Tower to reduce supply chain costs by $15M over 3 years

By Ann Steffora Mutschler, Senior Editor -- Electronic News, 8/20/2007

Migdal Haemek, Israel-based specialty foundry Tower Semiconductor Ltd. reported today that in order to integrate advanced capabilities in logistics, engineering and support services along with implementing inventory management of spare parts for Tower's manufacturing tools.

EMA Inventory Lifecycle Solutions, a joint partnership of Exel MPL and AVBA Hi-Tech Services is to provide on-site spare parts management services, planning, procurement, logistics, repair, transport and delivery.

Shimon Dahan, VP of corporate services at Tower said the company is already seeing cost reduction and expects that during the coming three years, accumulated savings of approximately $15 million on Tower's spare parts and other costs will be reached.

To achieve this, EMA is purchasing and owning Tower’s spare part inventory and assuming responsibility for the entire supply chain, including the spare parts' availability. As a result, EMA as the supplier and Tower as the customer are sharing the risks and advantages of managing efficient inventory.

In addition to cost reduction, Tower reiterated this arrangement is expected to improve spare parts availability, which may result in increased manufacturing capacity; and reduction of its inventory level.