They also applied Six Sigma tools to analyze ECO processing data.
- The company was able to reduce lead time of an ECO by more than 40 percent.
- In the case of the front end of the ECO process, from ECO creation to ECO release:
- Lead time was reduced from 23 days to 6 days
- The number of process steps was reduced from 85 to 47.
- In the case of the back end of the ECO process, from ECO release to ECO implementation:
- The lead time was reduced from 20 days to 5 days
- The number of process steps was reduced from 120 to 78. *The company and the names of its executives have been removed at the request of our client who wishes to remain anonymous.
About TBM Consulting Group
TBM Consulting Group is the worldwide leader in lean innovation and rapid performance improvements for manufacturing and service industries and government organizations. The hallmark of our work is rapid implementation, generating sustainable results for our clients. We have a bias for action and work side-by-side with our clients to transfer knowledge and help them generate results with their own people. To learn more about our work with other technology companies, contact Bill Schwartz at 800.438.5535.
