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As a result of clustering effect and rapidly growing, next to the Silicon Valley in the States, Taiwan has become the 2nd large base for the fables IC design houses in the world. Some of the leading companies has even dominated more than 50% world-wide market share in some specific application area. Such as: Net work chipset (RealTek); Optical Storage chipset (MediaTek) and Consumer market chips (Sunplus), etc. However, as a “fabless” IC design house, most of the production jobs has to be outsourced to the subcontractors, and the production plan is done according to the forecast for the next 2~3 months. To be one of them, we can see the subcontractor’s capacity and stability present a reverse trend to the total market demand. And, the subcontractors might ask for more capacity reservation as a condition to secure the limited capacity during blooming market. So, once the market trend turn down, an IC design house has to face the fact of much higher inventory which can significantly affect to profit margin, especially in the drastically changed digital consumer market and short lift time products. Based on the Theory of Constraint (TOC), this paper is trying to study if there are other alternatives to get better result in an IC design house’s production plan and inventory management field. Which includes: the study of Demand-pull way vs. Forecast way and “real time inventory level monitoring method” in inventory management, etc. We are trying to evaluate those theories with a company’s history data. Then, we might able to say if these methods are able to reduce a company’s inventory loss, enhance its flexibility to market demand and increase its profit as well.
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