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One of the reasons for the success of ASML, a producer of lithography systems headquartered in The Netherlands, is its management of its extensive supplier network. ASML works with about 500 firms that supply about 90 per cent of the costs of a lithography system, leaving ASML with the task of integrating these modules and parts into the final tool. In order to meet the technology roadmap of the high velocity semiconductor industry (Eisenhardt, 1989b), the pace of innovation in theASML network is high. An important approach that ASML uses to secure innovation as well as to spread the risk of development in the network is their supply chain management philosophy of value sourcing. This philosophy implies that for each technological competence, multiple suppliers are used to decrease dependencies. Existing partners are constantly monitored in terms of improvements in their knowledge base, as well as their control of processes. These and other practices have enabled ASML to develop into the technology leader in the chip lithography market. By drawing on four embedded case studies of innovation projects conducted within ASML’s supplier network, we present both the theory and the practice of ASML’s supply chain management approach. We conclude that ASML’s approach to managing its network of suppliers is notably different from approaches in less dynamic industries such as the automotive industry (Dyer and Nobeoka, 2000). The modularization of the network means that knowledge is integrated in separate projects, each involving a limited number of partners. As a consequence, ASML is able to innovate with a large number of partners without implementing numerous knowledge management mechanisms across the entire supplier network. However, this approach has its limitations. It only works when the partners in the network have high managerial and technological skilIs. Where these skilIs are absent, difficulties occur. |
