The encyclopedia · Engineering & Operations · Operational decision · 2015–2017
Western Digital optimized which plants get the right to make each part
Qualifying a site to make a product takes months; Western Digital used a multi-stage stochastic program to choose qualifications and cut lost sales.
Western Digital
the move
Western Digital makes thousands of products across a global Silicon Operations network, and each product must be qualified at a site before it can be made there. Qualification takes months and hundreds of engineering hours.
The obvious choices are bad: qualify each product at only one site, leaving no fallback, or qualify it everywhere, spending a fortune on redundant qualification.
The move was a mixed-integer stochastic program with multiple stages of recourse. It decides which sites qualify each product, weighing both expected demand and demand uncertainty, solved with a greedy heuristic plus a linear programming solver.
Deployed in the first quarter of 2015 and run as a quarterly process, it streamlined the decision and produced substantial savings from fewer shortages and less wasted qualification effort.
why it works
- Qualification is slow and costly, so you cannot wait to see demand before deciding.
- Demand is uncertain, so the choice must weigh expected demand and the risk of a shortfall.
- Multiple stages of recourse let the plan revise site choices as uncertainty resolves.
- Having alternate qualified sites turns a potential shortage into a routing change.
what transfers
When you cannot react quickly, buy the option to react. Pre-qualifying a second source is slow and expensive, but it converts a would-be shortage into a routine re-routing instead of a lost sale.
what came after
Western Digital deployed the model from the first quarter of 2015 and institutionalized a quarterly site-qualification review, streamlining the decision process and crediting the tool with substantial savings in lost sales and qualification effort.
references
- Optimizing Site Qualification Across the Supply Network at Western Digital
- Optimizing Site Qualification Across the Supply Network at Western Digital
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