Manufacturing strategy: Eroding competitiveness
May 8, 2020
RESEARCH REPORT
In brief
In brief
- Accenture Strategy analysis reports as much as 50% of revenue is eaten up by the cost of goods sold.
- Most companies believe they perform best when they focus on one manufacturing source strategy and optimize it to become highly efficient.
- The solution: Embrace a hybrid, flexible approach to manufacturing sourcing.
Selecting the right sourcing strategy
Many semiconductor companies are not deploying the optimal strategy for their business because they use the wrong criteria to determine which sourcing strategy to adopt.
- They rely on the type of product a chip is destined for or the company’s business model to shape their decision.
- This can lead to a mismatch between the strategy and the needs of the business and compromise a company’s ability to control production costs.
- With a hybrid, flexible approach, a semiconductor company can effectively use both the Known Good Die and Wafer Buy strategies, switching from one to the other when business conditions require.
Determine which strategy to use when
Introduction
As the product moves into the growth stage, demand begins to ramp up and yield becomes more volatile.
Growth
Minimizing risk to production and mitigating any potential supply issues is critical—which is one of the biggest strengths of Known Good Die.
Maturity and beyond
That decision is primarily a function of where a product sits in its life-cycle, as illustrated by the semiconductor yield curve.
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Take action to boost the bottom line
Control costs
Given the dynamic nature of this industry, and increasing investor pressure for better returns, addressing the increasingly unwieldy cost structure helps to shore up the bottom line.
Bring process, tools & systems together
Adapting the sourcing processes, yield management capabilities, costing methods and ERP systems to flexibly support both Wafer Buy and Known Good Die strategies can help rein in COGS.
Embrace innovation
Benefits of improved margins and competitiveness await semiconductor companies who embrace this creative thinking.
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