Case | HBS Case Collection | August 2009

The TSMC Way: Meeting Customer Needs at Taiwan Semiconductor Manufacturing Co.

by Willy C. Shih, Chen-Fu Chien, Chintay Shih and Jack Chang

Abstract

When L.C. Tu receives an emergency order, he is confronted with a range of production scheduling choices, each of which has unique costs and trade-offs. The case was designed to help students understand job-shop style production and the impact of disruptions and reactive scheduling. Students use two of Taiwan Semiconductor Manufacturing Company's mainstream processes as a vehicle for analysis. The case describes a real situation in which upper management accepts an emergency order. By working through the impact on the production system, students should develop a feel for how shifting demand in a large factory that is structured as a job shop alters the demands on, and utilization rates of, expensive capital equipment in a complex way. As bottlenecks shift, students can explore several alternatives, each with different costs and trade-offs. Students may also reflect on the true cost of providing the extraordinary service, and whether management properly takes the impact on operations into account when it makes customer commitments.

Keywords: Disruption; Customer Relationship Management; Decision Choices and Conditions; Cost; Order Taking and Fulfillment; Production; Semiconductor Industry; Taiwan;

Citation:

Shih, Willy C., Chen-Fu Chien, Chintay Shih, and Jack Chang. "The TSMC Way: Meeting Customer Needs at Taiwan Semiconductor Manufacturing Co." Harvard Business School Case 610-003, August 2009.