At Gartner’s recent Supply Chain Planning Summit, I had the honor of co-presenting with Chance Finley, Vice President for Global Supply Chain at onsemi, a leading semiconductor manufacturer with more than $8 billion in annual revenue.
Since 2022, Blue Yonder has been working with onsemi on a digital transformation of its supply chain to increase resilience, with an initial focus on demand planning. While the journey is still underway, Finley shared with attendees the reasons behind the transformation — as well as the lessons learned by the onsemi team so far.
While every business faces unique supply chain challenges, I believe onsemi’s journey can provide inspiration, as well as encouragement, for any company considering this kind of radical transformation. Here are some of the key points Finley highlighted during our Gartner session:
Achieving Certainty in an Uncertain Landscape
Even in the most predictable market environment, onsemi faces enormous supply chain planning challenges. Each year, onsemi ships over 60 billion units, representing more than 30,000 individual SKUs that range widely in size and functionality. The global automotive industry is a huge customer; Finley noted that the new, all-electric BMW i7 luxury sedan features hundreds of onsemi chips. But onsemi also serves the global energy, aerospace and defense, industrial, and medical markets.
The company manufactures its diverse solutions at 19 sites in nine countries. And, unlike fab-less semiconductor manufacturers, onsemi has an in-house silicon production capability. It all adds up to an incredibly complex supply chain that must be managed with precision to ensure optimal service and financial results.
The past few years have been characterized by extreme market volatility in the global semiconductor industry. That level of uncertainty has made it extremely difficult for onsemi to operate its supply chain with any degree of certainty or predictability.
“The chipsupply shortage throughout the COVID-19 pandemichighlighted a lot of pressing process and system issues at onsemi related to allocating supply, managing our bookings and communicating with customers,” Finley noted.
“At the same time, we got a new CEO who changed the strategy of the company by differentiating between ‘good’ orders — which support strong revenues and profits — and orders that are low margin or otherwise undesirable,” he continued. “The problem was that we lacked the processes, tools and data to make that distinction.”
“The new strategic direction exposed the weaknesses of all our systems and revealed the need for a transformation,” explained Finley. “We were using manual effort, a lot of spreadsheets, a lot of people working late, a lot of reactivity and not enough proactivity. We were using antiquated systems, some of them over 50 years old. So combining all these different things together, clearly there was a need to transform.”
Following an exhaustive RFP and vendor selection process, onsemi chose to partner with Blue Yonder. Our demand planning solution is scheduled to go live in a few months, with supply planning, as well as sales and operations planning, to follow.
It All Begins With Demand
According to Finley, it was only logical to begin the digital transformation at onsemi by focusing on gaining a more accurate view of demand — then cascading that perspective back through the supply chain. By developing more accurate forecasts, segmenting demand based on profitability and other metrics, and syncing demand with inventory levels and production schedules, onsemi will be better prepared for success amid ongoing market volatility.
“While we’ve addressed the chip shortage, the post-pandemic supply recovery has created a different kind of uncertainty, reverting our supply chain challenges back from supply maximization to demand prediction,” said Finley.
“Following the global semiconductor shortage, which created longer-than-normal lead times, extended bookings and long-term contracts started pouring in. Now these excess bookings are causing inventory to build in customer channels — and they’re blurring our visibility to true end customer demand, making build decisions more difficult,” continued Finley.
“Blue Yonder’s demand planning solution is not only going to help us determine true demand, but it’s also going to enable us to segment that demand based on profitability, inventory levels and other factors,” he pointed out. “As an order comes, the planning engine will automatically look at different variables related to that order and make the right decision about how, where and when to fulfill it. We’ll become proactive instead of reactive.”
The Importance of a Digital Thread
Finley noted that creating a digital thread across onsemi’s worldwide supply chain is absolutely critical to driving a successful transformation.
“While we’re starting with demand planning, what’s exciting is that we’re already gaining interconnection across the supply chain — and we’re going to get a lot of value out of that,” he said. “When we tie the supply side to demand, now we’re going to achieve a true line of sight to the shared business outcomes we’re trying to drive. We’re all going to have a single, aligned plan.”
“At onsemi, we were really lacking that connection,” Finley remarked. “So the first major hurdle is integrating siloed systems across the company so they can really speak to one another, operate on the same language and use the same data.”
“At its essence, a digital thread is the concept of creating that interconnectedness across systems, across processes and ultimately across data,” he explained. “Everybody has heard a lot today about artificial intelligence (AI), machine learning, generative AI, and predictive analytics. You can’t leverage those capabilities without good data and systems integration.”
According to Finley, Blue Yonder’s Luminate® Cognitive Platform is a key differentiator that will help unify the end-to-end supply chain and enable a digital thread.
Executive Support Is Vital
One of the biggest lessons Finley has learned over the past two years is the importance of executive sponsorship in driving this kind of sweeping transformation.
“We’ve kept our key executive leadership engaged, informed and involved throughout the entire process, making sure they understand what it’s going to cost, what they’re going to get from it, what the challenges are,” he stated. “We have over 100 people involved with the project across the company, across disciplines, with representation from every single organization.”
“We also have a full-time change manager on this project whose sole purpose is to make sure that we’re communicating correctly, that people understand what’s coming and how this will affect their lives going forward. Culture will eat your plans for breakfast,” Finley emphasized.
“People are the key. You can’t transform anything unless people are actually engaged. Culture is key to the success of our journey.”
Begin Your Own Transformation
It’s been exciting to watch the changes that are taking place at onsemi — and we’re looking forward to the rollout of demand planning this spring.
If you’re ready to tackle your own supply chain transformation, start by learning how Blue Yonder is uniquely positioned to help — with AI-enabled cognitive planning solutions that are purpose-built to increase your supply chain resilience.
