A ctive S upplier M anagement IFAG PUR R&D

Active Supplier Management IFAG PUR R&D

role of Purchase (PUR R&D) @ Infineon transparency by clear process description and tools

Dr. Marcel Körting – Infineon Technologies AG Core Buyer/Commodity Manager October 2007

Infineon Confidential

Page 2Apr 22, 2023 Infineon Confidential Copyright © Infineon Technologies 2006. All rights reserved.

Agenda

New Role of PUR & PUR R&D

Active Supplier Management (ASM) within PUR R&D

Processes & Tools

Overview – Infineon & Purchase Department (PUR)

Introduction

Status quo / outlook


Agenda

Introduction


Agenda

Overview – Infineon & Purchase Department (PUR)


Infineon - overview

More than EUR 4 bn in revenues (w/o QAG) in the fiscal year 2006, EUR 1.01 bn in the third quarter of the fiscal year 2007

Approx. 30,000 employees (incl. 6,000 R&D staff) as of June 30, 2007

Strong technology portfolio with about 22,900 patents and applications; more than 30 major R&D locations worldwide

Focus on Energy Efficiency, Communications and Security

Majority holding of Qimonda (QAG)


COM

AIM

QAG

Infineon – marktorientierte Unternehmensstruktur

ApplikationenMarktorientierte Bereiche

Kun

den

PCs und Notebooks, PC-Aufrüstung, Workstations, Infrastruktur (Server, Netzwerke), PDA's, SMART-Telefone, Peripherie-Geräte, Flash-Speicherkarten

Automobilelektronik (Antriebsstrang, Sicherheitsmanagement, Body & Convenience, Infotainment), Energie-wandlung (Netzteile, Antriebe), Sicherheit (Zahlungsverkehr, Identifikation, Plattformsicherheit, Unterhaltung)

Automobil, Industrie & Multimarket

Kommuni-kation

Speicher-Produkte

Mobile Lösungen, Basisstationen für Mobilfunk, Breitbandzugangsnetze,Netzwerke, Metro- und Weitverkehrs-Netze, mobile Anwendungen und Systeme, GPS, CPE, Tuner


Organizational setup – Infineon Technologies AG

IFAG COMCommunication Solutions

Prof. Dr. H. EulP. Gruber

IFAG AIMAutomotive, Industrial &

MultimarketP. Bauer

G. Henschel

IFAG OPOperationsDr. R. Ploss

Infineon Technologies AGDr. W. Ziebart

P. Bauer Prof.Dr. H. Eul Dr. R. Ploss P.J. Fischl

IFAG LPLegal & Patents

IFAG HRHuman Resources

IFAG OP FEPFrontend Production

Power

IFAG OP ATPAssembly & Testing

Power

IFAG OP FECFrontend Production

CMOS

IFAG OP SCCorporate Supply Chain

IFAG OP QMCorporate Quality

Management

IFAG OP PURCorporate Purchasing


Infineon Purchasing (PUR)

Production Partner Mgt

Frontend (FE) Materials

Frontend (FE) Equipment Purchasing Asia Facilities &

ServicesIT and R&D

PurchasingProcurement& Logistics

Office

Reporting, Planning,

Controlling PL

Center of Competence (COC)

Core Buyer

Local Purchasing

Central Support

FE Equipment Core Buyer

FE EquipmentEquipment Trade

Purchasing Regensburg

Purchasing Villach

Purchasing Kulim

Purchasing Dresden

FOV + PCVA

Assembly & Test Core Buyer

Purchasing Singapore

Purchasing Melaka

Purchasing China

Purchasing Wuxi

Facilities & ServicesCore Buyer

Purchasing Warstein

PurchasingKista

Purchasing Horten

ITCore Buyer

R&D Core Buyer

FE Material Core Buyer

Processes, Methods & Tools

Procurement North America

PPM Core Buyer

Purchasing Munich


Agenda

New Role of PUR & PUR R&D


Prejudices about Purchase Departments

PUR:… is complicated and inflexible… are stealing my and my supplier’s time

… has no added value to offer

... does not understand what BGs want

… only and always wants to decrease prices

… is only focused on cost savings & cost reductions

… can not work without SAP


To be a recognized

“value added” central function

within Infineon

Active Supplier RelationshipManagement

and development

Internal and external

Communication to increase

reputation andtrust

Standardized processes,

methods & tools:to support shift from tactical to

more negotiation oriented work

People, Team andOrganizationaldevelopment

Current Overall PUR Strategy

Purchasing Performance

focused on Competitive Price,

Secure Supply, and Operating costs


11 key initiatives and owners defined to implement PUR Strategy

Focus on Value

Early Involvement

Effective Supplier Briefing

Golden Rules

Data transparency

Intelligent IT Roadmap

C-Part Handling

Best Practice Sharing

Role definition

Management Team Building

Individual Development

Recognized „value added“

function

PUR Performance

RelationshipManagement Communication


methods & toolsPeople

Recognized „value added“

function

PUR Performance

RelationshipManagement Communication


methods & toolsPeople


Kontinuierliche Investitionen in F+E

42.90042.000

Ca. 1,2 Milliarden Euro F+E Ausgaben im GJ 2006 Über 30 Haupt-F+E-Standorte weltweit Über 6.000 Mitarbeiter im Bereich F+E Derzeit rund 42.900 Patente / Patentanmeldungen

F&E - AusgabenGJ 1998-2006 [Mio. EUR]

Anzahl Patente und Patentanmeldungen (GJ 1998-2006)

637 739

98 99

F&E Ausgaben [ab 2006: incl. Qimonda]

18.34923.853

98 99 00 01

1.025

28.200

0200 01

1.189

03

31.100

02

1.060

04

30.300

03

1.090

05

39.000

04

1.220

06

41.000

1.293

05 06

1.249


PUR R&D: Risks of uncoordinated Supplier Management

Resource Manager

PUR

Supplier + Expert Portfolio:

ExpertSupplier 3

Expert

Expert

Supplier nSupplier 4

Supplier 2Supplier 1

Demand, Skill ProfileExpert Selection

Suppliers / ExpertsQuote

Non approved new Sources

uncoordinatedsourcing

Significant training efforts

Request on Purchase Order

Individual ContractingIndividual Price Negotation

Short term demandsMissing knowledge

Low sourcing activities

No market overview availableMultiple contact points

Standardization not possible

Risk of Know How Flow,Loss and transfer

Individual contractingIndividual rates

Uncoordinated Supplier Management includes multiple risks!


Agenda




Resource Manager

PUR SourcingContractingPrice NegotiationQualification


Approved Supplier Portfolio:< n suppliers*• Allocated to n Fields of Knowledge (FoK= PCNs)• Frame Agreements• Standardized skill and expert levels• Pricing structure

IFX Active Supplier Management Model

QuoteSpecification

Expert

Expert

Expert

Expert

+ n experts

*Approved Suppliers anddevelopment work only

FoK 1*Supplier 1, 2, 9

FoK 2*Supplier 2, 4, 9

FoK n*Supplier 6, 7, 8


Development of ASM within PUR R&D

Resource Manager

PUR

Specification Quote


Price NegotiationQualification

Combined Pool (Suppliers & Experts) for Consulting Services allocated to FoK

Reduced training efforts

No additionalsourcing required

Overview onMarket situation

FoK 2Appr. Suppliers

Back up: Experts

FoK 1Appr. Suppliers

Back up: Experts

FoK nAppr. Suppliers

Back up: Experts

Performance ranking based oncustomer feedbackPhase In / Phase Out processto improve performanceEstablish long term relationshipwith experts

Expert Recruitment / Sourcingtogether with selected partners

Control on Know How Flow

SourcingContracting

Approved supplier portfolio

Fields of Knowledge: Appr. Suppliers + Experts Appr. Suppliers are 1st choice


Agenda

Processes & Tools


Define Business Cases on a regular base – BGs & PUR together

BG PUR

Cooperation:

• Evaluate risks

• Define main suppliers

• Frame contract & qualify

• (Commit minimum volume)

Output:Supplier strategy for the

next FY (SRS)

Contributes:- needed skill profiles - budget

Contributes:- overview on the market- overview on suppliers (availability, costs, Field of knowledge

Owner of the developed product? License rights?

License fees?Profit sharing?

May I get resources from other IFX sites?

Customer approach?Sales channels?

compare internal & external costs

Is external supplier liable?

Do I have enough internal resources?

Support at the customer?

Are external resources available


Purchasing Process according CR: PUR R&DR&D Services PCN (Purchase Code Number/Warengruppen = FoK): 8R*Precondition: underlying Commodity Strategy (ASM)

Process Step Action Tools / Strategy Output

BG PUR Buyer BG PUR Operation

Buy decision (if necessary with

consultation of PUR R&D)

Technicalspecification

Supplier Selection,Pricing, Contract

BG Approval Purchase Order out

Archivedocuments

- Klusa- Roadmap

- Commodity Strategy (ASM)- SRS

- Commodity Strategy (ASM)- SRS / SIM (e-questionnaire)- Recruiting Portal

- POCA - SAP - SAP- Saperion / ICP

Statement of Work (Technical specification)

- Selected Supplier(including start of supplier evaluation if necessary)- Legal Frame Work- PUR Approval

BG Approval Purchase Order Archiveddocuments


Purchasing Process – e.g. Step PUR Buyer

PUR Core Buyer

- Supplier selection (either Approved Supplier or Approval through PL – Alignment with BGs) - Effects commercial negotiations- Defines the type of contract- Checks the terms of the contract (price, delivery conditions, payment terms)- Verifies the conformity of the contract with legal & IFX rules- ensures SOX compliance (“Cover Sheet”)- gives PUR Approval

Note: the less discrepancies from Commodity Strategy (ASM) the less work for any involved department


Purchasing Process – e.g. BG Approval(Paperless Outsourcing Contract Approval)

ProjectManager

ProgramManager

PURCore Buyer

PUR Operations

Finance /Head of Finance

CorporateFunctions Head of BU

Outsourcing Manager / PJM

ResourceManagerPresident

CFO

POCA


Purchasing Process – e.g. Step PUR Operations

PUR OperationsResponsibility: Administration & Purchase Order processing

Checks / ensures / completes /: - Core Buyer Approval; - BG Approval;- availability, completeness and consistency of PO documents - contract signatures (internal & external)

and:

- releases PO in SAP;- sends out the PO and contract documents;- stores Softcopies of supplier & IFX signed contract in SAP and Saperion / ICP and files Hardcopies in the “Document Archive”


Agenda

Status quo / outlook


PUR R&D: Change of self-concept

PUR only played “Bad Guy” within price negotiations and sent out Purchase Order

traditional role

new role PUR…

… offers a structured Supplier Pool (Network; regularly alignment with BG)… knows external resources best (availability, prices, performance, quality, legal …)… manages Suppliers… advices BG in respect of “make or buy decision”… is interface between all BGs and Supplier… is a trusted Partner (intern & extern)… offers SW-tools and services


PUR R&D: Value added function within Infineon

PUR R&D strives to be a responsive partner for

a) BG (internal) demanding external resources, andb) Suppliers (external) rely on dependable statements

to reach innovative semiconductor devices, solutions and services

to improve Infineon customers' competitiveness


Documents

A ctive S upplier M anagement IFAG PUR R&D