OEMs need to re-think the way they manage their demand for electronics components if they are to handle the risks inherent in an increasingly complex supply chain, a speaker from STMicroelectronics told a conference hosted by Future Electronics in Leipzig.
Alberto Della Chiesa, Vice-President for Supply Chain Solutions at STMicroelectronics, told the conference that e-commerce retailers such as Amazon have opened to the market and to consumers the possibility of next-day delivery of almost any electronics device. This can lead, together with the wide and different product options and flavours, to extreme day-by-day swings in demand for specific parts. At the same time, he explained that semiconductor manufacturers typically require between 8 and 12 weeks to produce a finished, packaged IC.
Della Chiesa added that the increasing complexity of the interactions among semiconductor manufacturers, foundries, packaging facilities, test establishments, OEMs and end users meant that the supply chain’s traditional reliance on inventory management alone was becoming ineffective.
He said that it is only by combining demand management, demand propagation and inventory management with an intensified focus on manufacturing excellence that the entire electronics supply chain can handle the increasing volatility in demand that it is facing – something that STMicroelectronics calls flexible networking.
The conference, which was dedicated to the theme of ‘Supply Chain Innovation’, was organised by Future Electronics and held close to its EMEA Distribution Centre (EMEA DC). Some 150 invited customers of Future Electronics from all over Europe attended the event, which also included visits to the EMEA DC and to the largest DHL logistics hub in the world at Leipzig airport.
Closing the conference, Tom Galligani, Global Vice-President of Supply Chain at Future Electronics, echoed the theme, saying: ‘Supply chain complexity is not a threat that we have to think about preparing for in the next few years – it’s affecting OEMs and CEMs right now.
‘Electronics component distributors have a big part to play in helping OEMs and CEMs to manage the resulting volatility. Services such as Future Electronics’ Bonded Inventory Management (BIM) programme will help, giving manufacturers a three-month buffer stock and providing extra time to respond to spikes or falls in demand for specific parts. This long-distance backward visibility into the supply chain helps to make up for OEMs’ dramatically reduced forward visibility of end-user demand.’