Matching assets with demand in supply-chain management at IBM microelectronics

In the early 1990s, the IBM Corporation decided that its microelectronics division should expand from producing parts exclusively for other IBM locations to producing a range of products for diverse customers. To overhaul its supply-chain-management applications to handle the new business, it developed intelligent models to match assets with demand to determine which demands it could meet when and to provide manufacturing guidelines. In 1994, the PROFIT team began applying OR techniques to build these tools, interweaving linear programming with a traditional material resource planning algorithm and a heuristic matching process based on clues established in the explosion algorithm. The team has deployed three core applications: a weekly division run that determines customer commitments and manufacturing requirements, daily manufacturing runs that identify the best use of manufacturing resources to meet division requirements, and a division available-to-Promise application that facilitates fast response to customers placing orders (not described). This work has improved manufacturing utilization and customer-order response time.