Rinchem's Supply Chain Solutions Helps Chip Maker
“By replenishing the fab daily direct from the Rinchem warehouse, we were able to slash their costs while, at the same time, increasing their operational efficiencies.”
— Monte Schmidt, Director of Operations, Rinchem
Challenges
- Reduce operating expense
- Streamline supply chain through process optimization
Solution
- Rinchem Warehousing and Transportation Services and JIT expertise
Benefits
- Cost savings – Elimination of redundant inventory holding point
- Simplified administration – Cycle time improvement by streamlining Process of Record
- Discontinued warehouse space can be utilized for other manufacturing or sold for profit
To meet the demands of its customers, a U.S.-based chip manufacturer operates fabs around the world, including some in Israel. Manufacturing chips is a costly and demanding process. To maintain the leading market position, the company demands constant evaluation and optimization of the supply chain process to reduce costs and increase operational efficiencies.
Challenge
To support an existing fab in Israel, the company had established an external facility that stored a three- to four-month supply of high-purity gas and chemicals. A smaller, on-site storage facility adjacent to the fab was later established that could store up to a month of gas and chemicals. This local facility was replenished from the external site approximately three times a week. Fab personnel drew from the local on-site facility as needed to meet fab production requirements.
With a new, larger fab coming online soon, however, the local on-site storage facility would be too small to supply enough materials for both fabs on campus. And due to cost-saving issues, expansion of the on-site facility was not an option. The company needed to rethink its supply chain logistics, so it turned to Rinchem, a leading chemical management solutions provider.
Solution
Rinchem was already providing global supply-chain logistics and oversight to the company, managing containerized shipments from a US consolidation point in Marlboro, Massachusetts to the primary in-country warehousing facility in Israel, as well as deliveries to the on-site facility. Rinchem recognized that the on-site storage facility was a costly additional step—a complete replication of manpower, machines, and equipment. Eliminating that handoff could generate substantial operating cost reductions and streamline the process.
Rinchem developed a Just-In-Time replenishment plan to supply the local fabs directly from the Rinchem external facility, bypassing the semiconductor company’s on-site facility. The comprehensive plan covered changes in systems of record, timing of deliveries, ordering patterns, and the establishment of minimum stocking levels to account for a 24-hour delivery cycle.
Under the original process of record, Rinchem maintained a system of record to manage inventory all the way to the local on-site facility using its Chem-Star® web-based inventory management program. However, the semiconductor manufacturer maintained a duplicate system of record for inventory delivered to the on-site facility. Under the new JIT plan, Rinchem would be exclusively responsible for maintaining inventory data.
Following a joint development effort, the transition plan was signed off on by all stakeholders. Rinchem ran a two-week pilot covering about a dozen materials to identify any issues before going into full production mode. With everyone aligned and processes mapped, tested, defined, and documented, the transition proceeded without incident.
Elimination of the on-site warehouse resulted in benefits
Benefits
Elimination of operating expenses for the onsite facility resulted in a cost savings of $650,000 per year for the semiconductor company.
The company also realized operational efficiencies by consolidating systems of record. The manufacturer no longer had to commit personnel to maintaining the inventory application. Chem-Star®, Rinchem’s web-based inventory management program, provides easier access to information, allowing personnel to track chemical and gas inventories in real-time and run multiple reports from their own desktops.
In addition, transporting materials in JIT mode directly from the external warehouse to the fab dock reduced transportation and material handling liabilities for the semiconductor company. Previously, chemicals and gases were transported one pallet or tote at a time via forklift across the campus from the onsite facility to the fab dock. After elimination of the onsite facility, deliveries were made directly to the fab dock via DOT-approved transportation.
Material handling liability was also reduced. Before, materials, some of which were hazardous, were handled at least twice—once upon receipt at the onsite facility and once at the fab dock. After elimination of the onsite facility, materials were handled just once at the fab dock.
According to Monte Schmidt, Rinchem’s director of operations in charge of managing the transition, “By shipping materials directly from the external warehouse to the fabs via daily deliveries, we were able to slash their costs while, at the same time, increasing their operational efficiencies.”
About Rinchem
Rinchem Company, Inc. is a chemical management solutions company with expertise in hazardous chemical and gas warehousing and transportation, environmental services and supply chain optimization. Throughout our 30 year history, we have worked to streamline the chemical supply chains of Fortune 500 corporations within many demanding industries, including the Semiconductor, Microelectronics, Chemical, Aerospace and Defense industries.