The Introduction of Lean Manufacturing

Concepts at Qualcomm

Introduction: Agenda

The Value Chain

Lean Concepts

Benefits of Lean Manufacturing

2 Oracle Instances

The QCT instance

The Quantum instance

Why 2 instances?

Separation of Production and Non-Prod Procurement

2007 Implementation Sites

The Value Chain

The Quantum value chain is driven by Qualcomms leadership
position as the developer of CDMA technologies. QCT CDMA
technologies accounts for 90-95% of QSCO demand, principally
FFAs and SURFS (test equipment used to test chip quality and
functionality). The remaining 5-10% of QSCO demand is
generated by QWBS (Qualcomm Wireless Business Solutions),
which manufactures OmniVision and other wireless products.

Value Chain Processes

Generate Demand
Develop-Introduce
Products /
Services

Market
Products /
Services

Fulfill Demand
Sell
Products /
Services

Procure
Materials /
Services

Plan /
Manufacture

Distribution /
Service
& Support

Lean Concepts: The 5S System

Japanese

Meaning

Translation

Seiri

Organization

Sort

Seiton

Orderliness

Set-in-Order

Seiso

Cleanliness

Shine

Seiketsu

Standardized Cleanup

Standardize

Shitsuke

Discipline

Sustain

Lean Concepts
FROM:

TO:

Predominately Push

Pull from the Partner

Inconsistent Inventory

Kanbans, Min/Max and Safety

Stock Demand Triggers

Disconnected Forecasts

Intelligent Forecasts

Inconsistent Signal to Partner

Defined Signal to CM Partner

Complex Processes

Radical Simplification

Benefits of Lean Manufacturing

Reduced inventory across the supply chain

Greater predictability around lead times and on-time shipments

Increased reliability the right product at the right time at the right price

Better customer satisfaction due to greater accuracy in forecast delivery

Better data, robust processes and systems management effectiveness

Increase control over quality, defects and root cause of defects (6Sigma)

Optimize operations between existing QSCO and shelter organization

Better manage throughput with new Contract Manufacturing partner

Position Qualcomm for rapid growth in emerging business and markets

2 Oracle instances: The QCT Instance

QCT instance has two application servers: 11.5.8 and 11.5.9 (lot controlled)

Quantum instance is an Oracle 11.5.10 instance, with min. customizations

Each organization owns its own inventory; common inventory items

QSCO (manufacturing) has no P&L, and will liquidate costs to other BUs

QCT Instance
FAB Suppliers

Qualcomm

4B2 message from

SAT

3B2_C-O message to
SAT

3B2_C-I message
from FAB

PO for
DIE items

SAT Organizations

Service PO for
FG items

2 Oracle instances: The Quantum Instance

Why two instances?

The QCT instance is geared to Qualcomms chip manufacturing
business, is heavily customized, and uses lot control and other
features that are not attractive to the Qualcomm discrete
manufacturing businesses

The QCT instance uses two application servers, one Oracle 11.5.8
and the other, an Oracle 11.5.9 instance, primarily to support Oracles
Advanced Supply Chain Planning (ASCP) engine

The QCT instance does not include project accounting, nor does it
make allowance for international rollout

There is continuing discussion in the press about spinning off the

chip business

Separation of Prod & Non-Prod Procurement

Qualcomm USD Set of Books

Direct
and
NPI
Shelter
and
Bldg M

CORP (NonProduction
Procurement)

QSCO
(Production
Procurement)

Oracle Services
Procurement

MRP/ASCP
Completely automated
Procurement Process

iProcurement

Oracle Contracts

Indirect
and
Services
Corp
Procure

Quantum Implementation Sites

Russia (2)
Canada (1)

UK(5)

San Diego
SD1
QMT San Jose
Tijuana, Mexico
SD2
Mexico(6)

EU (DE, ES, FR,

IT, NE, SE) (6)

Korea(2)
Japan(2)
China(3)
Israel(1)
Taiwan (3)
QMT Taiwan
India(3)
Vietnam(1)
Singapore (1)
Indonesia (1)

Brazil (1)
South Africa (1)

Australia (2)

Argentina (1)

Actual sites, 2007 rollout

Potential sites, 2008 + global rollout
10

Lean Manufacturing: Agenda

Inventory Orgs Structure

ASCP Overview

Forecasts and Sales Order Drive Demand

Business Processes

SCO (Supply Chain Organization) Procurement

Shelter Manufacturing and CM Procurement

NPI Procurement

Quality and RTS Highlights

The concept of a Virtual MRB

Lean Manufacturing to be Model

Conclusion

11

Qualcomm Inventory Orgs Structure

Inventory Org Structure for US Entities

Last Updated: 12/12/2006

7:32 PM

QC US BUSINESS GROUP
QC US SET OF BOOKS

Snaptrack
Legal Entity
- Division 33 -

QUALCOMM
Legal Entity
- Division 01 PO: 100000000

PO: 200000000

QSCO OU
001-049

QSCO SD1
001
BLDG M
RCPT: 4000001
INVENTORY
N R

QWBS SAN DIEGO

050
BLDG M
RCPT: 1000001
INVENTORY
N R
STAGE

MRB

MRB

OFFSITE

RTS

WFR

OFFSITE

WIP

NL N

DROPSHIP

SOI

NL N

CUSTEVAL

SOI MRB

NL

HOLDS
R

REPAIR COS
ERROR
GSTAR DEV
FGSTOCK

STAGE
INACTIVE

NL N R
N R

QSCO MEX
BLDG MX M
002
RCPT: 1000001
INVENTORY
N R
MRB
OFFSITE
WFR
NL N

SOI MRB

NL N
NL

STAGE

NL N R

SOI

RTS
FGSTOCK

NL N R

R
N

RPR INV

NL

RPR STAGE

RPR IP
NL R

NL N

STAGE

NL N R

DEPOT INV
DEPOT WIP

NL N R
NL N

PROTO

NL N
NL

FGI-PSTK

NL R
N
N R

925-949

950-974
BU: 00257-QFT

QSERV
BLDG __
900
RCPT: 1000001

MUI
925
RCPT: 1000001
INVENTORY

N R

STAGE
R

WFR

RTS
WFR

191-199

RPR FG

RPR IP
RPR STAGE

NL R

RPR-INCMNG

WFR

RPR IP
NL R

WFR

STAGE

LEGEND
PO: 1XXXXXXXX

BLDG __

BU: 00001-CORP
NL
N

STAGE

SCCA5__Connect Wireless Solutions

RTS

SCGA1__Cetacea Sound of Atlanta

SCIL1__Illinois Auto Central Thermo King
SCIL2__Truck Centers, Inc.
SCIN1__Great Lakes Thermo King

SCIN2__Stoops Freightliner

SCFL1__Select Communications

SCKS1__Velociti, Inc. (Kansas City)

SCMI2__Wolverine Freightliner

SCOR1__Thermo King Northwest

SCMN1__Thermo King Sales & Service

SCPA1__Thermo King of Philadelphia

SCNC1__Carolina Engine

SCTN1__Cetecea Sound of Memphis

SCNE1__Thermo King Christensen

SCTX1__Thermo King of Dallas

SCOH1__P.J.'s - Fabricating, Inc.

SCUT1__Thermo King Intermountain

SCOK1__Central States Thermo King

SCVA1__Radio Communications of VA / MOBEX

001-049

= PO Sequence (9-10 digits:

100000001,
1100000001,
2100000001)
= Receipt Sequence (7 digits)
= Business Unit Number-Name
= Not Locator Controlled
= Nettable
= Reservable
= Default Backflush
Subinventory
= Inventory Org Codes

NL R

NL

= Item Validation Org

(Allows different buyer
per item per inv org)
= Item Master Org
(Houses all items
found within Oracle)

N R

12

NL N R

NL R

WFR
STAGE

QGTC
BLDG __
981
RCPT: 1000001

QCT Asia Pacific

Legal Entity
- Division 31 PO: 6100000000

QCTAP OU
BU: 00014 - QCTAP
QCTAP
BLDG __
986
RCPT: 1000001

QWBSS
Legal Entity
- Division 11 -

QWBSS OU
875-899
BU: 00152 - QWBSS
QWBSS
875

BLDG __

NL

OFFSITE
RTS

QGTC OU

986-990
R

QMT SJC
979
RCPT: 1000001
INVENTORY
N R
MRB

QC Global Trading
Legal Entity
- Division 25 -

981-985

QMT TWN REPAIR

978
RCPT: 2000001
RPR FG
NL R
RPR IP
NL
RPR STAGE

BLDG __

BU: 00060 - QGTC

WFR

200-224

QCINT
910

PO: 4100000000

OFFSITE

OFFSITE

RCPT: 1000001

SCCA4__Sacramento Valley Ford Trucks

MRB
R

MRB

QTL OU

QTL
200

N R

QMT TWN
977
RCPT: 1000001
INVENTORY
N R

BU: 00013 - TECH

SCCA2__Velociti, Inc. (Barstow)

NL

RTS

STAGE

RPR STAGE

NL N R

RTS

QMT
975
RCPT: 1000001
INVENTORY
N R

RPR IP

CORP REPAIR
276
RCPT: 2000001
RPR FG
RPR STAGE

910-924

QMT REPAIR
976
RCPT: 2000001
RPR FG

RTS

QWI OU

QCINT OU
BU: 00283 - QCINT

NL N R

MRB

QCT REPAIR
226
BLDG M
RCPT: 2000001

N R

OFFSITE

OFFSITE

PO: 800000000

NL

QC International
Legal Entity
- Division 04 -

975-980

MRB

OFFSITE
RTS

QMT OU
BU: 00247-QMT

QFT
950
RCPT: 1000001
INVENTORY
N R

MRB

CORP
275
RCPT: 1000001
INVENTORY
N R
STAGE

OFFSITE

BU: 00010 - QSERV

QC MEMS
Legal Entity
- Division 74 PO: 5100000000

QFT OU

BU: 00099-MUI

900-909

BU: 00001 - CORP

00017 - INVC
00018 - QPROJ
00092 - MFT
00008 - QPAG
00016 - QCCU
00167 - QCDT
00195 - QCSEC
00204 - QGBD
00106 - QCWK

PO: 3100000000

MUI OU

QSERV OU

N R

SCCT1__Freightliner of Southern Connecticut

REPAIR NPI
SOI

RTS
HOLD

QWI
BLDG __
191
RCPT: 1000001

NL R

SERVICE CENTERS
055
RCPT: 5000001

NL N R

MRB

QGST
BLDG __
183
RCPT: 1000001

NL R

SCCO1__Thermo King of Denver

NL N R
R

STAGE

QGST OU

MRB

NL R

REPAIR COS

PO: 700000000

RPR PSTK
INVENTORY
STAGE

QWBS REPAIR N.CAROLINA

054
BLDG CAR A
RCPT: 4000001
RPR IP
RPR FG

QCT
BLDG W
225
RCPT: 1000001
INVENTORY
N R

BU: 00011 - QWI

RPR IP
RPR INV

NL

RPR FG
RPR STAGE

QAPP
BLDG __
175
RCPT: 1000001

183-190

QGOV REPAIR
126
BLDG M
RCPT: 2000001

BU: 00003 - QCT

00009 - QCTST

BU: 00166 - QGST

QWS MEX
102

OFFSITE

INACTIVE

DROPSHIP

RPR IP

MRB

DEBUG

WFR

RPR FG

QSCO QCT
006
BLDG W
RCPT: 6000001
INVENTORY
N R

WFR
WIP
RTS

OFFSITE

QWS REPAIR
101
BLDG AK
RCPT: 2000001

RTS

OFFSITE
RESERVED

NL R
N

NL N R

MRB
R

RTS

QWBS REPAIR MEXICO

053
BLDG MX M
RCPT: 3000001
RPR COMP

RPR STAGE

STAGE

MRB
R

QWBS REPAIR SAN DIEGO

052
BLDG M
RCPT: 2000001
RPR FG
R
RPR STAGE

QGOV
125
BLDG M
RCPT: 1000001
INVENTORY
N R

NL N R

STAGE

RPR IP

GSTAR RSVD

WIP

QWS
100
BLDG AK
RCPT: 1000001
INVENTORY
N R

275-299

225-249

175-182
BU: 00004 - QAPP

BU: 00005-QGOV

PO: 2100000000

PO: 1100000000

CORP OU

QCT OU

QAPP OU

125-149

BU: 00007-QWS

PO: 900000000

PO: 500000000

PO: 600000000

QGOV OU

100-124

BU: 00002-OMNI

ITEM MASTER
000

PO: 400000000

QWS OU

050-099

BU: 00300-QSCO

RTS

PO: 300000000

QWBS OU

QC Flarion
Legal Entity
- Division 77 -

MediaFLO USA
Legal Entity
- Division 82 -

NL N R

QMT Cayman Islands

Legal Entity
- Division 76 -

QMTCI OU
850-875
BU: 00250 - QMTCI
QMTCI
850

BLDG __

ASCP Overview
Demand driven by forecasts and Sales Orders (depending on OU)
As Demand drops into the Planners Workbench, Planners route make
orders to MES (Shop Floor Control), material requirements are
identified, and POs are created and transmitted to Suppliers via EDI
(Harbinger)
Entire production procurement process is automated, end-to-end
Generate Baseline Forecast

Generate Constrained
Long Term Supply Plan

Collaborative Demand
Planning

Generate Short Term

Manufacturing Plan

Generate Consensus
Forecast

Release Work Orders

to Contract Manufacturer

Capture Inventory
Visibility

Release Purchase Orders

to Component Vendor(s)

Collaborate with
Contract Manufacturer

Check Availability
& Capacity (ATP)

Oracle Modules:

ODP

ASCP

Collaborative
Planning

iSupplier
Portal

In addition, DBI may be used for KPI / Metric reporting

13

Order
Management

Forecasts Drive Demand into QSCO

Business Group

QC US BUSINESS GROUP
MFG END TO END PROCESS
QCT

QC US SET OF BOOKS

Set of Books

Legal Entity

QC LEGAL ENTITY

QSCO OU

QCT OU

001-049

225-249

re
Fo
ca

ITEM MASTER
000

Projects

Issue to Projects

st
Forecast/SO Demand

MFG SAN DIEGO SDI

001
Manual MOs

QCT
225

Subassy
Dem

Sales Order
Shipments

Customer

MFG MEXICO
002

Subassembly
Supply

Demand

Manual MOs
Demand

Supply

Supplier
QCT
006
Manual MOs
Demand

Production POs

Forecasts or SOs created in QCT, MUI, QMT OU

Demand is placed against QSCO OU, 3 inventory orgs
POs are generated and sent via EDI to suppliers
Production material received from supplier
Production POs

14

Forecasts
entered via
spreadsheet

Releases
against
Blanket PO
(EDI 850)

Sales Orders
Drive
Demand

Forecast
(EDI 830)

Adjustments to
Plan made with
Arrow

15

Includes VMI,
SOI, toll
manufacture

Sales Orders
Drive Demand

Run ASCP
Engine

SIM versus
REGEN Run
POs using EDI
850

Forecast using
EDI 830

16

ICG Process:
Item is
Planning
Enabled

POs marked
with an -NPI

17

Oracle Configuration: Item Master (1 of 2)

Indicates an
Active Item

Create Supply
to Match
Demand

Defines period
for which
releases created
18

Oracle Configuration: ASCP Engine (2 of 2)

ASCP Plan is
not Constrained
Enforced

Demand Drives
the Planning
Engine

19

Quality and RTS Design Highlights

Uses standard Oracle hooks from Procurement to Quality
8 Quality Collection Plans developed for each state an NCed item may
take
Handles RTS for both Production and Ancillary Items
Covers all RTS scenarios:
Credit
Outside Rework
SOI (Supplier Owned Inventory)
Legacy Receipts
Utilizes standard Quantum shipping process (custom, integration with RTS)
Leverages standard Oracle WO/PO process to capture all relevant inventory
consumption, item conversions, labor charges and other variances
Improves A/P debit memo process using the AP Open Invoices API for
automatic debit memo creation
20

QUALCOMM Virtual MRB Process

Rework: Manually
Create Work
Order for internal
rework items

Collection Plans

Material Receipt into MRB Inventory

Factory

Factory receives part, and after inspection (reject),

transfers NC part to MRB Inventory.

RCV INSP

Work Order
NC Rework
NC part is retuned to
MRB Sub-inventory

MRB
Sub

Repair
Vendor

Inv Move

OSP

RTS
(Buyer)

NC part is sent to
outsourced repair
facility

RTS/RTV

Supplier

NC
Process
Start

( Credit/ SOI)

Disposition Accept Accept,

Sub (SQE) Use as IsUse as Is
Scrap
Part is not salvageable
and is scrapped.

Hold

Scrap

RTS Process: Create

OM Shipping Lines from
Receipt Lines.

Key

Master Main
Audit
Detail
Disp Master
RoHS-WEES
WFR Master
RTS Master
OSP Master

Automated
Manual

21

Quality Automated Processes (incl. RTS)

Automatic Creation of Sales Orders

Trigger on RTS disposition

Utilize Item set up
Feed Shipping documents
Create Vendor address (site)
Automatic E-mail Notification to next Person in Chain
Reports

22

LEAN Process Flow To Be Model

On line Orders

Qualcomm

Supply Chain Partner

SLC

ERP
Order
Mgmt

Costing
Customer

Resp
Pack-out

Transit
Eng Change
Mgmt

MPS Planning

CdeC Site

Kanban/ROP
ROP Sizing

Transfer FGI to
Company

Health
Monitoring

Kanban/ROP

Kanban/ROP

CM Dist Site
#`1

CM
Kanban/ROP Pack-out

ERP
Component
Mgmt
MRP Planning

Contract
Manufacturer
CM Dist Site
#2
23

Bad Board/
Virtual MRB
Process

Conclusion