01. Introduction to the ePM

Purpose / Objective

The purpose of the esca Progression Model (ePM) is to provide a strategic framework and common language for the design and improvement of supply chains and supply chain relationships in the electronics industry community.

Characteristics

Common Language. The model is intended to provide a common language for in depth discussions between supply chain partners and the electronics supply chain community.

Strategic in Nature. The model is strategic in nature. It helps define the strategic rationale and best practices behind a particular choice of supply chain. It helps you set direction. It is not the intention of the model to describe supply chain contracts or processes in a line by line or step by step manner.

Relationship Based. The model inherently considers “relationships” within the supply network. Several of the dimensions are specifically about how we work with partners rather than what we do within the four walls of the organization. These relationships can range from simple supply relationships to turn-key outsourcing.

Non Judgmental. The model tries not to judge a particular decision as “good” or “bad”. For example neither “in house” or “outsourced” is considered best in a particular situation. The highest level is not the “best level”, it is merely the highest level of sophistication needed to manage a particularly complex supply chain or relationship. For many other supply chains or relationships, a lower level of sophistication may be best. However, the model does imply that it is good supply chain practice to make explicit decisions based on all the factors considered in the model. Moreover, some “best practices” in supply chain may be implicit in the model. The model does not attempt to set standards.

Recognizes the Characteristics of the Electronics Supply Chain:

  • Build-to-order demand in hours or days for products that are dependent on build-to-forecast semiconductors in weeks or months
  • Traditional market-maker channel masters driving demand are dependent on enormously capital intensive semiconductor silicon foundry decisions for supply
  • Volatile consumer trends and short time to market on the demand side with long design times and NPI of IP essential semiconductors
  • Intellectual property embedded in both the end product and the silicon.
  • Differentiation between high IP, high cost components and commodities.
  • Extremely short product life-cycles and often inherently long development/approval cycles.
  • The adoption of extreme forms (whole of product or whole of life) of outsourcing, e.g. ODM, contract design and manufacturing etc where their is competition with the competition for the very sources of production.

Uses of the ePM:

  1. Provides a vocabulary for shared communication across companies and functions.
  2. To assess the overall level of supply chain sophistication of an organization. In this case we are looking at the top-most level used within the organization in all its supply chain relationships.
  3. To assess the overall level of supply chain sophistication in a particular supply chain or particular supply chain relationship.
  4. Assist in the planning and establishment of new or improved supply chains.
  5. Discuss developments and trends within electronics supply chain management.
  6. Enable participants in a supply chain to understand the drivers and constraints in another part of the supply chain (e.g. to enable a 3PL to understand the point of view of a semiconductor manufacturer).
  7. Serves as a guide for planning and prioritizing key business improvements.
  8. Help identify the contributors and risks to be considered for cost-benefit and ROI calculations.

Structure of the Model

The model is a grid. Down the left hand side are “Dimensions”. Across the top are “Levels” which represent a degree of management required to manage a particular supply chain.

Dimensions

The structure and grouping of the dimensions are designed to make the ePM practical to use (rather than be a list of abstract concepts).

The dimensions flow from the top down to represent a logical progression. The dimensions start with the definition of business objectives, then the risks to achieving those objectives, then the processes, then the organization, and ending in tool selection. The final dimension emphasizes the importance of continuous improvement.

This might be the manner in which you would design the supply chain or form a supply chain relationship with a new partner. Of course this would be an iterative process, since the dimensions are so highly related.

Because the dimensions are so highly related, pulling them into a one dimensional list is a compromise. However, each of the dimensions has a definition that also helps show the links to the other dimensions.

Levels

Each level is a progression from the previous level. Meeting the conditions of each level is an enabler of advancement to the next level.

An organization need not progress to the next level until and unless that level is justified by relevant factors; e.g. environment, complexity, risk, relationships, available budget, ROI etc. The appropriate level should be selected for the particular case.

A large company operating in the electronics space will ideally have at least some programs or relationships at which the highest level has been attained.

Future Additions

  • “Playbook” for using the ePM
  • Relationship of the ePM to the SCOR model