Scale, Scope, and Speed—Managing the Challenges of Multiproduct Manufacturing

An empirically grounded model characterizes the challenges of modern multiproduct manufacturing, where products that operate in highly contrasting economic environments run in one fab. Three product classes are taken into consideration-VLSI circuits for which unit sales prices are highly time dependent; specialty chips for which unit sales prices and total demand are specified a priori; and commodity components whose unit sales prices are low, predictable, and either flat or cyclical. The model calculates the impact of manufacturing cycle time on cost structure and the ability to generate revenue, and it simulates the economic consequences of a variety of production plans involving the three product classes. The findings of this paper suggest that an integrated approach to managing scale, scope, and fab cycle time can bring about dramatic increases in fab performance as measured by the net profit that the fab accumulates.