“Not just clean, but really clean” – visitors to the massive Campeon building in Neubiberg near Munich, housing the headquarters of semiconductor giant Infineon Technologies, may be excused if a classic ad slogan for cleaning products pops into their heads. After all, the semiconductor industry and its particlefree microchip manufacturing cleanrooms have the reputation of being the most pristine industrial production facilities on the planet – even topping the healthcare and pharmaceutical industries. And, perfection is deeply ingrained in the mindset of all Infineon employees.

The perfect example of this is the ‘Zero- Defects Initiative’ that Infineon launched in 2008, a policy that has one overarching goal: “Absolutely no defects along the entire value chain,” says Kurt Gruber, Corporate Vice President for Supply Chain at Infineon.

The key driver of the zero-defects policy is product safety and security. After all, Infineon’s products are applied in a number of highly sensitive business fields, providing the chips for ID and credit cards, for instance. Its main business, though, is manufacturing electronic automotive components for such respected automakers as BMW, Toyota and Audi. “We follow the motto ‘The most valuable part of a vehicle is the people it carries,’” explains Kurt. “For this reason, no compromises can be made in terms of safety – this starts with the smallest supplier and extends all the way to the manufacturers.”

No compromise

This refusal to compromise on defects must also be adhered to by the companies’ logistics partners. Since 1999, DHL has been handling express delivery of Infineon’s semiconductor products and samples from the manufacturer’s distribution center in Großostheim to its customers across Europe, including in Germany, France and eastern Europe. In addition, DHL provides air freight services to various destinations within Infineon’s worldwide network of production facilities. Taking this one step further, in 2008, the two companies launched a joint “Zero-Defects Initiative.” This initiative is unequivocal in committing DHL to ensuring no delivery mistakes, losses or damage.

The logistical deftness required to accomplish this quickly becomes apparent when you hold an Infineon wafer in your hand. The size of a DVD, the highly fragile monocrystalline-silicon wafers are a mere 0.5 millimeter thick and can contain up to 1,000 chips. The slightest damage could cause up to €10,000 in losses.

These wafers are made in a highly complex process at one of Infineon’s four front-end production facilities, such as in Dresden, and then tested in Regensburg. From there, DHL ships them by air freight in special Infineon packaging to one of the nine back-end plants, such as in Malacca, Malaysia. There, the chips are removed from the wafers and their components are connected, before being encapsulated in plastic housings. After the final internal test in Singapore, Infineon’s electronic components land in one of its distribution centers, for instance in San Francisco, California, from where they make their way into the production chain of the automotive industry.

Precision handling

All in all, a single chip can be produced from start to finish within three to four months, according to Kurt, but logistics have to move faster. “Speed means everything to us,” he says, referring to the requirement his customers place on his logistics partners. In other words, DHL Express has only 36 hours to deliver the packages to their destinations around the world – including the time it takes to clear customs.

Even a seasoned expert like Wolfgang Albeck, Head of DHL Express Germany, sees this as a big undertaking. “It’s a lot of work. If there’s even the tiniest of scratches on one of the packages, the delivery will be rejected.” For Wolfgang, this meant that his team had to spend weeks examining each individual step in the logistics process to determine why some packages exhibited rub marks, for example. The cause: the previously unsecured packages had shifted on the shelves of the delivery truck.

The biggest logistical challenge of the partnership with Infineon, however, was when the Eyjafjallajökull volcano erupted in Iceland in March 2010. The billowing cloud of volcanic ash forced the complete closure of the airspace over northern and central Europe for days. But DHL was quick to react to the situation. Within 24 hours, trucks were organized to deliver the entire air cargo. “We had to shift our whole air freight express network to the roads pretty much overnight,” Wolfgang recalls, “and it worked.” Nor was there a single damage claim, he points out proudly.

Supply chain robustness

So how has DHL managed to guarantee the manufacturer’s stringent no-defects policy? When the initiative was launched, the first step was to document what kinds of defects occurred within a five-day period, find the root causes of the defects and implement measures to eliminate the problem.

The team then worked out a concrete master plan with specific measures to prevent defects from occurring in the future. “One defect at the beginning of the supply chain may not be so costly,” Wolfgang explains. “But the further the defect makes its way down the line, the more expensive it becomes for all involved.” For this reason, clear-cut, step-by-step guidelines govern the reporting process for defects at DHL. This is further bolstered through routine meetings and regular exchanges between the two partners.

So, are there any logistics challenges left to be tackled by the two companies? “Yes,” agree Wolfgang and Kurt: “Ensuring supply chain robustness in the face of growing global interconnectedness and the resulting increased supply chain vulnerability.” It looks like both managers and their teams will continue to have their work cut out for them for quite a while.

Verkehrsrundschau article Infineon/DHL Express, Eva Hassa