Antidote for supply chain woes

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When talking with industry contacts, I often ask people what they see happening to help the poor “visibility” up and down the supply chain. The answers are not very encouraging.

Some experts blame the horrendous industry cycles on the many layers in the supply chain and the poor information transmitted between suppliers and customers. A chipmaker's customer misjudges the market requirements, so the chipmaker buys more equipment than it needs or gives unrealistic forecasts to the foundries and packaging subcontractors that it uses. Those companies ramp up in anticipation, only to have the real demand fall far short of the projections. The equipment makers end up with canceled orders.

This phenomenon has been widely recognized, and there have been many efforts to get suppliers more coordinated with their customers. This work has often been focused on Internet solutions, but I don't hear people saying that they now have a better idea of their suppliers' capabilities and their customers' demand. I see people shrugging their shoulders and saying that they will just have to deal with the supply chain challenges and the resulting cycles.

So, can anything be done? I actually heard some encouraging comments from the National Electronics Manufacturing Initiative (NEMI), at APEX in January. JimMcElroy, NEMI's executive director, and John Pomeroy, president and CEO of Dover Technologies and NEMI's chairman, told Advanced Packaging that NEMI is currently focusing on decreasing the manufacturing cycle times in the electronics assembly industry. They realize that improving the projections is outside of NEMI's realm – and perhaps not realistic for anyone – but if products and equipment can be manufactured more quickly, then the accuracy of forecasts is less critical.

If the leadtime for making a die attach machine or test equipment is cut in half, for example, then buyers won't need to be extrapolating their expected needs out so far, and their forecasts will be inherently more accurate. Similarly, suppliers won't need to demand such extended forecasts, and they can also provide more realistic information for the suppliers of the components needed in the equipment.

This is not a new idea, but it is very appropriate and timely for an organization like NEMI to be focusing on reducing cycles times. Few people would argue that the industry ups and downs are among the worst concerns in the electronics industry, so a concerted and realistic effort to address this problem is certainly worthwhile. We should all pay attention to NEMI's roadmaps and their other efforts to keep the industry working together constructively. We won't find all of the answers there, but their approach should be encouraging for the people who have been resigned to just suffering through the cycles.

Thanks for reading,
Jeffrey C. Demmin
[email protected]


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