Journal of Network and Computer Applications 36 (2013) 15031511

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Journal of Network and Computer Applications

journal homepage: www.elsevier.com/locate/jnca

Collaborative design and analysis of supply chain network

management key processes model
Ta-Ping Lu a, Amy J.C. Trappey b, Yi-Kuang Chen c,n, Yu-Da Chang d
a

Department of Industrial Engineering and Management, National Taipei University of Technology, 1, Section 3, Chung-Hsiao E. Rd., Taipei, Taiwan, ROC
Department of Industrial Engineering and Engineering Management, National Tsing Hua University 101, Section 2, Kuang-Fu Rd, Hsinchu, Taiwan, ROC
c
BSID/SCID, Taiwan Semiconductor Manufacturing Company, 121, Park Ave. 3, Hsinchu Science Park, Hsinchu, Taiwan, ROC
d
Graduate Institute of Industrial Engineering and Management, National Taipei University of Technology, 1, Section 3, Chung-Hsiao E. Rd, Taipei, Taiwan, ROC
b

art ic l e i nf o

a b s t r a c t

Article history:
Received 9 August 2012
Received in revised form
12 March 2013
Accepted 25 March 2013
Available online 3 April 2013

This study focuses on collaboratively designing a structured and comprehensive supply chain (SC)
network management key processes model and analyzing the relative importance of these key processes
for semiconductor industry. The collaborative design and analysis are performed by a multidisciplinary
team consisting of over 20 members from both academia and industry. This research is based on
experiences of these team members who joined a successful e-SCM project, used as a case study in this
research, between the world's largest semiconductor foundry and the world's largest assembly and
testing service provider. This study adopts focus group methodology for collaborative design and fuzzy
analytic hierarchy process (FAHP) for collaborative analysis. The result of the design is a structured and
comprehensive key processes model consisting of four dimensions: strategy and planning, manufacturing, logistics, and risk management (SMLR) with a total of 15 key processes included in these four
dimensions. The resulting weightings from FAHP analysis can identify the most critical one dimension
and four key processes since they account for approximately half of the overall weighting in their level.
The SMLR model provides a structured and comprehensive reference model for future SC network
management project executives, ensuring that all key processes are supported to avoid extremely costly
failure. The resulting weightings provide these managers with the relative importance of these key
processes and can help them make critical decisions in allocating limited resources to support the most
critical processes. To conrm the results and further explore the managerial implications, a second
session of focus group meeting was conducted and practices of the top three key processes in the
semiconductor manufacturing industry were used to illustrate what actions can be performed to improve
these processes and hence benet the entire SC network. The research results can serve as a foundation
for related academic researches.
& 2013 Elsevier Ltd. All rights reserved.

Keywords:
Collaborative design and analysis
Supply chain network management
Key processes model
Semiconductor manufacturing industry

1. Introduction
This study focuses on designing a structured and comprehensive key processes model for semiconductor manufacturing supply
chain (SC) network management and evaluating the relative
importance of these key processes based on research team
members experiences from a successful large-scale SC network
management project, presented as a case study in Section 3. This
study adopts focus group methodology for collaborative design
and fuzzy analytic hierarchy process (FAHP) for collaborative
analysis. The design and analysis are performed collaboratively
by a multidisciplinary and multi-company team consists of over 20
n

Corresponding author. Tel.: +886 2 27712171x2341; fax: +886 2 27317168.

E-mail addresses: robertlu@ntut.edu.tw (T.-P. Lu),
trappey@ie.nthu.edu.tw (A.J.C. Trappey), ykchena@gmail.com (Y.-K. Chen),
gogoyuda@hotmail.com (Y.-D. Chang).
1084-8045/$ - see front matter & 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.jnca.2013.03.015

members from both academia and industry with backgrounds in

both Business and Information Technology. The designed model
consists of four dimensions: strategy and planning, manufacturing,
logistics, and risk management (SMLR). The SMLR model can
provide a structured and comprehensive model of key processes;
helping SC network managers avoids extremely costly failure.
The resulting weightings from FAHP can serve as critical decisions
support information for future SC network management project in
comparable situations.
Supply chain is a concept which can be considered analogous to
a pipeline of physical and informational ows between suppliers
and customers. From an operational point of view, this pipeline
works like a process of activities that are distributed. Therefore,
supply chain is not only a linear structure but actually a network
(Bhaskar and Lallement 2008). The nature of supply chain networks is that they are a complicated network structure consists of
suppliers, manufacturers, warehouses, and retailers organized to

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produce and distribute merchandise at the right quantities, to the

right locations, and at the right time, in order to minimize total
costs while satisfying service level requirements (Simchi-levi et al.,
2003). As a traditional objective, efciency is the main objective
considered by the researchers and practitioners in SC network
management. Contemporary SC network management can be
dened as an integration of key business processes from end
users through original suppliers for effectively providing various
forms of products and adds value to customers and other stakeholders (Lambert et al., 1998; Wu and Chuang, 2009).
Competition in the global marketplace has moved from brand
versus brand to SC versus SC. Many companies invested signicant
resources to develop effective SC network management. However,
due to the complicated nature and often large scope of SC network
management system implementation, few of them are successful
(Wu and Chuang, 2009; Tarokh and Soroor, 2006). The failure of
such a strategic level system is extremely costly and can leads to
company collapse. SC network management can be dened as
the integration of key business processes (Lambert et al., 1998;
Wu and Chuang 2009) and therefore SC network management
system can only be successful if it supports all the required
business process (Karim et al., 2007). However, few studies discuss
SC network management key business processes from a holistic
view for a specic industry. Many studies only discuss processes
in a specic eld such as forecast, manufacturing, or logistics. The
semiconductor market exceeded US$300 billion worldwide in
2010. The semiconductor industry generates over US$1200 billion
in electronics systems business and US$5000 billion in services,
representing close to 10% of world GDP (Semico, 2008; Maa, 2010).
As the cost of building an advanced semiconductor manufacturing
module has risen to approximately US$3 billion, effective SC
network management has become imperative for the efcient
operation of semiconductor manufacturing companies.
From 1998 to 2004, Taiwan Semiconductor Manufacturing
Company (TSMC), the largest dedicated semiconductor foundry
and second-largest integrated circuit (IC) manufacturing company
in the world, and Advanced Semiconductor Engineering Inc. (ASE),
the world's largest semiconductor assembly, testing, and packaging service provider, completed a joint e-Supply Chain Management (e-SCM) project integrating 11 key business processes
between them. The result was a seamless interface for business
processes between TSMC, ASE, and their joint customers.
While the direct economic benets were around US$ 10 million
through productivity increase over a total investment of about US$
2 million, the indirect benets of this initiative could be on the
order of US $100 million if the joint customers benets are
considered (Hwang et al., 2008). With the proven success,
their pioneering experience had evolved from a two-company
project into a potent force to upgrade the entire semiconductor
industry efciency through process and data standardization
via RosettaNet, which is a globally supported standards development organization for collaborative commerce. The data standards
this organization denes are widely adopted by companies to
support inter-company business processes for efcient SC network
management.
This study denes and analyzes the key processes in SC
network management in the semiconductor industry. The dened
SMLR model provides a structured and comprehensive model of
key processes for future SC network managers, ensuring that they
consider all key processes to avoid failure, which is often associated with extremely high cost. The resulting weighting and
ranking from the fuzzy analytic hierarchy process (FAHP) analysis
identies strategy and planning as the highest-ranking dimension
with a weighting of 0.5330, while ensure collaboration with the
right partners pursuing the same goals, improve production planning
and scheduling to meet customer needs, develop an accurate

predictive capability and appropriate inventory policy, and design

product and technology life cycle are the four highest-ranking key
processes with a total weighting of 0.4889. The results clearly
identify the criticality of the highest-ranking one dimension and
the highest-ranking four factors since they account for approximately half of the overall weighting in their level in the SMLR
model. The resulting weightings can help SC network managers
make critical decisions about the allocation of limited resources to
support the most critical processes. To conrm the results and
further explore the managerial implications, a second session of
focus group meeting was conducted and practices of the top three
key processes in the semiconductor manufacturing industry were
used to illustrate what actions can be perform to improve the
processes and benet the entire SC network in industrial practices.
The results of this study reveal important directions for the
continuous improvement and future development of SC network
management systems to support all required key processes. In
addition to the contributions made to industries the research
results can also serve as a foundation for related academic
research when comparing the key processes of SC network
management among different industries.
The remainder of this paper is organized as follows. Section 2 is
the literature review. Section 3 introduces a case study of the
e-SCM project by TSMC and ASE. Section 4 introduces research
methodologies. Section 5 presents the research results, managerial
implications, and examples of real world practices in the semiconductor industry.

2. Literature review
2.1. SC network management key processes
Many SC network management processes-related studies published over the last decade discuss processes in a specic eld such
as forecasting, manufacturing, or logistics, but few of them discuss
SC network management key process from a holistic view for a
specic industry. This study summarized 45 previously published
key processes and organized them into an initial SC network
management system key process model. Among these 45 key
processes, collaborating with right partners pursuing the same
goal is mentioned by several studies. Klappich (2009) and Kim
(2006) both indicate the importance of selecting the right partners
and setting up common goals in the SC network and suggest that a
rm only tries to optimize its own goals in a SC network will lead
to myopic performance. Yeung et al. (2009) suggest that manufacturers are becoming increasingly reliant on their SC partners to
gain competitive advantages, and partnerships have become the
lifeblood of the SC network.
Another key process mentioned by several studies is improving
production planning and scheduling to meet customer needs.
Krajewski et al. (2005) indicate that production planning and
scheduling exibility are a capability that needs to be emphasized
when devising a reaction strategy to cope with dynamic requirements. Panayides and Venus Lun (2009) indicate that many SC
network management systems will use collaborative planning,
forecasting and replenishment (CPFR) to meet customer needs and
to realize the full benets of the SC network management system.
Ng et al. (2010) focus on a process at the operational level to
allocate a set of production lots to fulll customer's demand.
Three models and research reports from a research organization, an IT research and advisory company, and an industrial
company, respectively, were used as the skeleton for designing
the initial SC network management key processes model. The rst
is the supply chain operations reference (SCOR) model from
the supply chain council (SCC). The second are reports of the

T.-P. Lu et al. / Journal of Network and Computer Applications 36 (2013) 15031511

Top Seven Supply Chain Planning Processes, 2009 to 2014 and

the Top Seven Supply Chain Execution Processes, 2009 to 2014
from the Gartner group. The last model is the component business
model (CBM) for the semiconductor industry developed by IBM's
consulting department. These three models are described in the
following sections.

1505

2.2. SCOR model

references for the required business functions which can be

integrated into business processes.
Together with the three foundation studies above, the current
study collects 45 SC network management process from previously published studies and categorizes them into four initial
dimensions to form an initial SC network management key process
model. This initial model serves as a foundation for the collaborative design using focus group discussions.

The SCOR model denes SC processes using the following ve

dimensions:

3. Case study

Plan: The plan processes describe the planning activities

associated with operating a supply chain.

Source: The source processes describe the ordering (or scheduling) and receipt of goods and services.
Make: The make processes describe the activities associated
with the conversion of materials or creation of the content for
services.
Deliver: The deliver processes describe the activities associated
with the creation, maintenance, and fulllment of customer
orders.
Return: The return processes describe the activities associated
with the reverse ow of goods back from the customer.

The SCOR model is a generic model that provides references for

all industrial sectors without focusing on any industry. That makes
it very difcult to adopt this model into semiconductor industry
which has very unique characteristics, which can be revealed in
Section 3.

3.1. The semiconductor industry

The semiconductor industry is widely recognized as a key
driver for economic growth in its role as a multiple lever and
technology enabler for the whole electronics SC network. An IC
made by a semiconductor company is a component of other subassemblies or nal electronic products. Due to its up-stream
position in the electronics supply chain, the semiconductor industry has been plagued by demand unpredictability. Because the
demand of end customers is difcult to forecast accurately,
companies along the SC often carry an inventory buffer. Moving
up the supply chain from the end-consumer to semiconductor
manufacturing and nal testing companies, the demand uctuation is amplied.
3.2. Company background and project objective and scope

2.4. IBM CBM

TSMC, with revenues of US$14.5 billion in 2011, is the world's

largest dedicated semiconductor foundry and second-largest IC
manufacturing company. The ASE Group is the world's largest
provider of independent semiconductor manufacturing assembly
and nal testing (FT) services. To improve collaboration efciency
among SC partners, TSMC and ASE embarked on a pioneering
effort to integrate the key business processes between them via
an e-SCM project, covering all major business activities in the
production life cycle.
The goal of the e-SCM was to integrate key business processes
and data between TSMC and ASE, resulting in a seamless interface
to their joint customers. The project was comprehensive in scope,
encompassing all major business processes between TSMC and
ASE in the two following collaboration areas:

The IBM component business model (CBM) was proposed by

IBM business consulting services. The CBM customized for semiconductor industry proposes 72 essential business functions under
ve different business competencies and three different accountability levels. The ve business competencies are market and
product positioning, demand and customer management, manufacturing, distribution and logistics, and business and risk management. The three accountability levels include strategy, monitor and
manage, and execution. The semiconductor industry CBM provides

(1) Engineering collaboration:

Engineering specications.

Engineering test data.

Yield data.
(2) Logistics collaboration:

e-Purchase Order (PO) and order acknowledgment.

WIP data.

Finished goods tracking.

Shipping notice.

2.3. Gartner group report

The Gartner group is the world's leading information technology research and advisory company. This study refers to two
Gartner group reports titled Top Seven Supply Chain Planning
Processes, 2009 to 2014 and Top seven Supply Chain Execution
Processes, 2009 to 2014. As a generic reference for enterprises in
different sectors, these reports propose seven high-level SC key
planning and execution processes focusing on future developments. These processes are summarized in Table 1.

Table 1
SC key processes from Gartner group reports.
No.

Top seven supply chain planning processes, 20092014

Top seven supply chain execution processes, 20092014

1
2
3
4
5
6
7

Collaborative demand and supply planning processes

Network inventory optimization processes
Integrated business planning processes
Supply chain performance management processes
Supply chain segmentation processes
Supply chain sensing processes
Supply chain risk management processes

Multimodal transportation management as a global shared service

Inbound delivery management
Flow management
Labor/resource management
Global trade management
Returns management/reverse logistics
Supply chain execution convergence

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T.-P. Lu et al. / Journal of Network and Computer Applications 36 (2013) 15031511

Under the two areas, there were 11 detailed key processes

including yield rates, testing results, order and order acknowledgment, work-in-process, and shipment of nished products in
stock, etc. Figure 1 illustrates the key processes between these two
companies.
After achieving initial success, the e-SCM project extended the
SC network management solution to both up-stream and downstream partners of these two companies. The e-SCM model was
applied to more than 20 TSMC customers (with TSMC as the
interface), and 10 suppliers (with ASE as the interface) as Fig. 2
shows. The key process integration and data exchange experiences
subsequently became the foundation for three RosettaNet standards, i.e., RosettaNet 3D8 (Work in Process), 7B5 (Work Order),
and 7B6 (Work Order Acknowledgment), in the semiconductor
manufacturing council, which in turn benets the electronics
industry society at large.

Table 2
Collective benets summary.
e-operational processes

1998 1999 2000 2001 2002 2003 Total

(US$, K.)

Logistics collaboration
7
Engineering collaboration 0
Total
7

515
250
765

1481
463
1944

1836
535
2371

1852
617
2468

1955
576
2531

7645
2442
10,087

3.3. Project benets

Over a 6-year period from 1998 to 2003, the two companies
created an estimated value of more than US$10 million, compared
with only US$2 million total investment. Table 2 illustrates the
overall benets of the 11 e-processes in the two collaboration
groups.
The table above lists only the direct benets achieved by
TSMC and ASE internally. As mentioned earlier, more than 30
companies in the semiconductor industry have joined the eSupply chain network ever since. The indirect benet brought
to the SC network of the whole industry could be in the order of 10
times as much (Hwang et al., 2008).

4. Methodology
4.1. Focus group
This research adopts focus group for collaborative design of the
SMLR model for SC network management key processes in the
semiconductor manufacturing industry. Focus group is a carefully
planned discussion designed to obtain perspectives collaboratively
regarding a specic topic. The process of conducting a focus group
discussion consists of three phases: planning, conducting, and
analyzing. These three phases are introduced below.

Fig. 1. TSMC/ASE key process integrationconceptual overview.

Fig. 2. Extending integration up and down the SC network.

Phase 1. Planning phase: First, the purposes and topics of the

focus group discussion need to be dened clearly and then an
appropriate moderator must be appointed. The moderator
facilitates the discussion, but does not lead to avoid favoring
particular participants or directing discussions a certain way.
Member selection should follow these three guidelines: homogeneity, heterogeneity, and representative. Morgan (1997)
proposed that participants should possess similar understanding about the topics of the meeting.
Phase 2. Conducting phase: A prepared set of questions and
guidelines help facilitate the discussion so that it does not lose
focus. Memory, transcripts, notes, and tapes are frequently used
for data collection. This research collects discussion data by
taking notes since certain participants have concerns in recording the discussion.
Phase 3. Analyzing phase: Data collected from the group
discussion are analyzed and results are reported in this phase.
There are several analyzing approaches available (Morgan,
1997). This research adopts note-based analysis. An abridged
transcript and a brief summary for each focus group discussion
are prepared for analyzing and identifying the commonalities
and patterns.
This study adopts a two-step approach to design a structured
and comprehensive model of SC network management key process in the semiconductor manufacturing industry. The rst step is
to develop an initial SC network management key process model
based on the literature review described in Section 2. The second

T.-P. Lu et al. / Journal of Network and Computer Applications 36 (2013) 15031511

step adopts focus group methodology as collaborative design tool

to nalize the SMLR model.
The following ve questions were asked in each of the focus
group discussions to ensure that expected results are obtained:

Which processes do you think are critical for SC network

management in the semiconductor industry?

1507

Table 4
Random index (RI) (Saaty, 1980).
N

RI
N
RI

0.00
9
1.45

0.00
10
1.49

0.58
11
1.51

0.90
12
1.48

1.12
13
1.56

1.24
14
1.57

1.32
15
1.59

1.41

Which dimensions do you think are critical for SC network

management in the semiconductor industry?

Which processes are fractional but related enough to be

combined into one?

Which process should be under which dimension in
the model?
Is this key processes model for SC network management in the
semiconductor industry comprehensive?

Seven focus group discussions were conducted. All discussions

were held with ve to eight participants from both industry and
academia. While the same moderator facilitated each discussion,
the participants were carefully selected to have different opinions,
in compliance with the guidelines of homogeneity and heterogeneity. Each focus group meeting was 90120 min long, and data
from each discussion session were recorded by note taking since
certain participants have concerns in recording the discussion.
This design process is performed collaboratively by a multidisciplinary team consisting of over 20 members from both academia
and industry. Table 3 summarizes the composition of the focus
group team.
4.2. Fuzzy analytic hierarchy process

Aw max w

where w is the eigenvector of the matrix A, and max is the

largest eigenvalue of the matrix A. Then the consistency index
(CI) and the consistency ratio (CR) are dened by the following
equations, respectively:
CI

max n
n1

CR

CI
RI

where n is the number of criteria being compared in this

matrix, and RI is the random index. The RI is the average
consistency index of randomly generated pairwise comparison
matrix of similar size, as shown in Table 4.
Step 3: Construct fuzzy positive matrices.
The scores of pairwise comparison are transformed into
linguistic variables which are represented by positive triangular
fuzzy number. According to Buckley (1985), the fuzzy positive
reciprocal matrix can be dened as
k
k
A~ a~ ij 

This research uses fuzzy analytic hierarchy process (FAHP)

methodology to extract successful experiences from executives
and managers of the e-SCM project, and collaboratively evaluate
the relative importance of the key processes. This process is
performed collaboratively by a multi-company and multidisciplinary FAHP expert team consists of 20 members from both TSMC and
ASE with backgrounds in both Business and Information Technology. The analytic hierarchy process (AHP), proposed by Saaty
(1980), is widely used by researchers in a variety of elds in
recent years. However, AHP is criticized for its inability to reect
human cognitive process because it does not cope with the
uncertainty and ambiguity existing decision makers judgments.
To improve the AHP method, this study uses triangular fuzzy
numbers to express the evaluations of decision makers. The
essential steps of FAHP are as follows (Hu et al., 2009):
Step 1: Construct the hierarchical structure.
Establish the hierarchical structure with decision elements, i.e.
criteria, and decision makers are required to express relative
importance of two decision elements in the same level by a
nine-point scale recommended by Saaty (1980). Then, collect
the data and form pairwise comparison matrices for each of the
K decision makers.
Step 2: Check the consistency.
To ensure that the priority of decision criteria is consistent,
the eigenvalues and eigenvectors are calculated by using the
Table 3
Background of focus group experts.

Academic
Industry
Subtotal

following equation:

IT

Business

Subtotal

4
9
13

2
11
13

6
20
26

k
where A~ is a fuzzy positive reciprocal matrix of decision maker
k
k, a~ ij is the relative importance between i and j of decision
k
k
criteria; and a~ ij 1 i j, a~ ij 1=akji i; j 1; 2; ; n.
Step 4: Calculate fuzzy weights.
This study calculates fuzzy weights according to the LambdaMax method proposed by Csutora and Buckley (2001).
The procedure of Lambda-Max method is described as follows:
1. Let 1 to obtain the positive matrix of the decision
k
maker k, A~ m aijm nn ; and let 0 to obtain the lower
bound and upper bound positive matrix of decision maker k,
k
k
A~ l aijl nn and A~ u aiju nn , respectively. Using the weight
calculating process of AHP, the weight vector can be derived
as W km wkim , W kl wkil  and W ku wkiu , i 1; 2; ; n.
2. In order to minimize the fuzziness of the weight, two
constants, M kl and M ku , are computed as follows:
(
)
wkim


k
M l min
5

1 i n
wkil

(
M ku max

wkim



1 i n
wkiu

)
6

The lower and upper bound of the weight are dened as

W lnk wilnk ;

wnilk M kl wkil ;

i 1; 2; ; n

nk
W unk wiu
;

wniuk M ku wkiu ;

i 1; 2; ; n

By computing W lnk , W km , and W unk , the fuzzy weight matrix for

~ k wnk ; wk ; wnk ;
decision maker k can be acquired as W
i
im
iu
il
i 1; 2; ; n.
Step 5: Integrate the fuzzy weights of each decision maker.
Geometric average is applied to aggregate the fuzzy weights of

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T.-P. Lu et al. / Journal of Network and Computer Applications 36 (2013) 15031511

Table 5
The SMLR model.
Dimension

Key processes

Reference

Strategy and
planning

P1.
Ensure collaboration with the right partners
pursuing the same goal
P2.
Develop an accurate predictive capability and
appropriate inventory policy
P3.
Enhance information exchange
P4.
Improve performance metric
P5.
Design product and technology life cycle

Kim (2006), Yeung et al. (2009), Panayides and Venus Lun (2009), Briscoe et al. (2004),
Gunasekaran and Ngai (2009), Jain et al. (2009), Lin et al. (2010), and Klappich (2010)
Gunasekaran and Ngai (2009), Grossmann (2003), Ketchen et al. (2008), Terwiesch et al.
(2010), Yang et al. (2007), and Payne (2009)
Briscoe et al. (2004), Jain et al. (2009), Bahinipati et al. (2009), Manzanares-Lopez et al. (2011)
Kim (2006), Gunasekaran and Ngai (2009), Jain et al. (2009), and Payne (2009)
Grossmann (2003), Payne (2009), and Feng and Chern (2009)

Manufacturing P6.
Provide rapid calculation and simulation of
capacity
P7.
Improve production planning and scheduling to
meet customer needs
P8.
Address external resource constraints

Krajewski et al. (2005) and Ketchen et al. (2008)

Krajewski et al. (2005), Ng et al. (2010), Gunasekaran and Ngai (2009), Grossmann (2003),
Jun-Der Li-Ting (2009), Wang (2009), and Amaral et al. (2011)
Krajewski et al. (2005) and Briscoe et al. (2004)

Logistics

P9.
Standardize and manage logistics and reverse
logistics
P10.
Consider trade agreements and tariffs
P11.
Improve customer service with information
technology
P12.
Manage green supply chain

Gunasekaran and Ngai (2009), Klappich (2010), Manzanares-Lopez et al. (2011),

Cheng and Lee (2010), and Saccani et al. (2007)
Curtis (2009) and Villegas and Ouenniche (2008)
Saccani et al. (2007) and Renko and Ficko (2010)

Risk
Management

P13.
Create a exible structure to prevent logistic
failure
P14.
Comply with laws and regulations
P15.
Cope with supplier, outsource, and internal risk
and natural disasters

Ketchen et al. (2008) and Paliwoda and Marinova (2007)

Diabat Simchi-Levi (2009) and Lu et al. (2008)

Koh et al. (2012) and Luh et al. (2010)

Grossmann, (2003) and Payne (2009)

decision makers as follows:

~ i
W

!1=K

~ k
W
i

k1

Table 6
Background of survey subjects.

k 1; 2; ; K9

~ i is the aggregated fuzzy weight of criterion i of K

where W
~ k is the fuzzy weight of criterion i of
decision makers; W
i
decision maker k. K is the number of decision makers.
5. Evaluation results

IT
Business
Total

Senior engineer

Manager

Senior manager or director

Total

4
1
5

3
4
7

2
6
8

9
11
20

insights in judging the criticality of the SC network management

processes in the semiconductor industry.

5.1. SMLR model

5.3. Results
All the notes taken during focus group discussions were used in
the nal analysis process. Table 5 shows the resulting comprehensive SMLR model for SC network management key processes in
the semiconductor manufacturing industry. This model has four
major dimensions: strategy and planning, manufacturing, logistics,
and risk management. These four dimensions include a total of 15
key processes. The reference following each process denotes the
major reference literatures in which the process was originally
mentioned.

Twenty valid questionnaires were received, analyzed, and

checked for consistency. The consistency index and consistency
ratio of each survey subject's pairwise comparison matrix of the
dimensions and key processes under these dimensions are all less
than 0.1, which is the upper threshold value used in this research.
Table 7 lists the resulting weightings and rankings of the four
dimensions and the 15 factors from FAHP analysis.

5.4. Managerial implications

5.2. Evaluate the SMLR model
This study uses FAHP to extract successful experiences from
executives and managers of the e-SCM project and collaboratively
evaluate the relative importance of the dimensions and key
processes in the SMLR model. Survey questionnaires, designed
base on the SMLR model in Table 5, were delivered to 20 selected
project members through group meetings during which questionnaires were explained and answered. Table 6 shows the
composition of the 20 surveyed subjects with job functions
covering the areas of order management, demand planning,
manufacturing planning, logistic operation, system analysis and
design, and data management. Fifteen of the 20 survey participants are directors, senior managers, and managers with enough
experience to provide strategic perspectives and managerial

5.4.1. Dimensions
Table 7 shows that strategy and planning is by far the highestweighted dimension with a weighting of 0.5330, which accounts
for over half of the total weighting of 1. Previous studies agree
with this result by suggesting that critical strategy and planning
processes have an overall impact on the entire enterprise and
supply chain (Bahinipati et al., 2009; Horvath, 2001; Stadtler,
2005). The dimensions of strategy and planning and manufacturing
have a total weighting of 0.7468, which is almost three-fourths of
the total weighting. This indicates that the success of SC network
management in the semiconductor industry relies heavily on the
key business strategy and planning processes to guide the manufacturing operations. This is especially important when the cost
of building an advanced semiconductor manufacturing fab has
risen to approximately US$10 billion. On the other hand, the

T.-P. Lu et al. / Journal of Network and Computer Applications 36 (2013) 15031511

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Table 7
Weighting and ranking of dimensions and key processes.
Dimensions

Weighting

Key processes

Weighting

Strategy & planning

0.5330

P1.
P2.
P3.
P4.
P5.

Ensure collaboration with the right partners pursuing the same goal
Develop an accurate predictive capability and appropriate inventory policy
Enhance information exchange
Improve performance metric
Design product and technology life cycle

0.1331
0.1205
0.0689
0.0984
0.1121

1
3
6
5
4

Manufacturing

0.2138

P6.
P7.
P8.

Provide rapid calculation and simulation of capacity

Improve production planning and scheduling to meet customer needs
Address external resource constraint

0.0529
0.1232
0.0377

8
2
11

Logistics

0.1161

P9.
P10.
P11.
P12.

Standardize and manage logistics and reverse logistics

Consider trade agreements and tariffs
Improve customer service with information technology
Manage green supply chain

0.0454
0.0225
0.0316
0.0167

9
14
12
15

Risk management

0.1370

P13.
P14.
P15.

0.0443
0.0628
0.0300

10
7
13

Create a exible structure to prevent logistic failure

Comply with laws and regulations
Cope with supplier, outsource, and internal risk and natural disasters

logistics is the lowest-ranking dimension, with a weighting of 0.1161.

Table 5 shows that while logistic processes are not discussed less
frequently than the other dimensions in related studies, their
criticality for SC network management in the semiconductor industry
is much less. This is a characteristic of the semiconductor industry
because the cost and complicity of logistic processes are much less
than that of the planning and manufacturing processes.

5.4.2. Key processes

Under strategy and planning dimension, ensure collaboration
with the right partner toward the same goal is the overall highestranking process with a weighting of 0.1331. This process is also one
of the seven key processes of the future discussed in the Gartner
group's report titled Top 7 Supply Chain Execution Processes,
2009 to 2014 (Payne, 2009), which emphasizes the importance of
developing a collaboration strategy to identify who to work with.
Other previous research (Kim, 2006) also indicates that a rm that
tries to optimize its own goals rather than the common goal of the
SC network will lead to myopic performance. Improve production
planning and scheduling to meet customer needs rank the second
among all key processes, with a priority weight of 0.1232. Several
studies reach the same results by stating that matching supply
to demand is a recurring theme in SC network management
(Ng et al., 2010; Yeong-Dae et al., 1998). This is especially true in
semiconductor industry because of the random yields, rework,
complex product ows, and rapidly changing products and technologies that make the planning difcult. The third ranking
process is developing an accurate predictive capability and appropriate inventory policy with a weighting of 0.1205. This process also
appears in the report titled Top 7 Supply Chain Planning Processes, 2009 to 2014 by the Gartner group (Payne, 2009), which
accentuates that companies should clearly dene inventory optimization requirements and predict how venders can fulll them.
Terwiesch et al. (2010) indicated that forecasting volatility and
ination from downstream happen frequently, and rms must
develop a strategy to cope with this issue. The fourth important
process is design product and technology life cycle, with a priority
weight of 0.1121. Grossmann (2003) suggested that rms should
adopt broader approaches to the life cycle assessment of products
and processes to predict more accurately their long-term sustainability. This is a particularly important process for semiconductor
manufacturing industry due to the high coat and long lead-time
for developing manufacturing technology and building up manufacturing capacity for IC products.
Notice that the four highest overall ranking processes have
a total weighting of 0.4889, which is almost half of the total

Ranking

weighting. This indicates clearly that these four key processes are
particularly critical among the 15 key processes and managers in
the semiconductor industry need to make sure these four processes are well supported to ensure the success of the SC network
management system.
5.4.3. Practices in the semiconductor manufacturing industry
To verify and further elaborate our research results from a
managerial perspective, a second session of focus group discussions were conducted with directors and senior managers with the
resulting weightings presented. Major conclusions from the meetings are the conrmation of the research results and practices
of the top three identied key processes in the semiconductor
manufacturing industry to illustrate what particular actions a SC
network manager can perform to improve these processes and
benet the entire SC network in industrial practices. The following
paragraphs present these practices of the three highest-ranking
key processes in the semiconductor manufacturing industry.
5.4.3.1. Ensure collaboration with the right partners pursuing the
same goal. A current trend in the semiconductor manufacturing
industry is for many companies to gradually go fab-light and
even fabless, transferring wafer manufacturing to their SC
partners, namely foundry companies. Consider N company, one
of world's largest graphic processing unit providers, as an example.
N company and TSMC set a common target to expand market
share. N company was to concentrate on IC design, while TSMC
focused on developing advanced manufacturing technology and
provided full capacity support.
Q3 is usually a peak season in the semiconductor industry.
TSMC's 45/40 um capacity was in shortage by Q3, 2010. However,
with the full capacity support from TSMC, N company was able to
increase its market share in peak season with its advanced
products. Thus, TSMC secured its orders from N company while
N company enjoyed an increased market share, creating a win
win situation in the SC network.
5.4.3.2. Improve production planning and scheduling to meet customer
needs. Semiconductor manufacturing for advanced products has a
more than 3 months lead-time and more than one thousand steps
in their manufacturing processes. Unexpected low yield at one step,
which is not very uncommon, can seriously affect production
planning, scheduling, and delivery date committed to customers.
In the case of an unexpected yield drop at certain step, the planning
and scheduling system must re-plan as soon as possible to meet the
committed delivery date based on updated information such as

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T.-P. Lu et al. / Journal of Network and Computer Applications 36 (2013) 15031511

Fig. 3. Order and WIP pegging.

nished wafer inventory, work-in-progress, and available capacity.

For example, Fig. 3 shows that lots in different manufacturing steps
(S1, S2S4) are pegged for different orders with different due dates
(D1, D2D4). If one of the manufacturing steps (S4) has an
unexpected yield drop (Fig. 4), the planning and scheduling
system must re-plan as soon as possible to make up for
insufcient quantity by re-pegging the lots to orders and start
new high-priority lots from the beginning of the production line.
A fast-responding and exible production planning and scheduling
system is essential to manage these manufacturing problems while
maintaining efcient use of manufacturing capacity and providing
on-time delivery, which is crucial for the efcient management of
the entire SC network.
5.4.3.3. Develop an accurate predictive capability and appropriate
inventory policy. Although TSMC adopts build-to-order business
model, capacity allocation planning is still an essential planning
process based on demand forecast before customers place orders.
The forecast and planning must be accurate since downstream
assembly and testing companies will plan their production
schedules accordingly in the SC network.
The mobile phone chip market went up rapidly in 2006. Mobile
phone shipments are 200 million units more than estimated earlier
in that year. With more than four chips per mobile phone, there is a
large gap between demand and supply for mobile phone chips.
To avoid this in the future, TSMC began to enhance its process of
examining updated forecasts from customers, deciding nonsupported demand, and further deliberate the up-side or pull-in
request from customers. The result is a more accurate forecast and
capacity allocation plan to collaborate with TSMC's up-stream and
downstream partners. That drastically increased the overall capacity utilization and on-time delivery rate for TSMC as well as for
TSMC's partners and hence creating a more efcient SC network.

6. Concluding remarks
SC network management is an increasingly applied strategy for
companies while competition in the global marketplace has
moved from brand versus brand to SC versus SC. However, few
SC network management systems are successful. SC network
management can be dened as an integration of key business
processes from end users through original suppliers and therefore,
a SC network management system can only be successful if it
supports all the key business process. However, few studies
discuss SC network management key business process from a
holistic view for a specic industry. Most studies only discuss
processes in a specic eld such as forecast, manufacturing, or
logistics. This study focuses on collaboratively designing a structured and comprehensive SC network management key processes
model and analyzing the relative importance of these key processes for semiconductor industry. The SMLR model is designed

Fig. 4. Order and WIP re-pegging with unexpected yield drop at step 4.

collaboratively based on a review of related studies, and especially

on the valuable industrial experiences of e-SCM project managers
that successfully integrated all major SC network management
processes between TSMC and ASE. The SMLR model is a structured
and comprehensive reference model of key processes for future SC
network managers, ensuring that all key processes are supported
to avoid extremely costly failure.
Based on the SMLR model, this study conducted a survey and
received valid feedback from managers and executives who actively
participated in the e-SCM project. Fuzzy analytic hierarchy process
was used to analyze the survey results and weight the dimensions
and key processes in the model. The resulting weighting identied
strategy and planning as the highest-ranking dimension, while ensure
collaboration with the right partners pursuing the same goal, improve
production planning and scheduling to meet customer needs, develop an
accurate predictive capability and appropriate inventory policy, and
design product and technology life cycle are the four most critical
processes. Both of the highest-ranking one dimension and the
highest-ranking four processes account for approximately one half
of the overall weighting in their level and thus clearly indicate the
most critical dimension and key processes. The weightings and
rankings provide SC network management executives with a reference for the relative importance of the dimensions and processes and
can also help them to make critical decisions about the allocation of
limited resources to support the most critical processes.
To conrm the results and further explore the managerial
implications, a second session of focus group meeting was conducted and practices of the top three key processes in the
semiconductor manufacturing industry were used to illustrate
what actions can be perform to improve the processes and benet
the entire SC network in industrial practices. The results of this
study reveal important directions for the continuous improvement
and future development of SC network management systems to
support all required key processes. The ndings of this study can
also serve as a foundation for academic research in related elds.
The proposed SMLR model focuses on the semiconductor industry;
future related research may focus on different industries.

Acknowledgment
This research is partially supported by the National Science
Council Grant and the Ministry of Education Grant.
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