 By Nancy Ellen Dodd, MPW, MFA
Abdi Hariri was named Group Vice President, Global Operations in April of 2009. Prior to his current position, Mr. Hariri had been Group Vice President of the Customer Support Business Group since March 2007 and Vice President and General Manager of the Customer Support Business Group since August 2004. Mr. Hariri previously served as the General Manager of Lam Research Co., Ltd. (Japan) for approximately 18 months and has served in a number of different assignments with the Field Sales and Product Groups. His experience prior to his appointment in Japan included over 13 years at the company with various responsibilities, including global business development and engineering. Prior to his employment at Lam Research, Mr. Hariri served as a Process Engineer at Siliconix, Inc. He holds a Master's Degree in Chemical Engineering from Stanford University.
How important is supply chain management to Lam Research's overall business strategy?
Lam Research was among the first equipment suppliers in the semiconductor industry to adopt a broad, multi-function outsourcing strategy. Initiated in early 2000, our plan targeted the outsourcing of support and "non-core" functional areas, which enabled us to focus on our differentiating core competencies. Today, manufacturing of many of our products is outsourced. As a function of this transition as well as changes in the market conditions, supply chain management has become a focus and core competency at Lam Research.
What primary areas of focus (or key initiatives) should Lam Research be looking at for Supply Chain Management?
Our integrated approach to supply chain management - including suppliers, manufacturers, and logistics - keeps us focused on all areas. In the end, our objective is to continue to improve service levels while we deliver the highest quality products at the lowest cost of ownership for our customers.
While we strive to optimize each segment of the supply chain, in the end, an integrated view of the whole is very critical. For example, a low-cost manufacturing opportunity would be dismissed using an integrated approach upon learning there was no supply base or other necessary infrastructure. The lack of an adequate infrastructure could impact cycle time, freight costs, and taxes. In addition, legal compliance items, such as export control and IP control, weigh heavily in our decisions. While such an opportunity on its own shows promise, overall, it would lead to a net loss.
In addition to taking an integrated approach, we need to be flexible and be able to quickly adjust to the changing needs of the market and our customers. Since our supply chain is an integral part of our business, each component must also be highly adaptable.
For example, as product lifecycles shrink, time-to-market requirements become a more important focus area. As a supplier of semiconductor manufacturing equipment, we are often asked to provide customized solutions timed to meet the market demands of an industry challenged by short business cycles. This requires we evaluate our suppliers' abilities to respond to changing needs in a timely manner.
Another example is our response to the financial crisis that the world was facing during the second half of 2008 and 2009. We increased our focus on business continuity plans and, more specifically, on the long-term health of our supply chain.
How has outsourcing enabled Lam Research to be successful with these initiatives?
Outsourcing has led us to regard our suppliers as an extension of Lam Research, and we work collaboratively and very closely with them. We have extended teams that work with suppliers on critical elements of their operation that impact our business. These include inventory management, cost reduction, quality, on-time delivery, solving very complex technical issues, time to market of new products, and business continuity plans.
How is Lam Research addressing the market's increasing focus on "green" supply chains and reducing a company's carbon footprint?
We are designing products with higher productivity, where the output per square area is improving year over year. We are also using energy efficient components in our designs. Reducing the use of consumables and spare parts through lifetime extensions and alternative parts programs is another strategy we are implementing. By reducing waste and becoming "green," we also help our customers become more cost competitive.
What do you think the key supply chain management priority for the coming 2-3 years is for Lam Research?
As we enter new markets and develop new products, we will be reviewing our infrastructure, processes, systems, and capabilities to optimize them for evolving business and customer needs.
What do you think the key Supply Chain Management priority for the coming 5-10 years is for Lam Research?
As our customers, markets and products evolve, we need to develop better strategic decision support models to deal with a complex set of global issues impacting multiple organizations (internal and external to our company). Sourcing, manufacturing of new products, service locations, capacity planning, and distribution models will continue to play a larger role in our company's market share and profitability objectives.
What are the biggest INTERNAL challenges for manufacturers to achieve supply chain excellence?
When a company is experiencing success, it is hard for employees to understand the need for change. Resistance to change can hinder efforts to position for the future, leaving a company vulnerable to becoming irrelevant. Vision and leadership are essential under such circumstances to effect the changes needed to position for continued success.
What are the biggest EXTERNAL challenges in achieving supply chain excellence?
The biggest external challenges are predicting our customers' and market needs for the future so we can design our supply chain to respond to those needs and be differentiated.
What are the supply chain challenges to which Lam Research SHOULD be paying more attention?
We should continue all of our ongoing activities that improve quality and reduce costs, lead times, and cycle times. The challenge is to proactively respond to future requirements so that we deliver the needed solutions timed with market demands. To understand these emerging needs, we focus on developing high-trust relationships with our customers and our suppliers.
Who is responsible for planning your company's business continuity when facing natural disasters, major disruptions or other geopolitical issues?
Every organization within the company is responsible for having a business continuity plan. These plans are reviewed on an annual basis. Our Global Operations team plays a centralized role in ensuring the plans are documented, reviewed, and tested on a regular basis.
How do you grade Lam Research's overall supply chain performance in client satisfaction?
Because we have a very close relationship with our customers, we receive direct feedback on key metrics such as on-time delivery, cost, and quality. We also use a number of internal metrics, for example, inventory turns, and benchmark ourselves in our industry. Based on these data, we do quite well in a number of key areas. However, we are always mindful that the bar is constantly being raised, and we continuously strive for improvement.
How do you prepare for the upturn now that the economy is showing improvements?
Our industry is cyclical. We go through a cycle at least every 18-24 months, and sometimes the cycles are even shorter. In addition to internal planning, we work closely with our suppliers to give them the visibility they need to be prepared for our upcoming business needs.
When do the fuel cost / dollar exchange and / or geopolitical factors make insourcing a viable option?
The decision whether to insource or outsource involves more than a simple assessment of fuel costs and the exchange rate. It includes consideration of the complex technology and processes of our business as well as what we believe to be our core competency. We use these factors and others to determine who can best do the job with the flexibility that our customers require.
What attracted you to supply chain management?
I have always enjoyed solving business and technical problems. In my previous role as Vice President of Lam Research's Customer Support Business Group, I had high-level visibility into the areas of supply chain management that impacted achievement of our business goals. This insight enables me to have a broader perspective when approaching new and challenging problems in the supply chain.
What are the main skills and personal attributes that have helped you reach your current position?
Because I have always challenged myself to keep learning, be versatile, and take risks, I have been fortunate to have had the opportunity to work in a number of different functional areas and levels of management.
What are your thoughts regarding globalization?
Globalization is an ongoing growth opportunity for companies, provided they understand the challenges, set clear objectives, plan, and execute well.
What would you say is the most rewarding experience you've had in your career?
Turnarounds and winning new markets can be very rewarding. I have been fortunate to have been part of Lam Research's turnaround as well as the company's business growth in Japan and customer service.
What have you learned as Group Vice President of Global Operations that has surprised you or changed the way you do business?
While supply chain and operations are not highly technical areas, I have encountered unique business problems and opportunities that have challenged the organization to be very innovative.
Who do you rely on for advice?
I work closely with my team, management, and colleagues. We are fortunate to have a seasoned management team that works well together and provides help or input whenever it is needed.
Turbulent times can be the best time to implement changes. However, companies tend to paralyze due to uncertainty in the market or their human capital. What is your advice to maximize the opportunities to implement changes during tough times?
Turbulent times are opportunities to strengthen weak areas and/or refocus the organization in a new direction. This requires having a vision for the company following the turbulent times and a strategic plan for how to achieve that transition. To do so will require a lot of communication with employees around the need to change and what we will become once the change is complete. This will require risk-taking, which may not be easy for some people.
How important is it for leaders to actually work overseas?
Every country and every culture provides a unique experience, which is difficult to come by unless you actually live there. Just getting the exposure to how various people think and how their perceptions, values, thought processes, and logic vary is an invaluable experience for anyone, especially in leadership. In global organizations, one of the issues of not having that perspective is people may tend to think and behave in a siloed manner, not really understanding the consequences of what they say or what they do to a broader set of people and organizations.
What are some of the differences between your experience overseas and your U.S. experience?
The decision-making process varies significantly from country to country and in some cases from company to company. For example, in some of the Asian countries there is a lot more consensus building that goes into a decision-making process, and things may tend to take longer and may come across as being slow. But what happens is that you have a decision that is bought into by more of the people and supported more broadly. That's the good part of it. The bad part could be that it may take longer to make a decision.
On the contrary, in many western companies you have situations where decisions can be made by individuals and then cascaded down to other people in the organization to execute. We may not spend enough time building consensus and getting proper feedback.
In working with multi-national teams, how do you mesh a standard set of best practices while accommodating different cultures?
The important thing is to be focused on the end results. What a customer wants, regardless of regional location, is a product that works, at the lowest cost of ownership, delivered on time, with the highest quality, and properly supported. We have key performance indicators (KPIs) and performance metrics with which we measure ourselves globally.
From an internal perspective, we measure by answering these questions:
- Are we increasing our customer trust?
- Are we increasing our market share?
- Are we generating the right return on our products and services to finance the next-generation
solutions?
It's important to have the end success criteria in mind. Then it's really about the process of how you go from where you are to where you need to be. The approach that works in the U.S. is not necessarily going to work in another country. This is when you have to customize your approach to the cultures with which you are dealing. It's really important to set global KPIs and not lose sight of the end business results that you are after.
How do you manage multinational teams effectively?
One of the things that Lam Research has done fairly successfully is to proliferate our vision objectives, core values and governance systems. We use global standard KPIs to measure business results and success. As long as you have that as the framework, you can have objective and open discussion focused on business results.
Cultural training and sensitivity play a key role in increasing mutual understanding of how things are done a certain way in each country and bring a common understanding between different cultures.
What are the most important steps to keep a global team motivated and effective across various time zones?
We set what we call stretch targets every year, and we work very hard under what we call the core values of the corporation to achieve those objectives. As a whole, I think what keeps people motivated is being successful.
How do you improve employee morale in a downturn?
Considering the environment that we are in, this is a challenge for any company. We were facing a similar challenge over a year ago ourselves. I think it is important to be honest and open with your employees about the reality of the business and where it is. Having a vision for what things could be like after the downturn is also going to be very important. We look at downturns as great opportunities to position the company to become stronger when the upturn comes. The key is understanding what the business environment will look like after the downturn and how to position the company to be stronger. When you are in a downturn, it is critical to get your people and resources focused on the few things that are relevant to ensuring the success of your corporation after the downturn ends.
What should newcomers in the supply chain industry know in regards to working overseas?
Things in our industry are changing constantly, so whatever you know today, there is a very good chance it will become obsolete tomorrow. You have to keep yourself up to speed on the latest developments and trends and be really hungry for learning and improvement.
It is very important to think about the impact on your customers in everything you do. Always think about the needs of the customer first and foremost. Think about the fact that it is a global industry, and people have different views. We have to be open to cultural traditions and understand why people do some things and think a certain way while staying focused on the end result.
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