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Case study : Improve the problem of order fulfillment in CPT


Janet Huang, Larry, and WindyfunDepartment of Industrial Engineering and Engineering Management

National Tsing Hua UniversityHsinchu (300), Taiwan

ABSTRACT

In TFT-LCD industry, most parts of industries all have their own full process order fulfillment capacity of multiple stages and multiple factories. For example, the main activity of CPT Company is array to cell, and transports the semi-final product panel to mainland LCM factory to do the final module assembly. In whole supply and demand environment, the main front process is push production; the end process is pull production. However, the customer will direct order to CPT LCM factory in mainland. But, there are many LCM factories of CPT, and the production capacity are different, and each of there relationship are independent. So, if the supply is unable to meet the demand, presently there is no choice to choose substitute factory to fulfill the demand. Therefore, in this research, we proposed to develop a solution by contribute Global Central Sales Department to integrate multiple factories ATP information, and though Web interface to supply the customer can order on-line. Finally, we though the total ATP allocate decision rule, and expect it can improve the order response rate and order fulfill rate.

Keywords: Order fulfillment , TFT-LCD

1. INTRODUCTION

1.1 BACKGROUND

Chunghwa Picture Tubes Ltd. (CPT) is taken as the major object for discussions in this study. CPT was established in 1971. CRT is one of the most important display manufacturing. The Chairman of Tatung Corporation, Principal and Professor, Lin, Ting-sun has been base on from the very beginning, when dedicated itself to R&D and production of Picture Tubes, the vital component of Taiwan video products. In order to satisfy people’s need of visual desire, CPT is enthusiastically devoted to the development of the new display technologies and has fabricated various products which have amazing quality in 1997. Based on strong and concrete core foundation in display technologies for many years, CPT has been one of the most ten important thin film transistor liquid crystal display panel and picture tubes manufacturers in

the world. Coupled with the superior technologies of wide viewing angle performance, faster response time for moving picture, and high color saturation, etc., CPT continuously develops new products, aggressively raises the quality of products as well as services. Until now, the global production plants of the CRT are included Chunghwa Picture Tubes, Ltd., Chunghwa Picture Tubes, Ltd. (TFT Lungtan Plant), Chunghwa Picture Tubes, Ltd. (CF Yangmei Plant), Chunghwa Picture Tubes (Malaysia) Sdn. Bhd., CPTF Optronics CO.,LTD, Chunghwa Picture Tubes (Wujiang) Ltd., CPT Display Technology (Fujian) Ltd., CPT TPV Optical (Fujian) Co., Ltd., and CPT Display Technology (Shenzheng) Ltd. The Number of employees of the CRT is 22000 World Wide. The major products are TFT-LCD, CRT and its related components, and CRT and flat display facilities.


Figure 1 The global footholds of the CPT

1.2 ORGANIZATION

Because of the organization of the actual CPT is very complexity. So, we just describe the simple scope in our report. In higher manager level in the organization, there is the highest overall planning company decision president (related member resource named CPT_President, we just using code name to replace the personal name) and General Manger. It can divide three execution units, such as Logistic Manager Room (process logistics and sales), Supply Chain Manager Room (execute operation and planning), and Supply Chain Planning Room (planning operation framework), each units has their own director. That is the core organization level.

Organization operation level can drill down to the each internal organization of the TFT, LCD, and LCM. In here, we only give an example of which in this report considered LCM foundry. In this internal important organization framework, is Sales Department (execute local sales and maintain customer relationship), Production Plan Department (execute capacity planning and production scheduling planning), Manufacturing Department (according to the production to monitor the manufacturing shop floor to finish the operation) and Material Manager Department (execute forecast purchase key part, control stock level, and maintain supplier purchase quota), and so on. Overall organization model is shown in the Figure 2.

Figure 2 Orgation

1.3 PRODUCT AND BOM

The main product is TFT-LCD panel, it can divided different product group and machine type. The thin film transistor liquid crystal display (TFT-LCD) is composed by six critical components, which is included by glass, color filter, polarizer, source-IC, gate-IC, PWB, and back light. The product structure is shown as the Figure 3.

Figure 3 Structure of product of TFT-LCD

1.4 PRODUCTION PROCESS OF THE TFT-LCD

The complexity of the manufacturing process and long production lead time of the TFT-LCD industry. Therefore, it is according their production environment characteristics to divided as array process, cell process, and module process, which is shown in the Figure 4. Then, each manufacturing process will be finished in each foundry, such as array foundry, cell foundry, and module foundry. In array manufacturing process, the source input is glass, the output is TFT. Then, TFT will transport to the cell foundry to assemble with color filter, and


paste with polarizer to become the semi-product panel. Finally, it will transport to the module foundry. The semi-product panel will assemble with source-IC, gate-IC, PWB and back light to become the finish goods.

Figure 4 process of major production of TFT-LCD

In recent years, TFT-LCD (Thin-Film Transistor Liquid-Crystal Display) is grown up quickly at the application of consumer product, like LCD-TV. The manufacturer have invested larger plants, to provide more capacity and application sizes. The TFT-LCD manufacturers establish the new foundries, it let their production chain become three levels in otder to satisfy the customers’ demand. (shown in Figure 5) The front stage of array and cell process, the production lead time is too long and to invest the foundry cost is too expensive. So, it adopted Make-to-Stock (MTS) to stuff capacity in order to decrease the foundry invest cost. The end stage is module foundry which is provided the finally assembly. That was because of the variety different kinds of product, the demand is unknown, and the short product lead time. So, it is adopted Assembly-to-Order (ATO) production model to deal with the variety product demand.

Figure 5 production chain of TFT-LCD

The end stage of module process is direct face the customer order. It played the important role

of the order fulfill or not. If it can provide precisely due date and available to promise quantity to each query order, then it will improve the customer satisfaction. The shorten product cycle time, the customer demand is low price product become to the quickly response demand service (such as shorter production lead time or quickly order fulfill) and the better interaction with each other. Therefore, the quickly reponse to customer demand and in-time to provide the customer service are become the critical parts of the company can exist or not. That is also the important indexes of the customer satisfation.

In this paragraph, we will talking about the order fulfill procedures in nowadays of the TFT-LCD industry. The first step is that sales department will deal with the order fulfill issues. Then, the sales department will tell the certain orders to the production planning members to do the production planning in module foundry. The production planning members will return remain available to promise quantity to the sales department. The available to promise quantity can be the sales department reference of the next time to deal with the query orders. The main process procedures is shown in the following:

1. When sales department receive from the customers query order. The sales department will refer remain material and capacity which is return from production planning department to calculate the roughly available to promise quantity. According to the traditional MRP logic to expand the demand, and did not consider the product priority, material assembly, and product characteristics, and reply the calculation results to the customers.

2. At the same time, the sales department return the certain order information to the production planning department to lock the capacity and material which is the order demanded, and to do the elimination and schedule the production plan.

3. When the production planning department receive the promise order from the sales department, it will according to the remain capacity and material to do the production planning to do the production plan. To paln the module daily input capacity plan and cell foundry transportation plan to tell production members of the module foundry to execute the plan.


4. At the same time, it schedule the material and capacity elimination, produce daily remain capacity and available material that will become the next production planning input and return to the reference of the sales department when they response the customer query order.

Figure 6 process of order fulfillment of As-Is

2. LITERATURE REVIEW

American Production and Inventory Control Society (APICS) published APICS Dictionary [1] in 1998, defined the ATP “ATP is based on a simple monitoring of the uncommitted inventory and expect production to decide, and that quantity is calculate by production scheduling and it can be the customer order fulfill reference.” Ball et al. (2002) [2] defined ATP link the customer order and industry available resource played an important role, it means that the supply and capacity own the profit capacity in the future. Therefore, accept the order or not is according to the ATP. So, we can know the main function of ATP is it can be used to industry to check accept the customer or not, and though the ATP quantity, the company can response the order fulfill to customer.Guinet (2001) [4] defined many production units “multi-factories”, multiple factories scheduling divided the whole multi-factories planning problem and the zone multi-work stations scheduling problem in the same time. This kind of problem can be divided two stages planning. The goal of the first stage is minimum cost; it is planning each factory production order. The second stage is practical to allocate the order to designate factory and process the detail operation in the future. So, the multiple factories problem directs the two main points in the same time, which is which factory should produce? When to produce which kind of product?Leachman (1987) [5] focused the semiconductor industry of multiple factories production planning model, and it proposed Corporation Planning System which is considered the

traditional semiconductor industry is scheduling by their self, and ignore the effect of multiple factories planning effort.Chritian and Kallrath (2000) [3], an object of study is a chemical industry which own different geographic production factory location and point of sale. It directed that each factory should have the same characteristics, it can be support each other, and each of multiple factories have no upstream and downstream relationship. They can finish the customer direct product by their own factory. However, each factory location is decentralization. So, their relationship should considered the transportation capacity and scheduling time cost.

3. AS-IS MODEL ANALYSIS

3.1 ANALYZE REAL SUPPLY MODEL

In real CPT supply chain model, the main front TFT-LCD factories are located in Taiwan. After the front process produce panel (Semi-finished Product, SFG), it can sell to customer, or transport to end process module factory to do the Final Product assembly. Due to the human cost, material supply and market relation, CPT module factories located in southeast along the coast in mainland. The main process is to do the panel assembly operation to make it become the monitor of equipments of brand customers’ TV, PC, and NB. On the other side, it also can be other Contract Manufacturing (CM) to do the consumer product application. The whole CPT supply chain framework model is shown as in figure 7. We can focus on the supply and demand behavior of LCM process. We focus on the Fujian province factory (CTOC) and Jiangsu province factory (CPTW) to be LCM1 and LCM2 to become the future AS-IS model construction.

Figure 7 real supply model


3.2 FORMULATE AS-IS MODEL

We use the real supply model to contribute AS-IS model which will discuss in this research such as in figure 8. In the figure, we only shown two supply chain of CPT, such as LCM1 and LCM2. Different customer will order from different LCM factory sales. We will drill down the AS-IS model of the LCM factory which is the main discuss of this paper, and that is shown in the figure 9. The main functions of LCM factory are sales, allocation order plan, material plan, and manufacturing. The sales are face the customer order which have to accept the order and confirm order. When after the customer order, first, it have to check ATP information which is from the production department, check the order fulfill situation, finally response the customer order status. The main operation of allocation order plan is production panning operation, it allocate order to schedule the time to decide when to produce, when to input material, and confirm to the pre-stage of LCD factory to check the panel semi-product material plan. Material plan is to response of material supplier to purchase material and purchase ratio plan. Manufacturing is based on the previous function to decided the scheduling plan, and prepare the material of the work order, to do the final assembly, and finish the final product, then transport to the downstream factory which is customer designated.

Figure 8 AS-IS model

Figure 9 AS-IS model (drill down)

3.3 INFORMATION MODEL

The information model is shown in the figure 10. That is included accept order information, and according to the order to do the allocation order plan to decide each material purchase plan and production scheduling plan. Finally, it can become the transportation information of the final product transport to the customer designated location.

Figure 10 Information model

3.4 PROBLEM DEFINITION

In the end stage of LCM foundry of CPT is belong to MTO. So, the customer order is responsible by the sales department members in LCM foundry. It is clearly to see in Figure 11. One customer though some ways (such as mail or telephone) to transport the order to one of LCM foundry local sales member of the CPT. That sales member will key in the order


information to the internal system. The other professional sales member will check the order can be satisfy during the customer’s assigned due date or not. In that time, there will ATP information which from the shop floor and planning calculates result of local LCM plant. Otherwise, the professional sales member will using the production reflection the ATP information to judge promise or not. When they confirm there are enough material and capacity in the shop floor can fulfill the order on time, then they will key in that order though the internal information system to the production department to execute the allocation order plan to confirm the schedule work order and material demand planning.

If there is not enough, the order is judge to the un-commit order. In that time, it will report to the responsible sales members. The sales members will direct to connect or though the customer relationship to response the customer satisfy situation. The response context is included to tell customer it may not fulfill on time, and ask the customer if the customer can accept delay due date or take apart orders. One part can be fulfill remain capacity and material; another part can be delay to replacement.

Because of that it can not in the first time to response the fulfill information; it may lose the order profit. If that is brand customer in a hurry to satisfy the sales period or in the rush season demand, the such foundry like CPT can not on time to supply products, the brand customer will reduce their quota, even if full orders draw out, and let others’ foundry produce. It not just meaning lose one order, it is the full company supply capacity, and partner independent discount to the CPT.

Figure 11 problem scenario

4. DEVELOP SOLUTION AND FORMULATE TO-

BE MODEL

4.1 DEVELOP SOLUTION

When one of the LCM foundry in CPT face the problem, how to solve it? Fortunately, the LCM foundry in CPT is not only one, in real cases, CPT in Chain has four foundries, each foundry has different resources and their own independent accepts order, and independent satisfy orders.

Therefore, we proposed one simple point of view that is if one LCM foundry can not supply enough, we can though internal information system to let the un-promise order to let the other LCM foundry. If the other LCM foundry can satisfy, and consider extra transportation cost, it also gain profit, then we can not refuse the order.

So, we proposed two stages solve proposals:

1. Step 1 Solution (Local receive order, aggregate not enough order): Each foundry independent receive order, and did not have each foundry aggregate system, so, the direct way and simple improve proposal is that when local sales receive order and judge the order. The order which can not confirm will return to the overall sales department and find out the other foundry to satisfy.

2. Step 2 Solution (Aggregate receive order, and allocate the order): Although the step 1 reduces the order rejects, but the information complexity. So, we proposed the step 2. It have to improve the information aggregate system, such as overall sales members only have to key in, and they can known the front stage TFT foundry, LCD foundry, and end stage LCM foundry’s capacity, material, and WIP information. So, the overall department can consider the each foundry and transportation information to make the best allocation to simple the information transport and reduce the order rejects.


Figure 12 solution

In the later, we use the Step 2 Solution to become the TO-BE model and do the future discussion.

4.2 FORMULATE TO-BE MODEL

Though the Step 2 Solution develop model case, we formulate TO-BE model which is shown in the figure 12 and figure 13. The figure 13 is the drill down result of figure 12. The original AS-IS in each LCM factory of sales department function is remove, and independent to become a Global Central Sales Department that may allocate in CPT in Taiwan whole department. We though the Web interface to supply the customer to do the CPT order operation. In the other words, the customer should not decided which LCM factory should order, it just consider the CPT. There is the similar function of Global Central Sales Department and original allocate in LCM factory of Local Sales Department. They all done the accept orders, confirm and response customer, other LCM factory just concentrate on purchase material and production behavior.

Figure 12 TO-BE model

Figure 13 TO-BE model (drill down)

We discuss the details of Global Central Sales Department functions, which can be divided to three stage operations:

Step 1: There are professional responsible sales to response the different customers and different zone customers to check the order and collect the order. After they confirm the order information, they will release the order.

Step 2: When after check the order information, there is no mistake, then it can check this order can be fulfilled or not. In the same time, there is ATP information which is aggregate from different LCM factories. That is shown the specific time which is still having extra capacity information. According to the ATP, and order allocation decision rule to allocate the customer order.

Step 3: Finally, according to the Step2 decision allocation result to update the order status. If the whole LCM factory of CTP can not fulfill on time, it can response to customer to update the order, or request internal LCM factory to work overtime. On the other side, if it is confirm status, it should allocate to the planning LCM factory, and do the order fulfillment process.

The order and ATP allocation decision rule is shown in the figure 14. First, it will decide the customer designate LCM factory or not. If the customer designate the LCM factory, then according to the order due date and the shortest time order to check first. Then check the most quantity order, and decided the priority, then check that designate LCM factory have enough ATP capacity before due date or not. If there is enough ATP, then order confirm will delete the allocate ATP; if can not fulfill, then response reject the order. If CPT has other LCM can be supply, then will propose customer to choose the other substitute factory. If all can not fulfill the


order, then ask customer to decide update the due date, quantity or cancel the order. If the customer did not designate the factory, then choose the shortest LCM factory distance to customer location. Then according to the previous priority choose rule to check there have enough ATP information or not. If the tentative factory can not supply, then choose the substitute factory and repeat the check rule until find out the fulfill ATP. If still can not fulfill, it mean that the whole LCM factory of CPT can not fulfill the customer designate conditions and response to the customer to do the future substitute case. Whether customer designate LCM factory or not, though previous decision rule, if decided confirm then frozen the order and allocate the capacity. Then transport the order information to decide LCM factory, and then the factory production operator will transfer to work order, and do the production planning and order fulfill activity.

Figure 14 ATP and Order mapping decision rule

4.3 EXPECT BENEFIT

From the AS-IS model to TO-BE model, it may take the expect effort and improve cost of CPT, which is take list in the following statements.

Expectation Improvement1. Saving each factory set local sales

department expense, such as operation cost and each accept order operation cost.

2. Improve order fulfill expect quantity (According to aggregate all factories ATP information allocation)

3. Though Web interface to order and process the order, it can direct transport end information, and reduce human key in data mistakes and human expenses.

Cost1. establish Global Central Sales Department

cost2. Contribute Web interface to order and

aggregate the ATP information confirm expense

3. Aggregate other particle system operation expense

4. Install internal operator and customer training expense

5. SYSTEM DESIGN AND IMPLEMENTATION

We use the technology of ASP.NET to design a Online Electronic Ordering System (OEOS).In the later, we will brief this system to separate to two parts. First, it is a customer interface for every customer can order online. Second, it is management interface for sales representative of CPT to check order mapping ATP that come from production information.

5.1 CUSTOMER INTERFACE

Design a Web system for customer that can come from all the world to post and revise order online conveniently. They will make account register to become the formal customer of CPT, then the CPT will check and decision to allow some customer can use this system. If a customer take a permission, he will login this system likely in figure 15. Then, the Web interface transfer to ordering management interface that is shown as the Figure 16. In this interface, it provided some founction include post new order, update order, delete order, and modify the own account data. In the early part of posting order, the states of the commitment at that order preset the “In handle” state. It’s mean that the order is a new date and wait for some body to deal with it. If that order was be checked and make some decision on it, the states of the commitment at that order was going to become the ”Commitment” state or the “Reject Order” state. It is mean that that order wes promised that can be orderfulfillment before delivery date, or the CPT do not have enough capacity to fulfillment that order.


Figure 15 Login interface

Figure 16 Customer order list interface

5.2 MANAGEMENT INTERFACE

If sales representative of CPT will check order and make decision to promise or not, he will through the same system to check it. First, sales representative of CPT must login this system using the “admin” account, so he will view all of the order data that is no matter what in handle or commitment. It is shown as the figure 17. In the other hand, some information come from production place is a representative the production capacity. It is a common knowledge. Everyone call it as “Available-to-Promise (ATP) ”. We can view it at figure 18. It include what plant, what product, when manufacture combination information. Finally, ales representative of CPT must to connect with order data and ATP information. Through in figure 19, in this interface provide a quickly check function that is shown the one order date that he want to check and the other ATP information all the time at the same interface. So, sales representative of CPT can use the “Query” and “Check” button to chang that order states. Until all of the order in this period was be deal with.

Figure 17 Admin manage order interface

Figure 18 ATP information

Figure 19 Check ATP & order interface

6. CONCLUSIONS

CPT is one of the most important TFT LCD suppliers. That own array, cell, and module manufacturing capacity. In global footholds, the front stage from TFT foundry to LCD foundry is adopted forecast push production, and all foundries allocated in Taiwan. In the end stage of LCM foundry is receive pull production, the major allocated Chain. In nowadays, the LCM foundry operation in CPT, each foundry is independent receive order, independent produce.


Therefore, there will some losing opportunity of the smaller or can not enough capacity LCM foundry have some un-commit order, and also losing their partner independent.

Therefore, we proposed a simple solve proposals, in the beginning, the local foundry receive order, if they can not fulfill, and they can return to the overall company and to find out the other LCM foundry support. Until the information integration system finish contribution, it can on time to aggregate each foundry information, and overall sales department receive order, and aggregate allocation to reduce the order release and to improve the efficiency information process model.

REFERENCES

1. American Production and Inventory Control Society., APICS Dictionary, 1998.

2. Ball, M. O., Chen, C. Y. and Zhao, Z.Y., “Available To Promise”, Working Paper, Rober H Smith School of Business University of Maryland College Park, 2002.

3. Christian. H. T. and Kallrath J., “Optimal Planning in Large Multi-Site Production Networks”, European Journal of Operation Research, 126, pp.422-435, 2000.

4. Guinet, A., “Multi-Site Planning: A Transshipment Problem ”, International Journal of Production Economics, 74, pp.21-32, 2001.

5. Leachman, P. C., “Preliminary Design and Development of a Corporate-Level Production Planning System for the Semiconductor Industry”, Operation Research Center University of California Berkeley, 1987.

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