The Introduction of Lean Manufacturing

Concepts at Qualcomm

Introduction: Agenda

The Value Chain

Lean Concepts

Benefits of Lean Manufacturing

2 Oracle Instances

The QCT instance

The Quantum instance

Why 2 instances?

Separation of Production and Non-Prod Procurement

2007 Implementation Sites

2

The Value Chain

The Quantum value chain is driven by Qualcomms leadership
position as the developer of CDMA technologies. QCT CDMA
technologies accounts for 90-95% of QSCO demand, principally
FFAs and SURFS (test equipment used to test chip quality and
functionality). The remaining 5-10% of QSCO demand is
generated by QWBS (Qualcomm Wireless Business Solutions),
which manufactures OmniVision and other wireless products.

Value Chain Processes

Generate Demand
Develop-Introduce
Products /
Services

Market
Products /
Services

Fulfill Demand
Sell
Products /
Services

Procure
Materials /
Services

Plan /
Manufacture

Distribution /
Service
& Support

Lean Concepts: The 5S System

Japanese

Meaning

Translation

Seiri

Organization

Sort

Seiton

Orderliness

Set-in-Order

Seiso

Cleanliness

Shine

Seiketsu

Standardized Cleanup

Standardize

Shitsuke

Discipline

Sustain

Lean Concepts
FROM:

TO:

Predominately Push

Pull from the Partner

Inconsistent Inventory

Kanbans, Min/Max and Safety

Stock Demand Triggers

Disconnected Forecasts

Intelligent Forecasts

Inconsistent Signal to Partner

Defined Signal to CM Partner

Complex Processes

Radical Simplification

Benefits of Lean Manufacturing

Reduced inventory across the supply chain

Greater predictability around lead times and on-time shipments

Increased reliability the right product at the right time at the right price

Better customer satisfaction due to greater accuracy in forecast delivery

Better data, robust processes and systems management effectiveness

Increase control over quality, defects and root cause of defects (6Sigma)

Optimize operations between existing QSCO and shelter organization

Better manage throughput with new Contract Manufacturing partner

Position Qualcomm for rapid growth in emerging business and markets

2 Oracle instances: The QCT Instance

QCT instance has two application servers: 11.5.8 and 11.5.9 (lot controlled)

Quantum instance is an Oracle 11.5.10 instance, with min. customizations

Each organization owns its own inventory; common inventory items

QSCO (manufacturing) has no P&L, and will liquidate costs to other BUs

QCT Instance
FAB Suppliers

Qualcomm

4B2 message from

SAT

3B2_C-O message
to SAT

3B2_C-I message
from FAB

PO for
DIE items

SAT Organizations

Service PO
for FG items

2 Oracle instances: The Quantum Instance

Why two instances?

The QCT instance is geared to Qualcomms chip manufacturing
business, is heavily customized, and uses lot control and other
features that are not attractive to the Qualcomm discrete
manufacturing businesses

The QCT instance uses two application servers, one Oracle 11.5.8
and the other, an Oracle 11.5.9 instance, primarily to support Oracles
Advanced Supply Chain Planning (ASCP) engine

The QCT instance does not include project accounting, nor does it
make allowance for international rollout

There is continuing discussion in the press about spinning off the

chip business

Separation of Prod & Non-Prod Procurement

Direct
and
NPI

Indirect
and
Services

Shelter
and
Bldg M

Corp
Procure

10

Quantum Implementation Sites

Russia (2)
Canada (1)

UK(5)

San Diego
SD1
QMT San Jose
Tijuana, Mexico
SD2
Mexico(6)

EU (DE, ES, FR,

IT, NE, SE) (6)

Korea(2)
Japan(2)
China(3)
Israel(1)
Taiwan (3)
QMT Taiwan
India(3)
Vietnam(1)
Singapore (1)
Indonesia (1)

Brazil (1)
South Africa (1)

Australia (2)

Argentina (1)

Actual sites, 2007 rollout

Potential sites, 2008 + global rollout
11

Lean Manufacturing: Agenda

Inventory Orgs Structure

ASCP Overview

Forecasts and Sales Order Drive Demand

Business Processes

SCO (Supply Chain Organization) Procurement

Shelter Manufacturing and CM Procurement

NPI Procurement

Quality and RTS Highlights

The concept of a Virtual MRB

Lean Manufacturing to be Model

Conclusion

12

Qualcomm Inventory Orgs Structure

13

ASCP Overview
Demand driven by forecasts and Sales Orders (depending on OU)
As Demand drops into the Planners Workbench, Planners route make
orders to MES (Shop Floor Control), material requirements are
identified, and POs are created and transmitted to Suppliers via EDI
(Harbinger)
Entire production procurement process is automated, end-to-end
Generate Baseline Forecast

Generate Constrained
Long Term Supply Plan

Collaborative Demand
Planning

Generate Short Term

Manufacturing Plan

Generate Consensus
Forecast

Release Work Orders

to Contract Manufacturer

Capture Inventory
Visibility

Release Purchase Orders

to Component Vendor(s)

Collaborate with
Contract Manufacturer

Check Availability
& Capacity (ATP)

Oracle Modules:

ODP

ASCP

Collaborative
Planning

iSupplier
Portal

In addition, DBI may be used for KPI / Metric reporting

14

Order
Management

Forecasts Drive Demand into QSCO

Forecasts or SOs created in QCT, MUI, QMT OU

Demand is placed against QSCO OU, 3 inventory orgs
POs are generated and sent via EDI to suppliers

15

Forecasts
entered via
spreadsheet

Releases
against
Blanket PO
(EDI 850)

Sales Orders
Drive
Demand

Forecast
(EDI 830)

Adjustments to
Plan made with
Arrow

16

Includes VMI,
SOI, toll
manufacture

Sales Orders
Drive Demand
Run ASCP
Engine

SIM versus
REGEN Run
POs using EDI
850

Forecast using
EDI 830

17

ICG Process:
Item is
Planning
Enabled

POs marked
with an -NPI

18

Oracle Configuration: Item Master (1 of 2)

Indicates an
Active Item

Create Supply
to Match
Demand

Defines period
for which
releases created
19

Oracle Configuration: ASCP Engine (2 of 2)

ASCP Plan is
not Constrained
Enforced

Demand Drives
the Planning
Engine

20

Quality and RTS Design Highlights

Uses standard Oracle hooks from Procurement to Quality
8 Quality Collection Plans developed for each state an NCed item may
take
Handles RTS for both Production and Ancillary Items
Covers all RTS scenarios:
Credit
Outside Rework
SOI (Supplier Owned Inventory)
Legacy Receipts
Utilizes standard Quantum shipping process (custom, integration with RTS)
Leverages standard Oracle WO/PO process to capture all relevant inventory
consumption, item conversions, labor charges and other variances
Improves A/P debit memo process using the AP Open Invoices API for
automatic debit memo creation
21

QUALCOMM Virtual MRB Process

Rework: Manually
Create Work
Order for internal
rework items

Collection Plans

Material Receipt into MRB Inventory

Factory

Factory receives part, and after inspection (reject),

transfers NC part to MRB Inventory.

RCV INSP

Work Order
NC Rework

MRB
Sub

NC part is retuned to
MRB Sub-inventory

Repair
Vendor

NC part is sent to
outsourced repair
facility

RTS
(Buyer)

RTS/RTV
( Credit/ SOI)

Disposition Accept Accept,

Sub (SQE) Use as IsUse as Is
Scrap

Part is not salvageable

and is scrapped.

Hold

Scrap

RTS Process: Create OM

Shipping Lines from
Receipt Lines.

Master Main
Audit
Detail
Disp Master
RoHS-WEES

Inv Move

OSP

Supplier

NC
Process
Start

Key

WFR Master
RTS Master
OSP Master

Automated
Manual

22

Quality Automated Processes (incl. RTS)

Automatic Creation of Sales Orders
Trigger on RTS disposition
Utilize Item set up
Feed Shipping documents
Create Vendor address (site)
Automatic E-mail Notification to next Person in Chain
Reports

23

LEAN Process Flow To Be Model

On line Orders

Qualcomm

Costing

Resp

Customer

Pack-out
Transit
Eng Change
Mgmt

MPS Planning

Supply Chain Partner

SLC

ERP
Order
Mgmt

CdeC Site

Kanban/ROP
ROP Sizing

Health
Monitoring

Kanban/ROP

Kanban/ROP

ERP

CM Dist Site
#`1

CM
Kanban/ROP Pack-out

Component
Mgmt
MRP Planning

Contract
Manufacturer
CM Dist Site
#2
24

Transfer FGI to
Company

Bad Board/
Virtual MRB
Process

Conclusion