When, half a dozen years ago, Lam Research Corporation began outsourcing, it realized there was a core competency the company lacked.

The Fremont, California-based enterprise is a major maker of wafer fabrication equipment, used by the semiconductor industry to shape the form and function of computer chips. At the time, the company—which today boasts 2,250 employees and annual sales of about $2.5 billion—saw three capabilities as key to its success: upfront customer touch; the result on the wafer; and post-sales customer support.

But, says Ballan Campeau—Lam’s managing director for global logistics—when the company started outsourcing its assembly, accounting, and other functions, that “precipitated the recognition that we need a fourth core competency—supplier management.”

That recognition, in turn, prompted Lam to reassess the general role supply chain played within its organization, progressively expanding and integrating that role.

First, Lam took a new approach to its suppliers, creating a group that works with them to improve manufacturing and assembly processes, quality and yield. Taking it a step further, the Lam team works to build its suppliers’ own relationships with their suppliers. What drove this, Campeau said, was the cost competitive nature of the semiconductor industry and “a general flow-down of ‘we don’t want to pay this much.’”

Second, Lam tied supply chain concerns into the company’s product development, with director level representatives that provide liaison between the product and supply chain groups. Campeau explains: “Each product line has a supply chain executive who is responsible for sourcing and communicating requirements relative to new products, so that the transition from development supplier to production supplier is made easier.” That work, he adds, continues from the purchasing side of the supply chain equation to the after-market side, with customers, ensuring Lam will be able to support those products, particularly in the beta-testing phase.

Commonly, when companies focus attention on supply chain improvement, they find themselves moving toward fewer suppliers, with stronger ties to each. This, Lam did with its transportation provider. According to Campeau, “We focus on a few and we focus on our own agility.” He adds, “Freight, in one sense, is very much a commodity; in another sense, it’s very much a relationship. Lots of things can happen between points A and B; ensuring you have a provider who can manage those anomalies is very important.”

A key player in the transportation piece of Lam’s supply chain consolidation was Menlo Worldwide Logistics. “Through a collaborative approach to supply chain innovation, Menlo Worldwide Logistics has helped us streamline our logistics operations and better manage our business,” said Ballan Campeau. “Menlo has seamlessly integrated into our organization to support our logistics operations and continues to provide the flexibility we need to improve continuously.” We needed to develop a better understanding of how things move worldwide,” with the ultimate goal of having well-documented processes.

Looking down the road, Lam has an additional supply chain goal: in three to five years, the company wants to be able to move goods point-to-point, worldwide. This presents several challenges, one of which is cultural. Campeau offers an anecdote: “When I was a soccer coach, we took our team on a tour of Europe in the late ‘80s; we quickly learned that every country plays the game differently. It’s absolutely true of business as well. There are certain common themes—the customer is always the customer. But, how that customer interacts tends to vary a bit from country to country.” The challenge, he says, is that the customs regulations in each country have unique qualities; export controls vary from place to place.

In China, for example, different localities have different translations of regulation. Campeau comments: “Having systems and processes in place to manage that, is something that must be done very deliberately.” wt