With a significant segment of the semiconductor wafer foundry base moving to Asia, our customer decided to relocate operations closer to their end user. Our customer opened an equipment integration facility in Singapore near their customer who provides wafer fabrication equipment. Unfortunately, this move created an increase in real estate and labor costs, thus denying our customer the warehouse space to stage components for assembly and integration. In addition, strict “copy exact” customer rules made it impractical to replace existing U.S. vendors with Asia-based providers. Therefore, many key components were still sourced from the U.S., adding to our customer’s freight costs. Noatum Logistics was engaged to find creative ways to reduce supply chain costs associated with the Singapore operations.
Noatum Logistics Singapore created a supplier inventory hub in the free zone at the Singapore Changi Airport. This allowed vendors to stage goods close to the fabrication facility, and let the customer postpone payment of import fees until the goods were pulled for production. With warehouse space now available, vendors could ramp up production, and the customer could shift the transportation mode for large cargo from parcel and airfreight to less costly ocean freight.
In studying the customer’s supplier base, Noatum Logistics discovered multiple vendors were located within a 20-mile radius within the U.S. Noatum Logistics developed a pickup schedule and route, generating a more consistent product flow for vendors, better cash flow for our customer, and lower inland transportation costs. This also allowed Noatum Logistics to consolidate airfreight cargo for better rates and establish a set shipping schedule.
Noatum Logistics adapted its purchase order management system and processes for the customer. This adaptation improved the customer’s visibility and control over shipments, while maintaining compliance with Bureau of Commerce strict export controls on certain components.
By consolidating air shipments, opening a supplier inventory hub in a free zone at Changi Airport in Singapore, and creating a new ocean program, Noatum Logistics saved the customer more than 60 percent in transportation costs.
In addition, the customer was able to retain its existing supplier base and maintain its competitive rates, thus avoiding the lengthy and costly “copy exact” processes necessary to qualify new vendors.