By Gary Dagastine

Applied Materials’ efforts to build a robust and sustainable supply chain for semiconductor and display manufacturing received increased focus earlier this year when the company announced its Supply Chain Certification for Environmental and Social Sustainability initiative (SuCCESS2030). The initiative’s goals are to reduce energy usage and emissions and conserve resources throughout the supply chain while meeting customer requirements globally, even in the face of unprecedented events such as the COVID-19 pandemic.

To accomplish these goals, Applied is optimizing its materials and parts selection, procurement, packaging, warehousing, transportation and recycling practices.

Bob Davis is Applied’s Corporate Vice President of AGS Operations and Component Engineering and Display Flexible Technology, responsible for supply chain performance. Nanochip Fab Solutions (NFS) spoke with him recently to learn about the need for a more sustainable supply chain, the steps Applied is taking to achieve that goal, notable successes to date, and relevant lessons learned from helping customers maintain production while the COVID-19 pandemic has raged.

NFS:    Bob, why is building a more sustainable supply chain such a timely and important issue?
Davis:  The need for a robust supply chain that incorporates environmental, social and governance (ESG) criteria has never been greater, for many reasons. From the customer perspective, the expectation is that we will do whatever is required to get them the parts and supplies they need whenever and wherever they are needed, even during unexpected, challenging and constantly changing conditions, such as we’ve experienced this year.

From a corporate governance perspective, there is a strong and growing preference on the part of employees, customers, partners, investors and governments to engage with corporations that incorporate sustainability practices in their operations.

NFS:    Does this conflict with normal business practices? It sounds like a significant retooling of traditional operations.
Davis:  What we’re doing is good business for Applied Materials. For example, as a general rule the fewer times and the less distance you have to move a product to get it from Point A to Point B, the greater your energy savings will be and the lower your costs. Accordingly, one of our major goals is to minimize unnecessary stops and transfers as parts and supplies move around the world, and to build in flexibility as to how we do that to lower our carbon footprint and reduce costs while still meeting customer needs.

NFS:    You mentioned parts reuse. Is that a major focus of your efforts?
Davis:  We think it makes little sense to expend resources to build and ship a brand-new spare part when the part it would replace can be repaired and refurbished cost-effectively. For example, process power supplies, RF matching networks, and ceramic and metal wafer pedestals often lend themselves to repair and reuse, but they are just the tip of the iceberg. Our spare parts repair work has tripled in recent years, and a major goal is how to drive the repair percentage up still further.

 levels of repair at different points in its lifetime. At first, we might just rework the surface of a part, but after two or three reworkings we might have to do a more aggressive repair. Even with something as straightforward as a wafer pedestal, for example, temperature, chemical and plasma issues must be considered when determining whether repair is a viable option.

NFS:    How do our suppliers feel about this movement toward repair and reuse?
Davis:  It can help them in several ways. We may turn to the primary supplier of a given part and ask them to do the refurbishments we’ve identified, which is additional business for them. Our engineers also provide feedback to our suppliers on how the parts performed in actual use on the factory floor, which enables suppliers to make improvements for longer lifetimes, better performance and/or ease of repair.

NFS:    We’ve all heard the saying that necessity is the mother of invention. Has having to deal with the COVID-19 pandemic aided your efforts to develop a sustainable supply chain?
Davis:  The pandemic has opened our eyes to the supply chain challenges that really exist out there. I like to say that before the pandemic our imagination of what could go wrong was insufficient, because we focused our contingency planning primarily on the possibility of earthquakes occurring in key areas like Japan, Taiwan and Northern California.

But in early January we became aware that earthquakes weren’t the only problem. Instead, a pandemic was on the rise and migrating around the world, and so we began to look urgently at what parts might be needed by our customers and how we could get them produced and stocked to meet the looming crisis. We used proprietary analytics in our planning to avoid running out of spare parts and to respond to the many issues that arose, which aided us immensely.

A key issue was that transportation capacity was down. Prior to the pandemic, we often transported spare parts as economic “belly cargo” in commercial aircraft; that is, in the hold at the bottom of a plane. But as the global response to the pandemic increased, far fewer planes were flying and those that were, were smaller with less cargo space. So we turned to commercial delivery services like UPS, FedEx, DHL and others that were adding capacity. But as it turned out, we were competing for space there against the personal protective gear that was being shipped around the world at the time.

Meanwhile, moving physically large equipment had its own challenges. Our people were literally tracking the movement of cargo ships to better understand when equipment that was in transit would arrive, and so again, we continued to meet our customer demand.

NFS:    What are the main lessons for supply chain sustainability that you learned from these unprecedented challenges?
Davis:  First, the fewer parts coming from just one location, the better, and while supporting more suppliers in more locations to provide more repair options is costly, we do need the flexibility

NFS:    Any final comments, Bob?
Davis:  This has been a year of exceptional challenges. Even while the COVID-19 pandemic disrupted industries and supply chains everywhere, we intensified our efforts to find new, more sustainable ways to supply customers going forward. The lessons learned will carry us into the future and help us, our customers and the world around us in future years.

Change is nothing new, of course. What matters is our collective response to it, and nothing we have accomplished this year would have been possible without the talent, hard work and resiliency of our people, our customers and our suppliers. I’m very proud of our collective response.