“TI has developed a management system we call the ‘virtual fab.’ It links our worldwide manufacturing sites into a close-knit network. Rather than operating as autonomous units, all the fabs now work together to produce the maximum output for our customers. Through common equipment and processes, cycle-time reduction, and other improvements [these applications define operational modeling], we have gained the equivalent output of two additional wafer-fab facilities over the last two years–without spending a billion dollars in new brick and mortar.”
Texas Instruments Incorporated Annual Report
INTRODUCTION
Wright Williams & Kelly, Inc. (WWK) has three interlinked business units; Cloud-based software products, training programs in support of software products, and professional consulting services.
WWK’s software business unit develops and markets software products and services that measure and enhance productivity in our customers’ operations and in the employment of capital resources. WWK modeling and simulation software programs are scaled for either a single step in a work flow, multiple steps, full facilities, or multiple interlinked facilities. Uncertainty associated with escalating capital costs and rapid changes in technology has created strong demand for the predictive value of WWK’s products and services in capital-intensive industries. WWK products are used by semiconductor manufacturers and equipment and materials suppliers as well as leaders in aerospace, defense, photovoltaics (PV), solid state lighting/light emitting diodes (SSL/LED), nanotechnology, micro electro-mechanical systems (MEMS), thin film record heads, magnetic media, flat panel displays (FPD), and healthcare. The Company’s software is also licensed and used by universities, national scientific research centers and private laboratories.
WWK provides training programs in support of its software products and for the promotion of their application. These programs are often staged in conjunction with worldwide industry trade shows and technical conferences or as on-site presentations for client companies. WWK training programs are usually offered in a seminar/workshop format and now “Understanding and Using Cost of Ownership” is available as a self-paced, Cloud-based workshop. The Company also offers continuing operational and applications services among licensees of its software on an individual user level.
The Company serves its clients at both functional and general management levels by providing professional consulting services which capitalize on the experience of its principals and the global application of its software. Industry and market trend analysis consulting is supported by the predictive application of WWK software products. A core-consulting program for WWK is its global two-day seminar on the successful management of new product introductions. Further, WWK consults with individual clients in formulating and executing business strategies to deal with global strategic issues and ever-growing market competition. The Company facilitates strategic and market planning. It also provides research, assessment, and implementation services for new products and new business development.
Additionally, Wright Williams & Kelly, Inc. offers a complete suite of custom software consulting services. WWK’s Software Engineering group provides complete custom solutions through their experienced Project Managers and Software Engineers. These solutions cover the entire development cycle including requirements gathering, specification development, software development, testing, installation, training/documentation, and ongoing support. Custom solutions include but are not limited to accounting, financial, reporting, inventory, time records management, process automation, integration between systems, and commercial product development.
ORGANIZATION BACKGROUND
WWK began in Sacramento, California in 1991 as a consulting services company. In 1992, it introduced the first commercial cost of ownership (COO) software. Shortly thereafter, SEMATECH, a consortium of major semiconductor manufacturers, contracted with WWK to develop an equipment specification database. In 1994, SEMATECH contracted with WWK to take over its COO software development, training, and support services. In January 1995, IDC Systems, Inc., a wholly owned subsidiary of Industrial Design & Construction, Portland, Oregon, (now Jacobs Engineering Group) acquired WWK. In August 2003, Wright Williams & Kelly, Inc. reacquired the assets of WWK and operates as a privately-held, employee-owned organization.
WWK is headquartered in Pleasanton, California with technical support offices in Richardson, Texas, and Albuquerque, New Mexico. The Company utilizes employees comprising technical backgrounds in industrial engineering, software engineering, applications engineering, economic modeling, and business development. The Company also has consultants in its “Affiliates” program who are regionally located in the U.S. to provide specialized knowledge for software and consulting services customers.
NEED FOR THE COMPANY’S PRODUCTS AND SERVICES
WWK is indisputably the leading software developer for Cost of Ownership (COO or TCO) modeling programs in capital intensive industries. COO is a key metric because it provides a means to model future processes before organizations invest in new facilities, facility refurbishment, or technology migration. COO modeling provides detailed and objective analysis for decision making regarding equipment selection, materials use, and workflow step optimization. The Company has also introduced facility-level software which, in addition to modeling Cost of Ownership, provide a comprehensive array of capacity and profitability analyses on full facility operations and layout. The sophisticated scope of these programs embraces multiple product/service outputs and multiple workflow routes. The full facility programs are available in both deterministic and stochastic (discrete-event simulation) versions.
The need for the Company’s products is fostered by significant economic, technical, and opportunity factors present in high technology and healthcare industries.
Industry Examples
Risk Management: New semiconductor fabs now cost over $5 billion with next-product generation fabs projected to cost $10 billion. Eighty percent of the investment cost is related to the manufacturing process and production equipment. Semiconductor manufacturers have turned to equity partnerships with competitors, suppliers, and governments to raise the required capital and manage the enormous investment risk. They can optimize their investment potential and manage operational risk by adopting advanced capabilities in manufacturing design. Among these advanced capabilities are predictive software products that simulate and model risk, productivity, and profit factors. WWK is squarely at the forefront of this trend.
Industry Growth: Semiconductor industry sales have grown at a double-digit CAGR worldwide since 1980. Most developing countries have identified electronics as a “pillar” industry worthy of aggressive government support. Global semiconductor manufacturing leadership is viewed by U.S. officials as vital to America’s economic base and defense strategy. Continuous growth and technical advancement drive the construction of new fabs featuring expanded capacity with more sophisticated, costly processes. Older technology in the existing installed fab base eventually becomes a commodity often before the fab investment has been recouped. In either event, WWK’s productivity measurement and enhancement software helps management decide which technology, at what capacity, and at what return.
Technical Change: In the semiconductor industry, a new generation of devices is produced approximately every two to three years. Each generation has four times the number of transistors as its predecessor. This increased density enhances the product’s computational speed, memory capacity, or logic functions exponentially. Intel’s 286 microprocessor for personal computers, for example, had its debut in l982. The next generation 386 was introduced in 1985. Similarly, the 486 was introduced in 1988, the Pentium in 1992, and the Pentium Pro in 1994… Each generational advance in product technology requires semiconductor manufacturers to spend 50% more in R&D than was spent on its predecessor. Product technology also drives investment costs upward as increasingly more sophisticated manufacturing capabilities are needed which renders new equipment technically obsolete in three years or with each new generation of product. International technology roadmaps projected this sequence to extend well into the future. The pressure of relentless technical change and investment escalation has given high visibility to risk and productivity issues. WWK’s predictive software products are invaluable decision-enhancing tools for management in this complex and dynamic environment.
WWK PRODUCTS
The COOL® Series: The COOL® Series of software modeling programs provides Cost of Ownership (COO/TCO) and overall Equipment Efficiency (OEE) analysis for single workflow steps. Cost of Ownership (COO/TCO) is defined as total lifetime cost associated with the acquisition, installation, operation, and decommissioning of a piece of equipment. The COOL® Series is the only software to comply with SEMI (an industry trade association called Semiconductor Equipment and Materials International) Standard E35. This standard is the semiconductor industry guideline on the construction and use of COO modeling software. The first program in the COOL® Series was developed by WWK in 1992. Later enhancements were made available under a contract with SEMATECH, the industry/government consortium that conducted research in advanced semiconductor manufacturing technology. COOL® is an acronym for Cost of Ownership Luminator.
Through the COOL® Series, WWK offers one, integrated, standard-setting, Cloud-based software modeling program with 5 industry specific templates and a user-defined template for new or additional applications. TWO COOL® is designed for all equipment types that would be found in a manufacturing, assembly, or services (e.g., healthcare) industry.
Since September 1996, the Company has offered process sequence software, trade-named PRO COOL®, which allows users to link together the data files that TWO COOL® compiles for individual workflow steps into a single series of steps. PRO COOL® provides organizations with capacity and cost data for a single product/service in a contiguous workflow sequence. The last program in the series, PRO COOL® for Wafer Sort & Final Test, is software created and specifically designed for equipment performing wafer sort and final test operations.
WWK commercialized a new cross-industry software program in 1993 arising from a custom development contract based on the company’s reputation and capability in cost modeling. This program, trade-named COOLSoft™, establishes the cost and time in the development of new software programs. Though not an operational modeling software program like the company’s other COOL® products, it is an important product line extension for engineering and marketing organizations to use when coping with software development issues.
The Factory Series: The Company released a new series of comprehensive software programs for full facility capacity and cost modeling in September 1995. While PRO COOL® models the cost of a single product/service in a linear and contiguous flow, the Factory Series programs model capacity, cost, and profitability for full facility operations of multiple products/services and multiple flows. Factory Explorer® predicts system capacity and bottleneck resources and estimates dynamic measures such as cycle time, work-in-process, and material dwell time. It provides analytical precision by incorporating probability and distribution curve analyses. Profit predictability is another key feature of Factory Explorer® as forecasted revenues are related to facility and product/service costs within capacity parameters.
A product allied to Factory Explorer®, trade-named Factory Commander®, was concurrently introduced as a comprehensive cost and resource evaluation model. It performs high-level analysis of facility capacity, individualized product/service flows, overall facility costs, and is able to handle complex strategies such as multiple workflow mergers and full rework loops. While both Factory Explorer® and Factory Commander® are full facility models for capacity, cost, and profitability, they differ by degree in their mission. Factory Explorer® offers advanced precision in capacity simulation while Factory Commander® features a more extensive array of cost discernment fields.
The architectural structure of WWK software is modular, making modification easy and provides for speedy introduction of new releases. New releases (upgrades) are frequent but usually evolutionary. Program and code quality of all WWK software is underscored by very favorable market experience. No user has ever returned WWK software. This high level of quality earned WWK the Texas Instruments Supplier Excellence Award.
The latest addition to the WWK product family is Total Cost of Ownership for Energy™ (TCOe™). This modeling software differs from the other WWK operational models in that it looks at the cost of operating a finished energy production facility (typically photovoltaics) versus looking at the cost of manufacturing the products used in the production of energy. One needs a method to fairly compare energy costs produced by different means, and levelized cost of electricity (LCOE) was intended to be just that. LCOE can be thought of as the price at which energy must be sold to break even over the lifetime of the technology. Given that LCOE was originally designed as a breakeven model, it has limited application to situations where the project owner is interested in revenue (profit) generation or in installations where the electricity produced is displacing some or all of the high cost tier grid supply. TCOe™ addresses these shortfalls for both rooftop and utility scale applications.
FUTURE PRODUCT DEVELOPMENT
Upgrades of existing software products are projected for future release at a rate of one in per twelve-month period for each major product. New releases are almost always the result of customer requests for specific applications features. These are selective opportunities usually involving evolutionary adaptations which the Company markets at no additional cost.
The Company sees another major market opportunity in connecting its predictive-value software programs with data sources such as Manufacturing Execution Systems (MES) and Enterprise Resource Planning (ERP) systems. The opportunity is to wed real time data with the predictive capabilities of WWK programs.
SALES AND MARKETING
The Company’s current generation products versions have been in the market on average for less than one year. Nevertheless, there are over 3,000 users of COOL® Series products and almost 1,000 for its Factory Series. In addition, WWK has numerous clients in consulting and training relationships and certain clients are involved with more than one project with the Company.
WWK’s installed base of product users entails 54% in North America and 46% in Europe/Asia/ROW. Foreign sales have been consummated through direct company contact and indirect representation outside North America. Foreign business relationships are made through training classes, trade association references, media advertising, and product reputation.
The company successfully positioned itself through 1995 as “the cost modeling company” while, in fact, becoming an industry Cost of Ownership standard. As new and distinct products were developed which offer capability beyond cost modeling, the Company began a campaign to expand its market perception to a “decision-making-tools” company. Print medium ads since 1996 have carried the tag line “Real Tools for Real People Making Real Decisions” and “Decision Tools for Productivity and Cost Management”. The Company is sustaining its positioning strategy by contributing articles in trade publications, new product releases, press releases of significant sales contracts or co-development projects, and by maintaining its excellent reference based on product reputation. These actions are further supported by a state-of-the-art web presence.
THE MARKET
In the semiconductor and related high technology industries it is estimated that less than half of the manufacturers own any kind of predictive or productivity enhancing simulation software. It is further estimated that among those with some kind of simulation software program, less than a third are actively and effectively used. And, of those programs being used, the majority are nonstandard customized template programs of individual company design. Outside the technology fields, the penetration of modeling and simulation is even lower.
This is a picture of an emerging market whose existence has been fostered by individual user initiatives and whose saturation level is indefinable in size or functionality. The application of available commercial product offerings is constrained by a lack of human resources with specialized skills for understanding and using the programs at hand. User benefits in productivity and risk management clearly add value over the program cost. The service provider is given wide pricing latitude in exchange for applications and operational competence and the ability to transfer it to the customer. These descriptions are not unlike the personal computer market in its early stages of growth. It is noteworthy that Cost of Ownership’s (TCO) impact on operational intelligence has come to pervade the thinking in the personal computer industry and has extended beyond the sophisticated process equipment of its origin.
