Supply Chain Sustainability for Semiconductor Industry: An Integrated AHP, Optimization and Petri Net Approach

Li Rui

Abstract

Under the ever changing technology trend of the current semiconductor companies, the globalized semiconductor industry is constantly imposing itself to various risks like international political instabilities, environmental sustainability and natural disasters (Gevel, 2000). Being able to resume the normal production under extreme disruptions is key to ensure the success and competitive edge of the semiconductor companies. Hence, this paper proposes an integrated three-step approach to facilitate the decision making process in various crucial stages of the semiconductor industry supply chain. This three-step decision-making approach mainly caters to three aspects of the semiconductor supply chain: supplier selection, purchase allocation and overall assessment of risks, through innovative proposed models: Analytic Hierarchy Process(AHP) Model, Mixed Integer Programming(MIP) Model and Petri Nets(PN) Model. This innovative method incorporates both static and dynamic approach to facilitate the decision making for various stakeholders in semiconductor industry.

The proposed AHP model takes into considerations of the most up-to-date and pressing concerns of semiconductor companies, with carefully selection of criteria and determination of relative weights of various criteria. Next, the results generated from the AHP model will be input into the proposed MIP model, to determine the optimal purchase allocation to maximize the value of the whole semiconductor supply chain. Furthermore, the semiconductor companies’ performances under different disruptive situations are also evaluated, to find out the most impactful disruptive situations. After in-depth scenario analysis, results show that the most impactful disruptive situation to a semiconductor company is water scarcity. Moreover, a PN diagram is drawn to represent various stages of the semiconductors supply chain. However, due to the time constraint, the PN diagram is not yet simulated. Once simulated, impacts of the risks in supply chain and values of mitigation actions can be clearly shown based on the simulation results. Valuable management insights for the semiconductor industry are provided to semiconductor companies during this research, through analyzing the results obtained. Overall, this paper is useful for managers in semiconductor companies to make decisions to ensure sustainability of semiconductor supply chain.