LSI Logic Corporation

Since it’s foundation in 1981, LSI LOGIC has been providing innovative solutions to customers
worldwide. It’s product line ranges from standard ASSP semiconductors to highly custom designed ASIC solutions. The company with annual revenues of $ 2.5 Billion is well known
as the foremost global supplier of custom, high-performance semiconductors. Customers are
partnering with LSI LOGIC to take advantage of advanced products, technologies and services the company is offering to provide a total solution. The one-stop-shopping concept and the idea to put the whole system on a single chip stands in sharp contrast with the strategy of many competitors.
LSI is operating its own high-volume fabrication facilities in California, Colorado, Oregon and Japan, which sets them apart from its competition. LSI is traded on the New York Stock Exchange operating (NYSE: LSI) and has its headquarters in Milpitas CA, USA.

Business Environment

LSI LOGIC is manufacturing raw wafers and is internally selling sorted and unsorted wafers to there outsourced assembly and test locations in Asia. The wafers are produced in highly sophisticated wafer sites in California, Oregon, Colorado and Japan. The subcontractors, who
are performing the assembly and test operations, are located in various countries such as Korea, Malaysia, Taiwan and the Philippines. After the finished components are fully tested and the chip put on the package, the products are sold via an inter-company process to the LSI affiliates. From these locations they get sold to the end customers in the US, Europe, Japan and HK markets. Physically most of the products get directly drop-shipped from the subcontractors to the end customer.

LSI LOGIC has made the strategic decision to use the SAP R/3 system to build a highly flexible and integrated system environment to support the ongoing changes in the marketplace. SAP was selected based on the rich functionality, the full system integration, and the flexibility to further absorb acquisitions and add-ons in e-commerce and new technology solutions. In this sense the R/3 system with its new dimension products and e-commerce solutions suits the company’s increasingly complex business processes and helps to simplify the required system environment by reducing the number of systems and interfaces without loosing the full systems integration to the core R/3 system.

SAP R/3 Implementation

Scope

Phase 1 (Worldwide Financials)  LSI LOGIC was implementing worldwide Finance (FI), Human Resources (HR) and non-Inventory Purchasing (MM-PUR) in.

Phase 2 (Worldwide Sales) included the add-on of finished goods inventory management
(MM), the worldwide selling of such products (SD), the project system (PS) for tracking the extensive engineering efforts and the internal cost (CO) module. In addition to this the inter-company sales of wafers between multiple sites was also part of the project. The multi-site implementation included the following SAP plants: Hong Kong (HK), Fremont, Gresham, Colorado Springs, Fort Collins (US), Bracknell (GB), Tokyo, Tsukuba (JP), Kanata (Canada) and Kangnam-ku (Korea). Based on the intensive usage of subcontractors for testing and packaging, 15 subcontractor locations in 7 countries were also included in the scope of phase two.

In addition, a customer specific front-end module was developed which creates and changes the material master in multiple sites and company codes, creates a sales quote and a project record as required. All of these developments were created using the standard SAP development tools, and are seamlessly integrated in the standard SAP system, allowing LSI LOGIC to quickly launch an internal development project after winning business with a prospect.

Phase 3 (Upgrade 4.0B to 4.6B) of the worldwide SAP R/3 installation covering financials, sales of finished goods including project systems and own development. LSI LOGIC decided to upgrade the SAP software to take full advantage of the Web enabled functionality of release 4.6B. The company is following hereby a clear vision to further rollout additional SAP functionality in the areas of planning, production execution and costing. In addition E-Business functionality will be expanded beyond sales order status checks for which release 4.6B will build the base. The upgraded production system contained numerous user exists, and custom development that had to be readjusted and tested where appropriate. Also new functionality in the area of shipping on sales order schedule line level was tested and will gradually implemented.

Support Teams

Phase2 Team Consulting Group, Inc. was introduced by SAP America, Inc. to lead the TeamSAP consulting team. The consulting team provided to LSI LOGIC included a group of 7-8 full time consultants from SAP America, Catalyst Integration and TCG. The team was formed by 3 SD, 1
MM, 1 PS, 1 CO and 2 ABAP consulting resources. The two TCG consultants were working full time at the client site for the time frame mentioned above. They were responsible for the overall consulting team towards the customer LSI and SAP America, the system design, interface and additional ABAP design, configuration, integration and testing in the SD and the MM areas. This project is used as a reference that also sizable SAP clients can implement the R/3 system timely, on budget and successfully with a limited number external resources. Under the active guidance of TCG, we were able to build a solid SAP R/3 infrastructure for the client.

The overall LSI core team consisted of approx. 25 resources. All of these resources were fully assigned to the SAP project and were brought to Milpitas for the full duration of the project. The in-house team was a mix between LSI IS staff and end users from the US, Europe and Asia.

Phase 3 after going live with LSI with the worldwide sales and distribution functionality in phase 2, LSI was counting on the small TCG consulting team to help them for the upgrade project. One consultant was full-time, the other one 2-3 days per week at the client site. TCG is proud that the customer was able to do most of the upgrade work by using its own resources. The TCG consultants spent most of their time, in solving issues, which were  assigned to them by the group lead in the MM/SD area. Therefore, their expertise was used to solve difficult issues, which were essential for the LSI operation.

Duration

 Phase 2 was implemented within a 16 months timeframe and went live in time on 02/07/2000. This date included the printing of shipping papers in all the necessary subcontractors around the world.

Phase 3 was implemented within at time frame of 5 months. This time was used to adopt and retest all custom programming and business processes. The 4.6B upgrade went live on 10/23/2000.