Blog Post
AIMMS helps World’s Largest Semiconductor Chip Manufacturer to Optimize its Supply Chain with Digital Twin
About the company
The company is the world’s largest semiconductor chip manufacturer and is headquartered in Santa Clara, California. The company supplies microprocessors to global computer system manufacturers. It also manufactures motherboard chipsets, network interface controllers and integrated circuits, flash memory, graphics chips, embedded processors, and other devices related to communications and computing.
The Challenge
The company has a very complex, global supply chain, with many challenges. Paul van Nierop, Product owner at AIMMS recalls the challenges faced by the company:
- Improving the flow of products through the supply chain
- Reducing delivery times for semiconductors
- Increasing chip availability
- Managing rising costs and risks
These are all difficult problems to address due to the complexity of the global supply chain, and the multitude of options and possibilities. Modeling such a supply chain using Excel was time-consuming, and not repeatable. The company needed a solution to enable its supply chain network design decision-making initiatives.
The company’s Global Supply Chain Logistics Manager said, “The global supply chain for chips came unstuck in recent years. With more than 80% of the Asia region accounting for semiconductor manufacturing, COVID put a strain on the supply chain as demand for electronics surged. In Europe, the automotive industry, in particular, struggled to get semiconductors.
He added, “There was a need for our company to improve supply chain proximity to reduce reliance on manufacturers in countries like Taiwan. COVID created the perfect storm, where the need to diversify the company’s supply chain became clear. It’s what our customers wanted, and that’s why we’re putting our money where our mouth is to improve the end-to-end supply chain in Europe.”
The Solution
The company used AIMMS to set up a digital twin of their supply chain network at the strategic level. This helped them to visualize, understand, and optimize their current supply chain. In addition, it equipped the company for the long-term with an ‘always-ready’ digital twin, that they can use for a variety of reasons :
- Optimize the network for current products
- Design the network for new product introductions
- Understand the impact of mergers and acquisitions
- Look for opportunities to decrease end-to-end throughput times
- Introduce carbon emission impacts into their network design decisions
The digital twin also helped the company react to disruptions in its supply chain. During COVID, the company had to shut down its Shanghai distribution center and that’s when the company used AIMMS’ Network Design App to model the shutdown.
Paul van Nierop recalls, “We were on a call with the customer when the Shanghai distribution center was shut down for three months due to COVID. At that moment, they said they couldn’t focus on AIMMS right now, we need to sort out the Shanghai situation. But at that point, we said to the company’s team, why not use the model to help? Right there and then, in session, we opened the AIMMS Network Design App and ran a scenario to force close the Shanghai distribution center. The model gave immediate insights into what to do next.”
Paul van Nierop says, “In the case of the company’s distribution center in Shanghai, in a single session, they were able to analyze various scenarios – What if we close the distribution center? Where should we store our products then? And how will that impact our costs and delivery times? This exercise helped the company to realize that it can use its digital twin not only reactively, but also proactively for business continuity planning purposes so that people immediately know what to do if something like this happens to them again at the same or other locations.”
Watch our on-demand webinar where the company’s Global Supply Chain Logistics Manager talks about the shift from ‘Just in Time to Just in Case’ and describes other use cases of advanced network design technology.
The Results
The company’s decision to build the digital twin in the first place was driven by the need to get better at running scenarios – like the closure of its Shanghai distribution center.
AIMMS’ Network Design app enabled the team to optimize its existing outbound network, assess how new products slot into their current network, and their manufacturing and distribution processes.
All this has helped the company to model its cost and service levels, but they have since expanded the use of the application to model carbon emissions to meet sustainability goals. The spokesperson said, “The ability to monitor all scenarios enables our company to find solutions, which brings certainty.”
The company was also able to upgrade from Excel to an AIMMS-based Network Design app, which helps to consolidate data in one place. Plus, the network design app removes the need to build complex spreadsheets to model scenarios.
The spokesperson also explained how their company has utilized advanced network design technology in other ways, including:
- Optimization of the company’s distribution footprint
- An integrated view of the company’s production footprint
- Reducing carbon emissions as the next level of optimization
Ready to get started with Network Design?
AIMMS will enable you to look at different scenarios, build resilience, and cost-effectively meet service levels. You can bring these capabilities in-house and manage them from within your organization, with the help of seasoned supply chain modeling specialists from AIMMS. Or you can outsource to our specialists to do the heavy lifting to create and maintain your supply chain digital twin for you.
