Using and Developing Range Forecasts for Capacity Planning—ON Semiconductor’s Journey

Using and developing Range FoRecasts FoR capacity planning— on semicondUctoR’s JoURney By Ketan Khowala, prabhu valiveti, and tim Williams Short product life cycles coupled with long lead-times for procuring capacity necessitate a forecast ... errors in product forecast often lead to incorrect capacity investment decisions ... describes a novel approach that ON Semiconductor has developed to deal with such a problem. T T he semiconductor industry is dominated by capacity bottlenecks. To ensure low cost and superior service to our increasingly demanding customer base, it is essential to have a timely access to capacity. But capacity investment is very costly, easily running into millions of dollars and requiring long lead-times. To do it right, you must have a reliable view of future market demand, which is extremely difficult for new products and new technologies because they have no history to rely on. A new product forecast comes from a new product planner, which often is not very good. Here we present range forecasting, which is an approach that combines consensus demand planning (a part of S&OP process) with stochastic principles to derive a map of potential future ...