Hidden Logistics and Fulfillment Costs in the Semiconductor Supply Chain
Marta Garcés, Vice President, Operations, ADD Semiconductor
Effective supply chain management enables companies to be
more competitive in the world of manufacturing by reducing
costs and improving customer service. The main purpose of a
supply chain is, in fact, to make products available to customers in
the right quantity, at the right time, with the best quality and in the
most cost-effective manner.
When speaking about a semiconductor start-up's supply chain
needs, the process becomes even more complex and critical as
not only standard logistical problems and costs must be taken
into account, but also storage, handling of the final product, and
packaging quantities that may be limited by wafer size, thus making
it a critical point to better manage the supply chain so as to handle
possible quality problems reported by end customers. All these facts
make it challenging for semiconductor start-ups and third-party
logistics partners to implement strong, flexible supply chains.
The Everyday Problems of Global Sourcing
Today's modern semiconductor industry requires properly established
and organized supply chains set up for maximum efficiency so as
to avoid problems. The semiconductor market is truly global. Its
major foundries primarily located in Asia and the United States
ship sensitive materials all around the world using distributors that
may not be familiar with the foundries' special characteristics such
as specific security measures and tamper-proof locks. The market
demand variability for these types of products is very high, generating
different situations, from allocation problems to standard lead times
and overstock management when demand falls abruptly, creating an
uncertainty that makes logistics and supply chain planning a critical
step.
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Is Your Supply Chain Ready for an Economic Recovery?
Jim Takach, Director, PRTM
Companies across many industries believe that the worst of the
downturn has come to an end. After making massive cutbacks
over the past couple of years, they are starting to see an increase
in demand. This development is good for semiconductor companies,
but it also presents some significant challenges.
According to PRTM's recent global survey1, companies across
many sectors, on average, expect their revenues to grow more than 8
percent annually through 2012. More than one third of the companies
surveyed expect average gross margins to exceed 20 percent by 2012;
two thirds expect gross margins to surpass 10 percent. While the
responses vary by industry, the numbers as a whole stand in strong
contrast to just a year ago, when many companies experienced flat or
declining sales and struggled to produce profits.
But are supply chains ready for the upturn? Many executives doubt
their companies have the capabilities needed to meet rising demand
and the greater complexity it will impose on the supply chain.
The findings of this year's survey throw light on the concerns
that companies are experiencing as they prepare for the economic
recovery. A significant number of the survey's nearly 350 respondents
were original equipment manufacturers (OEMs) and suppliers from
major sectors served by semiconductor companies, including the
electronics, communications, industrial equipment, medical device,
automotive, and aerospace and defense industries. Given the end-toend
nature of today's supply chains, the challenges that customers
face are as important for semiconductor companies to understand as
the ones they face themselves.
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