The Supply Chain Dilemma
Nicole Lewis, Contributing Editor -- Semiconductor International, 7/1/2001
How is it that so many companies and industry analysts are predicting a poor second half, while the SIA is predicting nothing less than a second-half recovery followed by 20%-plus growth in 2002 and 2003?Inaccurate forecasting is very much a part of the semiconductor industry's overall supply chain dilemma. For too long, the industry has fallen behind in its ability to make accurate forecasts, which has in part led to the very problems it now faces. Building a supply chain network with its partners - namely OEMs and EMS firms - will be the most critical factor in determining whether semiconductor companies predict supply and demand with greater accuracy; however, some analysts note that this has not happened.
A report published in June by Boston-based AMR Research Inc. alludes to these problems and notes that, in the past, the rapid growth of the semiconductor and high-tech industries masked the lack of collaborative inventory management practices.
The survey, which gathered its information from interviews with 20 semiconductor, OEM and EMS companies, contends that supply chain disconnects in 4Q00 reflect the latest evidence of a failure of collaborative inventory management.
Indeed, the complexities of this tri-party relationship will only get worse, the report predicts, as the percentage of semiconductor content in a final product increases. Another point to note is that only limited participation in collaborative inventory programs by manufacturers of intellectual property-rich semiconductors and OEMs exists.
If the semiconductor industry does not take this opportunity in a slow market to build and connect its supply chain network to its partners, we may well see more forecast discrepancies.
