Chris Armbruster Director Supply Chain Strategy Agere Systems

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DESIGN
FOR
UNCERTAINTY
Chris ArmbrusterDirectorSupply Chain
StrategyAgere Systems
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Globalization
Outsourcing
Immediacy
Leanness
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or
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Understandthe Demand
Execute Relevant Strategy
Improve the Signal
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Understanding Demand

• Notwithstanding its fickle nature, uncertainty
  can be understood, characterized, bounded and
  modeled.

• Business intelligence is a key input to
  developing a relevant fulfillment strategy.

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How well do you understand your demand?

• Timing
• Size
• Range
• Trend
• Seasonality
• Bias
• Volatility
• Leading Indicators

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Improving the Signal
Visibility
Collaboration
Multi-tier Execution
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Fulfillment Strategy
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The Role of SpeedAll About Aligning Windows
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How Agere Deals with Uncertainty
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About Agere
1.9B FY04 Revenue

• No. 1 in chips for hard disk drives
• No. 1 in chips for wired communications
• No. 1 in chips for wireless infrastructure
• Top ten customers by revenue Apple, Cisco, HP,
  Lucent, Maxtor, NEC, Nokia, Samsung, Seagate,
  Western Digital

Employees 6,000 Central Campus Allentown,
Pa. Regional Offices Santa Clara, CA Shanghai,
China Assembly Test Sites Thailand Singapore
Ascot, UKHong Kong
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About Our Supply Chain
Package Assembly Test
CircuitBoard Assembly
Wafer Fabrication
4-12 Wks
Hours
2 Days
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Understanding Demand Through Profiling
Demand Certainty
Probability
Our customers are somewhat certain about their
demand over a quarter, but beyond the current
week they are not sure when in the quarter it
will materialize.
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Long Horizon
Short Horizon
Typical Telcom Industry
Typical PC Industry
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Leading Indicators for Clusters
Cluster- 3
Cluster- 6
Cluster- 8
Cluster- 7
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Improving Demand Through Collaboration
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Executing a Relevant Fulfillment Strategy
Certainty Window
Time(Weeks)
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Aligning Processes
24 Hour Planning Cycle
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Customer RequirementsFlexibilityResponsiveness S
ecurity
Business IntelligenceDemand Profiling Leading
Indicators
SpeedLean Manufacturing Logistics
Supply Chain Architecture Insource Assembly
Test Outsource Wafer Fabrication
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Collaboration Model Customer, Distributor Agere
Forecast
Order
Order
Distributor
Shipment
Shipment
Strategic Finished Goods BufferStatistically
Sized.
Strategic Semi-finished BufferStatistically
Sized.
EXAMPLE
EXAMPLE
Diebank and Finished Goods Buffers Sized and
Located Based on Statistical Demand Profiling and
Monthly Forecast Collaboration Meeting
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Collaboration Model Customer, Subcon Agere
Forecast
Pull
Order
Subcon Loc 1
Shipment
Shipment
Pull
Order
Subcon Loc 2
Shipment
Shipment
Strategic BufferStatistically Sized Located.
Pull
Subcon Loc 3
Order
Shipment
Shipment
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Thank You!Questions?