How Applied Materials Just Revolutionized the Warehouse Game with Crazy AI Tech!

Applied Materials has taken their warehouse distribution operations to the next level with their latest AI-powered modernization. Beginning June 2022, the company’s worldwide operation team went live with their new 725,000-square-foot Logistic Service Center (LSC) in Austin, Texas, boasting a network of robots, RFID technology, and innovative “Goods to Person” technology to create a seamless automated workflow for warehouse management.

This cutting-edge facility is a game-changer for Applied Materials, a major supplier of semiconductor equipment to chipmakers, and has earned the company a 2024 CIO Award for IT leadership and innovation. The Logistics Service Center eliminates the need for workers to navigate multiple warehouses to locate parts and place them in correct bins. With its innovative factory automation, RFID scanning, and consolidation of seven warehouses into one building, the efficiency of components distribution has vastly improved, and delivery to the company’s manufacturing division has sped up significantly.

One of the standout features of the LSC is its Goods to Person (GTP) capability, also known as the Automated Storage and Retrieval System (AS/RS). This system utilizes robotics technology to enhance scalability and cycle times for material delivery to manufacturing. Seamlessly integrating GTP with custom SAP software provides accurate and up-to-date information on inventory levels, stock movements, and order fulfillment.

A major challenge for Applied Materials was automating warehouse operations to keep up with the rapidly transforming semiconductor industry for the AI era. Hari Lakshminarayanan, managing director of IT solutions management at Applied Materials, led the LSC project. He noted that the key objective was to accelerate delivery time, increase accuracy, optimize costs, and reduce the touch process.

The LSC project involved a team of 25 employees from various departments, with 10 IT employees and data scientists out of the company’s 1,000 IT employees playing a crucial role in its design and execution. According to Hari Jayaram, corporate vice president and CIO, the company faced numerous challenges, including ensuring the automation was stable and scalable, and aligning multiple business units with the constant alignment among multiple business units in Applied Materials.

Despite these challenges, the LSC has resolved many efficiencies plaguing Applied Materials’ expanding manufacturing process. Lakshminarayanan explained that the warehouses were getting distributed, which creates logistics complexity and inefficiencies in delivering to their manufacturing. By leveraging RFID and auto scan technology, the project eliminated manual entry and manual audits, significantly improving accuracy, speed, and efficiency.

Another significant benefit of modernizing the warehouse operations is the integration of robotic automation with their SAP-based warehouse management system. This enables Applied Materials to achieve real-time visibility and control over inventory management and auditing. The enhanced automated workflow has vastly sped up the distribution process, and strategically positioned human-occupied ports give workers convenient access to the bins and enable seamless interaction between the operators and the automated system.

The LSC has had a significant impact on Applied Materials’ operations, with put-away productivity increasing eightfold and pick productivity experiencing a fourfold improvement. The company’s automated inventory and picking accuracy metric now exceeds 99%. The Logistic Service Center, which went live in November 2022, has reduced the campus footprint by 50%, alleviated space and resources constraints, improved inventory accuracy and efficiencies, and cut costs on labor, warehousing leasing, and transportation.

Change management was also a significant challenge for Applied Materials during the implementation of the LSC. Lakshminarayanan noted that each step in the automation process had to be executed individually and tested for some time to ensure stability. Aligning the business units and business processes as the automation was turned on at each step of the journey required a detailed project plan and substantial testing before moving on to the next step.

Overall, Applied Materials’ modernized Logistics Service Center is a testament to the company’s commitment to innovation and efficiency. By embracing cutting-edge technology and streamlining their warehouse operations, Applied Materials is well-positioned to meet the demands of the rapidly transforming semiconductor industry and maintain its position as a leading supplier of semiconductor equipment to chipmakers.