Integrate market demand forecast and demand-pull replenishment to improve the inventory management effectiveness of wafer fabrication

Abstract

The characteristics of the semiconductor industry are short product life cycle, lumpy demand, long lead time, and so on. Theory of constraint suggests a simple replenishment policy to effectively manage supply chain inventory by a demand-pull approach combined with buffer management. However, a demand-pull approach sometimes causes out of stock when the products have lumpy demand. In order to effectively solve this issue, this article integrated market demand forecast information and demand-pull replenishment to improve the inventory management effectiveness of wafer fabrication. An integrated circuit design house provides actual demand per week and market forecast information to the wafer fab. Wafer fab uses inventory buffer to meet customer demand and adjust inventory quantity according to market forecast information and demand-pull replenishment policy. A case of a wafer product that has been drawn from a professional wafer foundry company located in Taiwan is presented to further illustrate the proposed approach. After comparing the result that was obtained from the proposed approach with the traditional demand-pull method, it was found that the proposed approach helps keep high service levels and avoid being out of stock.