Improve the design of the logistic infrastructure for ASML

This report is the outcome of a Logistics Design Project carried out at ASML B.V., a lithography systems manufacturer, from February 2009 - Sept. 2009. Because of the dramatic change of market conditions in 2008, ASML notices that there is a need to improve its planning and control of its supply chain to decrease the investments in the pipeline and try to maintain or improve its delivery reliability to customers at the same time. Therefore, this project focuses on the improvements in the design of logistic infrastructure of ASML to achieve the above goals. The first step of this project is to perform a current situation analysis to understand ASML's current planning and control concepts, and its logistic requirements. The analysis shows that ASML now has high inventory in the supply chain with a high risk of obsolescence; meanwhile, the delivery performance is lower than the target. Next, a qualitative analysis and design are carried out to bring an initial design for ASML. The qualitative analysis and design is based on the framework of goods flow control and production unit control from Bertrand et al. (1990). The results suggest that the two main operations, the assembly of modules and the final assembly of systems, should form different production units because of the capacity issues, resource characteristics, and the high commonality and uncertainties at the module assembly stages. Based on this result, four possible customer order decoupling points (CODP) are defined. To select the suitable CODP for ASML, a simulation model is built and a series of simulation experiments are conducted. To achieve a significant saving in the pipeline, it is suggested that ASML locates the CODP upstream between the supply chain and the assembly stage. The main results are listed below: 1. The investments in ASML can be reduced around 30% and the investments and commitments in the overall pipeline can be decreased about 10% as well. 2. The delivery reliability towards customers drops substantially. 3. There are possible higher disturbances, more numbers of reschedule-in or reschedule-out, to the supply chain. Although moving the CODP upstream could bring ASML savings of investments in the pipeline, the delivery reliability is hampered as well. Therefore, to meet the target reliability and to further decrease the costs in the pipeline, the following actions are suggested: 1. Share more information with the supply chain to coordinate it with ASML and to reduce the disturbances to the supply chain. 2. Decrease the lead time in the supply chain. 3. Allocate proper safety stock for the buy parts and some modules to alleviate the decrease in the delivery reliability to customers due to the material shortage. 4. Reduce the variability in the production within ASML especially when the CODP is outside ASML. 5. Negotiate a fixed customer order lead time for each type of system and extra lead times for the specific requests with the customers. 6. Differentiate the CODP for each type of system. This project is a part of the "Logistic Efficiency Program" in ASML to develop new planning and control concepts to ensure the delivery reliability toward customers at minimal costs. As a simulation model is developed in this project. ASML can use the simulation model as a decision support tool to evaluate the costs and benefits of various investments in the improvement project by altering the logistic parameters of the simulation model. Furthermore, ASML could use the simulation model as the basis and incorporate new planning and control concepts into the simulation model for the assessment.