Operations Improvement in a Semiconductor Capital Equipment Manufacturing Plant : Component Level and Assembly Level Inventory Management

Semiconductor capital equipment is manufactured in a high-mix and low-volume environment at Varian Semiconductor Equipment business unit of Applied Materials. Due to the demand growth over the past years, Varian has been continuously improving its operations practices to increase the factory capacity without investing additional floor space or labor shifts. A hypothesis-driven analysis is used to identify, understand and formulate solutions for the issues that Varian faces in order to increase its production capacity. Based on the preliminary analysis, we develop a hypothesis tree and we identify effective operation time reduction and cycle time reduction to be the two root hypotheses. Inventory shortages increase the effective operation time of the production lines and lower Varian's production capacity, especially those high-volume low-variety assemblies built in supermarket build area. We present a consumption based assembly level inventory management system based on the base-stock model to reduce assembly shortages on downstream production lines. This system will be used to manage those finished goods inventory of supermarket assemblies on a make-to-stock basis for all downstream consumptions, and it will allow Varian to increase those assemblies' service levels while reducing finished goods inventory level of assemblies by 30%. Supermarket piece parts are the components used to build assemblies; piece part shortages delay the scheduled delivery of assemblies to the downstream production lines thereby causing assembly shortages. For piece part shortages caused by inaccurate inventory records, Varian lacks an effective solution. We present two component level inventory management systems for reducing piece part shortages. In short to middle term, we present a secured tablet solution as a self-check-out terminal to provide better user experience aiming at reducing inaccurate inventory records by 50%. In middle to long term, we present a Vertical Lift Module solution to completely eliminate inaccurate inventory record while reducing storage space. Thesis Supervisor: Stanley B. Gershwin Title: Senior Research Scientist, Department of Mechanical Engineering