Identifying the High Tech Industry's Differentiating Business Processes

Manufacturing to Delivery Integration: Manufacturing to Delivery Integration: Manufacture to Deliver aims to integrate business and operational data from the top floor to the shop floor, using industry cloud solutions for comprehensive management.

Industry Cloud Solutions Include:

• Cost of Yield Analytics
• Product Costing
• WIP Control
• Sustainability
• Lot Genealogy
• RMA

Business Data Components:

• Finance
• Procurement
• Customer Orders
• Order Fulfillment
• Production Planning
• Supply Chain
• Employee Data
• Inventory

Key SAP Solutions:

• SAP MII
• SAP Digital Manufacturing
• SAP Manufacturing Hub (IIoT) by PDF Solutions

These SAP solutions simplify the integration between ERP and MES systems.

Business Benefits:

Combining financial and operational data provides complete visibility, efficiency, and improved performance:

• Reduces the cost of maintaining MES/ERP (Business Applications) interfaces.
• Enhances profitability through accurate operational cost insights and analysis.
• Increases efficiency in product costing.
• Improves batch traceability and lot genealogy management.
• Boosts product throughput.
• Helps understand the impact of yield loss on revenue.
• Enhances customer satisfaction with improved order visibility and on-time delivery.

Operations Data Includes:

• Work Order Status
• Yield
• WIP (Work In Progress)
• Scrap
• Material Consumption
• Lot Tracking

This integration ensures a seamless connection between business and operational data, optimizing the manufacturing processes from start to finish.

Now, let’s dive into the first strategic priority: Semiconductor Manufacturing.

• Integration Challenge: The semiconductor sector faces challenges in integrating the ERP system with the semiconductor Manufacturing Execution System (MES) due to the complex shop floor processes.
• Universal Integration Platform: A partner solution called Sapience Manufacturing Hub (SMH) is available to facilitate integration of MES data and ERP data, regardless of deployment on-premises or on the cloud.
• Data Flow and Reduction: Operational data (yield, scrap, material consumptions, WIP inventory) is collected on the shop floor and fed back to the ERP system, with PDF Solutions capable of reducing data volume by approximately 70%.
• Optimization and Analysis: PDF Solutions offers Exensio Process Control for shop floor optimization and integrates manufacturing analysis data with business data for comprehensive executive insights, aiming to co-innovate industry cloud solutions for end-to-end business benefits in high-tech manufacturing.

The process involves collaboration between semiconductor companies and distributors to streamline and enhance channel management. The goal is to optimize various aspects of business operations, from salesforce performance to channel inventory and pricing management.

Key Components:

1. Salesforce: Focus on Salesforce performance management and external partners' incentive management.
2. Suppliers: Implement suppliers' rebates and bonus programs.

3. Licensor/Licensee:

   • Manage IP, licenses, and patents.
   • Price and monetize IP.
   • Calculate royalties and report usage.

4. Channel (Indirect) Business:

   • Manage price and margin.
   • Handle quotes and contracts.
   • Oversee ship and debit processes.
   • Administer sell-in and sell-out programs.
   • Maintain channel inventory.
   • Implement price protection measures.
   • Manage promotions.
   • Coordinate MDF and co-op programs.
   • Handle indirect customers and partner management.
5. High-Tech Company: Central hub for managing both direct and indirect business aspects.

6. Direct Business:

   • Focus on price and margin management.
   • Handle quotes and contracts.
   • Oversee promotions management.
   • Implement distributor incentive programs.

Direct pricing and indirect pricing mechanisms are detailed to ensure clarity in financial operations.

Stakeholders are distributors, end customers, retailers, resellers, CM (ECM, EMS), and OEMs are involved in the process.

SAP Vistex Solution for Channel Management: Key functionalities include ship and debit, price protection, royalty contracts, price management, distributor and customer rebates, channel programs, and channel inventory management.

This comprehensive approach ensures that all aspects of channel management are addressed efficiently, aiming for optimal performance and profitability.

• Channel Partners in High-Tech: Many high-tech companies, especially in semiconductors, use channel partners to reach customers, leading to faster, lower-cost, and lower-risk business opportunities.
• Role of Distributors: Distributors handle about 24% of the semiconductor industry's revenue, highlighting their significance in the sales process.
• SAP High Tech Channel Management: SAP offers a solution for high-tech channel management, integrated with SAP S/4HANA or ERP, to address business challenges in distributing and reselling high-tech products.
• Key Features: The solution provides visibility into inventory, manages orders, returns, POS data, and claims; supports multi-tier channel inventory management; streamlines claims processing; and offers price protection for margin safeguarding.

In summary, High Tech Channel Management equips you with full capabilities to manage your distributor business in a seamless, efficient, and profitable way.

Journey to XaaS:

1. Distinct Products: Selling products and services as separate offerings.
2. Bundles: Offering customers a package of products, either customer configurable or fixed.
3. Subscriptions: Charging a recurring fee for continuous or on-demand use of a product or service.
4. Everything as a Service: Allowing customers to purchase anything on a "consumption or on-demand" service model.

End-to-End XaaS Process:

1. Post-Delivery Lifecycle Management:

   • Product telemetry, analytics, and predictive insights (incl. IoT).
   • Service and profitability monitoring.
   • Service support, including repair and spare parts.
   • Software updates and feature re-activation.
   • Circular economy business models, including reverse logistics and takeback, refurbishing, remanufacturing, and recycling.

2. Design and Develop Cyber-Physical Offering:

   • R&D for cyber-physical offerings.
   • Product design for XaaS, including modularity and sustainability design.
   • Design for product use extension and responsible sourcing.
   • Usage feedback to inform design.

3. Offer Management:

   • Design of offerings, subscriptions, and pricing models, including bundling.
   • Configure, price, quote (CPQ) processes.
   • Management of customer lifetime value (CLTV) and assistance to sales.
   • Trials management.

4. Monetization:

   • Contract management.
   • Subscription management.
   • Tracking and mediation of consumption.
   • Invoicing for one-time, subscription, and pay-per-use services.
   • Management of provisions, installments, and commissions.
   • Revenue accounting and reporting.

5. Fulfillment:

   • Entitlement management.
   • Hardware fulfillment.
   • Service fulfillment, including remote and field service.
   • Software fulfillment (including IoT).

6. Customer and Partner Success:

   • Onboarding processes.
   • Customer health management.
   • Renewal and up-sell management.
   • Partner management.

By implementing these processes, high tech companies can transform into hardware, software, and service providers that deliver as-a-service offerings to all stakeholders.

We see that companies in High Tech, and in other industries are turning towards subscriptions, usage-based, and other models to meet changing demands from their customers and evolving trends in the market.

Customers, whether they are end-consumers or businesses, are demanding greater flexibility, personalization, and value in how, when, and what they are purchasing and consuming.

At the same time, investors are favoring companies with predictable, ongoing streams. And as we learned from the recent global pandemic and the war in Europe, those global event can be major business disruptors which can happen at any time.

As a result, organizations are looking at "everything-as-a-service", personalized bundles, pay-per-use, subscriptions, and other innovative ways of monetizing their products and services to address these external factors. Coming from a traditional products sales, where HW, Software and Services were provided in a separate offering, over to a bundling of Solutions and finally to a model where the monetization of HW, SW, and Services happens on a usage or even outcome basis.

SAP provides you with sophisticated solutions, which supports you in the whole end-to-end transformation process towards XaaS Business Models. Subscription and usage-based offerings can be quickly launched. Starting from designing and developing your XaaS offering, over to the creation of a quotation, including bundling and configuration.

The monetization can be handled flexibly, depending on customers needs including recurring, one-time and pay-per-use fees. If there are partners involved in your XaaS offering, partner revenue share models can be handled.

In the fulfillment process entitlement management takes care, that various types of entitlement are stored and tracked throughout the customer lifecycle, including subscriptions, licenses, services, training, and warranties. The solution makes it easier for your business to manage what customers have bought and are entitled to access or use.

Another important factor in the XaaS Process is the topic around customer and partner success. As your business transforms towards an XaaS business model, you have a longer ongoing relationship with your customers and with your partners. Therefore, customer and partner health are key, including the management of renewals and upsales. Finally post-delivery and lifecycle management is critical in order to guarantee that everything is up and running and profitable. Continuous service and support and software updates must be provided, recycling processes have to be managed and the profitability of your XaaS business has to be assured.

• Semiconductor Industry Overview: The semiconductor industry comprises various segments including Fabless companies, IDMs, OSATs and CMEMS, and OEMs. Success hinges on strategic priorities like customer centricity, optimizing production, and sustainability, alongside crucial business processes from manufacture to cash management.
• Optimizing Semiconductor Manufacturing: Integrating ERP with MES in semiconductor manufacturing enhances data flow, reduces data volume, and optimizes processes using solutions like Sapience Manufacturing Hub and Exensio Process Control.
• Semiconductor Sales Enhancement: High Tech Channel Management improves semiconductor companies’ sales efficiency and profitability using SAP solutions for inventory, claims, and pricing management with global distributor partnerships.
• SAP-Driven XaaS Transformation: Companies are shifting to flexible, subscription-based models to meet customer demands and market trends, leveraging SAP solutions for effective transformation to "Everything-as-a-Service" (XaaS) models.