It's not that traditional ERP Inventory systems don't work for everyone - they just don't work well for fabless semiconductor operations. Trying to make them fit is much like trying to force your left foot into your right shoe - you may be able to jam it in, but it won't be comfortable or highly functional.

So, what's missing in traditional ERP inventory systems that fabless semiconductor companies really need to have in their systems?  Here's a short list:

1) Genealogy (Process History Tracking) - Traditional ERP Inventory functionality simply does not provide genealogy tracking. Fabless semiconductor operations typically need to track their entire process history, mapping every step the product has been through, including re-work. For each production step you need to know the process completed, the vendor used, the procurement and production information, and all of the key attributes collected. Once you have this genealogy attached to a product, fabless operations typically need complete forward and backward tracking by genealogy from the production process to the customer and back (returns).

2) Specific Product Identification (Lot Number/Date Code) - Most traditional ERP systems only offer Lot Tracking or Serialization - with one tracking number associated with the part.  Most fabless companies mark their product with more than one key tracking attribute - often the Fab Lot Number and Date Code. A common additional complexity is lot splits and lot merges - which makes it more important to accurately collect the individual tracking attributes for your product.

3) Product Attributes - Beyond the product identification attributes, there is often other information that fabless companies would like to collect during the production process. Examples include the test program used, the test board, the mask set, an internal lot number, and the assembly lot number. Traditional ERP Inventory systems typically do not let you collect unlimited attributes about your product during the production process.

4) Process Cost History - Traditional ERP Inventory systems offer no solution for maintaining a process cost history. They also do not support semiconductor product costing and inventory earned value requirements.  Semiconductor costing has complexities and unique requirements unlike any other product. Fabless operations typically need to maintain complete cost history by step in the production process. They need to understand standard and actual cost and yield by step in the production process, and detailed cost variances by step.

5) Reclamation Handling - Traditional ERP Inventory systems lack the ability to allow previously discarded materials to be brought back into the system.  Fabless semiconductor operations often need a system for reclamation of previous yield loss (bonus). They need to have the ability to bring back previously discarded materials, including the full product genealogy, and allow them to be put back into inventory with appropriate costs.

6) Location Tracking - Traditional ERP Inventory systems do not distinguish inventory by company.  Fabless Semiconductor operations typically need to track locations by vendor. Ideally, they should be able to track unlimited locations for each vendor. For example, if your fabs, test houses and packaging house have multiple locations, you should be able to track materials at each location.

7) Integration with Operations Management - Traditional ERP Inventory systems are not designed to integrate with semiconductor WIP tracking or WIP costing.  For fabless semiconductor operations, ERP Inventory integration with WIP tracking and WIP costing is a bare minimum for an effective business system.

Tensoft's Fabless Semiconductor Management (FSM) delivers an affordable, flexible alternative to traditional ERP Inventory systems. Tensoft FSM provides a sophisticated, web-based solution to all of problem areas described above, as well as extensive semiconductor accounting, sales, production, supply chain, and manufacturing execution functionality. Tensoft FSM can also integrate with your manufacturing subcontactors.

Talk to us before you begin a lengthy and expensive ERP implementation, or before you resign yourself to another year of inefficient, error-prone systems. For a reasonable cost today, you can make a long-term investment that will scale as you grow.

 I'm pleased to announce that registration is now open for the seventh annual Tensoft FSM International User Conference, Momentum 2012.  This customer-only event will be held on May 21 & 22 this year, in Campbell, CA.   Past conferences have provided a lively forum for worldwide users of Tensoft's Fabless Semiconductor Management (FSM), a leading semiconductor ERP manufacturing and supply chain product, delivered on-premise or as a cloud ERP solution.

This year, attendees will have the opportunity to learn from - and brainstorm with - Tensoft's developers and business analysts, as well as network and share best-practices with their peers from other semiconductor companies.  General sessions include "What's New in FSM?" and a group discussion that will be used to create the product enhancement roadmap for the next year.  For the first time, we will also be offering two "hands-on" training sessions each day, which will run concurrently with the break-out topic sessions. 

Here's what Tensoft President and CEO Bob Scarborough had to say about this year's Momentum: "We look at this annual event as a way to provide value and show appreciation to our Tensoft FSM customers.  We work at keeping the costs low, so more can participate. As a result, we've had the real pleasure of hosting Momentum for many repeat attendees, along with each year's newcomers. The exchange of ideas always seems to propel process and product improvements synergistically, which is great for everyone involved."

Please let me know if you have any questions about this annual event, or would like to sign up.  Hope to see you there!

 Effective January 1, 2012, the California Transparency in Supply Chains Act requires many companies doing business in California to provide information regarding their activities to ensure their supply chain is free from slavery and human trafficking.  This law affects all companies that do business in California and whose worldwide gross receipts exceed $100 million.  That includes a lot of semiconductor and high tech companies in our area, so I was curious to see how companies are complying.

I tried a quick search on "CA Transparency in Supply Chains Act semiconductor" and found the following on the first page, in order of appearance: Vishay, ON Semiconductor, Texas Instruments, Applied Materials, Cypress Semiconductor, Micron and Global Foundries.  I'd expected to find Apple there.  After all, Gartner just announced in a January 24 press release that Apple was the top semiconductor customer of 2011, moving up from third place in 2010.  And, they've certainly been in the news lately for the human rights issues that their supply chain audit uncovered.  

Checking back on the requirements of the law, I found that no specific language is required to be compliant, but it does require that the disclosure appear on the company's home page, and that it is conspicuous and easily understood.   Looking through the homepages of both the top 10 semiconductor customers of 2011 that Gartner identified and the hits on my initial search, Apple stands out as one of the best examples of compliance, while others don't appear to be in compliance at all.  Interesting.

 Tensoft customer Amalfi Semiconductor pioneered high-performance radio frequency (RF) semiconductors for the cellular handset market based on standard, low-cost complementary metal-oxide semiconductor (CMOS) technology. Experiencing rapid growth from its success, the company needed more financial and manufacturing management capabilities than Intuit QuickBooks and a "point-in-time" WIP tracking solution could provide. Working with Tensoft, the company implemented Tensoft Fabless Semiconductor Management (FSM) and Microsoft Dynamics. The company has already saved US $75,000 in duplicate vendor invoicing and realized significant efficiencies. With the business management software in place, Amalfi has a solution that takes advantage of purchasing controls to support regulatory compliance. In addition, executives, operations employees, and finance managers now have the insight and control they need to help the company reach its growth goals.

For the complete case study, go to http://bit.ly/yiWV3g.

Thinking the other day about our annual FSM User Conference, Momentum 2011, which wrapped up last month, I was struck by how absolutely energizing this yearly event is – not only for attendees, but also for everyone on the Tensoft side as well.  

Everyone has the opportunity to discuss ideas, meet with their counterparts in other companies and get away from day-to-day interruptions to simply work on productivity and improvement. It’s a chance to think about doing your job better with people who are of like mind, discussing topics that facilitate creative thinking and problem-solving.

We stretched the Momentum envelope a bit this year by inviting some suppliers and outside experts into our discussions.  We asked questions like: “What does the demand model look like for your end-customers?” and “What do the suppliers look like from your production side?” and “What does your planning rhythm look like, or what does your input to executive management from the operations perspective look like?”

Attendees and Tensoft staff were able to coalesce their own ideas, learn from other people and take this all back to their companies to make what they do better.  I think that’s why so many good things come out of Momentum every year, and this year was no exception.