• AMI Semiconductor

Size: $605 million • Business: Silicon wafer fabrication

AMI semiconductor (AMIS) is not the same company it was five years ago. After making about one acquisition a year for the past five years (including the manufacturing operations of Alcatel Microelectronics in Europe), the midmarket firm—which was founded in 1966—grew its sales revenue from $327 million in 2001 to $605.6 million in 2006. To keep up with rapid growth, procurement successfully restructured its organization into a global operation that continues to evolve.

"Every time we complete an acquisition, it adds one more piece to the complexity," says Jim Duke, manager of global supply chain management at AMIS. "The acquisition and integration of the new business is a pretty complicated deal. We're a global organization now. We've had to divide people up and get them to understand their roles and goals to achieve results."

AMIS, which provides silicon solutions to customers in the automotive, medical, industrial, military/aerospace, and communications markets, operates headquarters in Pocatello, Idaho and Oudenaarde, Belgium. With operations in the U.S. and Europe, procurement focused on combining resources and reporting structures. "The strategy is to do the same things in all regions under the same direction," says Duke. "Our sourcing needs to be where we can combine global resources and global volumes with a single point of negotiation to drive cost."

The procurement organization now comprises about 24 people, with responsibilities divided between front-end and back-end manufacturing. Duke, who has been at AMIS for 15 years and in the semiconductor business for more than 30 years, is responsible for front-end manufacturing. He oversees sourcing of all of the supplies, raw materials and services for the company's four wafer fabrication facilities in the U.S. and Europe. He is also responsible for the procurement and negotiation for the wafer foundry services. Nine people, including three in Belgium, report to Duke who reports to Luc Vandermeersch, senior director of supply management. Vandermeersch resides in Belgium and reports to the senior vice president of operations.

To successfully manage the supply chain, and drive continuous improvement, AMIS relies on supply management teams (SMTs). Teams include, at a minimum, a procurement person, a quality person, and a technical or operational person. In this technology-driven business, it's been beneficial to bring engineers into the procurement department. The teams drive specific commodities, such as capital equipment, raw materials, and subcontract services.

Duke: Global integration of the supply management team is the end game.

With its global structure and strategies in order, procurement drives quality improvements and cost reduction by aligning with the right suppliers.

"Consolidation of suppliers is the first thing we look for in reviewing our supply base," Duke says. "We have to be prepared and willing to help suppliers improve quality. SMTs measure review performance and provide feedback to suppliers on a regular basis. The process can sometimes point to items or areas where we may have to move to new suppliers to achieve an improvement in quality, cost, service level or technology."

"Over the last few years, our biggest accomplishment has been the integration of the supply management organization, all headed in the same direction, and driving the overall strategy of quality first and continuous cost reduction." says Duke.