MANAGING GROWTH WITH MANMAN at SILICON VALLEY GROUP by Steve Robey, director Management Information Systems Silicon Valley Group San Jose, CA Managing explosive growth has always been one of the business world's most exciting challenges. Silicon Valley Group, Inc. (SVG), San Jose, CA, can certainly attest to that. Between 1986 and 1990, SVG -- America's leading manufacturer of front-end semiconductor wafer processing systems -- grew from $28 million in annual sales to $184 million through acquisitions and increased product demand. SVG employs about 1600 persons. Its Track Systems Division in San Jose is a leader in photoresist processing systems that process silicon wafers prior to photolithography exposure and manage the subsequent treatment steps. The Thermco Systems Division in Orange, CA, supplies thermal processing systems for oxidation/ diffusion and low pressure chemical vapor deposition. SVG's Lithography Systems subsidiary in Wilton, CT, supplies photolithography exposure systems that use advanced step- and-scan technology. SVG systems range in price from $200,000 to $4 million, depending on configuration and product line, that is, furnace, track, or exposure stepper. SVG's extraordinary growth increased the demands upon its management information system (MIS). In 1986, SVG was using an HP 3000 Series 48 minicomputer with about 50 terminals to run a third-party software package that was underpowered and lacking the features needed in a competitive commercial environment. Management was sure there was a better solution to SVG's multifaceted operations, and it set about finding it. The company established certain criteria for its information system upgrade: o It had to be a comprehensive MRP II solution to handle all of SVG's requirements, from financial to manufacturing o Its capabilities had to be integrated, sharing information and databases o It had to be flexible to meet SVG's needs as a combined make-to-stock and build-to-order business. SVG is trending to a build-to-order environment, and the MRP II system would have to support that strategy. When SVG receives an order, it's usually for unique wafer manufacturing equipment. To some extent each SVG system consists of parts common throughout the product line: power supplies, bake units, and so forth. By stocking these in multiples in advance, SVG reduces both its cost-per-unit and delivery time. With a combined parts list of 160,000 items, SVG clearly required a robust MRP II solution. THE ASK on HP SOLUTION After several months of investigation, SVG found that the MANMAN solution from ASK Computer Systems, Inc., Mountain View, CA, running on the HP 3000 multiuser system, could comfortably support its business requirements, with room for future expansion. ASK and HP have collaborated on such solutions worldwide for over 17 years. Today, ASK is HP's largest reseller, leveraging HP computer sales worth tens of millions of dollars annually. Moreover, HP made a 10 percent investment in ASK in Fall 1990. With ASK's subsequent purchase of Ingres, HP and ASK are truly uniquely positioned to meet SVG's MIS needs. For SVG, the principal appeal of ASK's MANMAN solution is its common database and its generally comprehensive approach to enterprisewide computing. MANMAN uses HP's Turbo Image database to supply information to any module running on the system. In unique situations in which MANMAN can't answer a query from SVG users, SVG uses QUIZ, a popular software package from Cognos Corp. to supply the required information -- a truly flexible configuration. MANMAN modules update TurboImage instantly. Thus, any user accessing the database has the most current information, enabling intra- or inter-departmental operations to proceed with the latest production information. This guarantees very accurate reporting of transactions among various departments. BACKGROUND In March 1986, SVG started with MANMAN's Core Four modules -- MFG, OMAR, AP, GL -- manufacturing, order management/accounts receivable, accounts payable, and general ledger packages. These modules function in the following ways: o MFG, the heart of the MANMAN system, is used by SVG to control priorities and capacities, facilitate master scheduling, plan material requirements accurately, provide shop floor control, and supervise critical cost-accounting functions. o SVG uses OMAR to streamline order management and accounts receivable with automated customer quotations, order entry, billing and sales analysis functions. Cash flow, on-time deliveries, and customer service have consequently improved. o AP and GL, Accounts Payable and General Ledger, support SVG's financial record-keeping and procedural capabilities -- very important to SVG's capital-intensive operations. SVG uses GL to consolidate the multiple general ledgers of the two divisions using MANMAN. The partnering of HP and ASK for close to two decades is evident in that the SVG's MIS team implemented the Core Four modules in only 90 days. Without such a highly developed working relationship between SVG's software and computer systems suppliers -- ASK and HP, respectively -- this installation would have been impossible in that 12-week period. SVG next added MANMAN's DecisionMaker module to sharpen its decision-support procedures for the production staffs. DecisionMaker summarizes key manufacturing, customer service, and financial information on-line. SVG formats such information into high-visibility exception reports for top management decisions. For example, the Track Division's Director of Manufacturing uses DecisionMaker to check transactions on expensive inventory items weekly. MORE HORSEPOWER NEEDED However, robust growth rates put increasing demands on the system, necessitating upgrades. SVG migrated from its Series 48 through an HP Series 70 to its present HP 3000 Series 950, a high-end HP Precision Architecture-RISC (PA- RISC) system. The computer's reduced instruction-set is enhanced by a microprocessor architecture that requires fewer components. This translates into superior mean-time- between-repair (MTBR) rates and simplifies system maintenance. In fact, SVG operates with minimal attention to system maintenance. A single part-time contract operator puts in several hours of maintenance weekly in the early morning hours as the system runs unattended. Minimal maintenance requirements and related capabilties of the HP 3000 resulted in its winning the annual Computerworld survey in September 1990 as the leading multiuser system in price/performance. The HP 3000 at SVG supports 200 ports. Twenty of the ports feed 600-line-per-minute HP printers; by means of a data switch, SVG has expanded the other 180 ports into 350 ports. Of these, 200 are terminals and 150 are PCs. The system otherwise includes an HP 7980XC tape drive, eight HP 7937 disk drives with 571 Mb capacity each, and two HP 670 disk drives with 670 Mb capacity each. EXPANDING UPSTREAM AND DOWNSTREAM After SVG management's early success with the Core Four modules it added two more modules to the system, one upstream and one downstream. Upstream, SVG uses the ENGINEER module to integrate engineering functions with manufacturing processes and to interface MANMAN with the CAD/CAE design and engineering systems. Before implementing ENGINEER, SCG had only one category for entering bills of material (BOM). Manufacturing could build an order the instant Engineering entered a BOM. Whether it had been checked or not, the initiation of a BOM was equivalent to a manufacturing release -- a manufacturing process resulted. A Total Quality Management group would then review this process for efficiency. Overall, the process was tedious and prone to error. FROM DESIGN TO MANUFACTURING Today at SVG, ENGINEER preempts such time-consuming situations by providing complete control over the stages of product design and the design's release to manufacturing. The module provides categories of release to get the design on-line for review sooner. These Release Status categories are: 1) just been entered 2) release imminent, and 3) has been released. SVG has thus cut its number of Engineering Change Orders (ECOs) dramatically. ECOs in any manufacturing operation are disruptive and an impediment to quality manufacturing procedures. By providing a separate database off-line, ENGINEER enables SVG's engineering department to manipulate its own data without undue disruption to the manufacturing department. Thus, data entry and error-correction time are reduced to a marginal level within the production cycle. SVG gains more time to focus on design modification, analysis and review. For example, since so much of each SVG product is based on the customization of existing designs, company designers can use ENGINEER's "COPY" function to rapidly create a prototype BOM and routing schedule. Product designers then modify the design and BOM to meet the customer's specifications. Once the engineering department is satisfied with its design and BOM, it transfers both to manufacturing; the ASK system copies released parts and products files overnight. The new design's appearance in the manufacturing database represents the release to build. This process effectively allows production only on the basis of Engineering Change Orders (ECOs). Nothing can be manufactured that hasn't been created in ENGINEER and transferred to MFG. SVG overall has automated a labor- and paper-intensive process. Accuracy and speed have greatly improved. SVG uses ENGINEER for more control over the build structures and cuts the processing time for ECOs. Moreover, ENGINEER has reduced paperwork functions in the Documentation Control department by about 65 percent, from about five hours daily to under three. Adding new part numbers to the BOM, and processing ECOs, is now done much more programmatically. Similarly, the SVG staffer responsible for expediting spare parts orders can now prioritize back-ordered spares. MANMAN highlights the oldest back-orders for priority processing. Since 1989 the back-order queue has been reduced from 60 percent to only 20 percent, a significant improvement. Downstream, SVG has added SERVICEMAN to maintain complete customer, equipment, and contract information. It tracks field service calls, monitors depot repair activity, and facilitates telephone/technical support operations. SVG enters field service data into the MANMAN database, integrating it with other modules, and closing the loop with Engineering. Each piece of SVG equipment is serialized and tagged with a customer and a location. If a problem arises with it -- for example, if a part should fail -- SVG records that information into SERVICEMAN, which correlates it with Engineering on the chance it may be relate to a design flaw. SVG also collects data to develop statistically-based maintenance programs. By implementing a preventative maintenance program related to "true warranty costs" and mean-time-between-repair (MTBR) rates, significant savings may result. SVG's director of Customer Service now has available two reports through SERVICEMAN to more accurately gauge MTBR rates and to monitor inventory for field service use much more closely. THE BENEFITS One measure of MANMAN's efficiency is seen in the cost of MIS operations at SVG as a percent of revenue. This cost typically runs about four percent for a manufacturing company; at SVG, it's three-quarters of one percent and dropping. Consequently, SVG will achieve its return on investment (ROI) for its hardware/software expenditures in a much shorter time. A major benefit at SVG stems from the unprecedented availability of information from MANMAN. The QUIZ report writer provides a fourth-generation development language (4GL). SVG's MIS staff can create just about any report a department may request. For example, the field service department asks for a BOM with vendor part numbers in place of SVG part numbers, and gets the report back in two days -- previously the information took at least two weeks to complete. The information is useful to both field service engineers and customers, who may need to deal directly with the part's supplier in an emergency. QUIZ also enables SVG's MIS staff to tailor MANMAN to its specific needs without reprogramming. SVG has reaped considerable rewards from MANMAN's ability to manipulate large masses of data and report back quickly. The company recently searched its parts databases across all divisions, matching up common vendor part numbers. SVG can now negotiate with its suppliers for better discounts on the basis of historical purchase records. Previously, this level of detail was not accessible. In summary, MANMAN has brought to SVG tighter control over every stage of its engineering, manufacturing, and service functions. As a result, SVG's competitive stance has improved significantly, and at a reasonable cost. FUTURE DIRECTIONS SVG is considering the addition of MANMAN's "REPETITIVE" module. This would minimize the number of transactions involved to build a product -- facilitating SVG's just-in-time (JIT) environment. For example, a planner can load daily build rates into REPETITIVE for two units a day at the beginning of the week; REPETITIVE does the rest, streamlining and managing the inventory on a "pull" basis -- only when parts are actually needed. This would take SVG further beyond "traditional MRP" -- which it surpassed some time ago -- and wholly into JIT operations. In addition, SVG is implementing advanced electronic communications, including E-mail and Electronic Data Interchange (EDI) between the company, its vendors, and its customers. By summer 1991 SVG had established EDI linkages with its bank for rapid, electronic check cancelling. Equally important, SVG's field service engineers now file activity reports on spreadsheets in laptop computers at customer sites or at point-of-use. The engineers then log onto the SVG system via 24-hour dial-up modems and upload their service reports and check sales order status. This results in a tighter correlation between the field sales groups and R & D, manufacturing and MIS departments at headquarters. SUMMARY In conclusion, Silicon Valley Group has made the substantial investments in information technology required to remain a leading manufacturer of wafer fabrication equipment, a technology generally agreed to be indispensable to America's future. Workforce morale has improved from a sense of participation -- or "empowerment" -- among SVG's 350 users of PCs and terminals. Top management is able to make fully informed decisions about strategic directions, while the MIS department has demonstrated its prowess in bringing to the company a truly integrated computer system in a cost-effective and timely manner.