GSA Ecosystem Summit: Supply Chain Links Strengthened

Although news from Japan regarding the earthquake and tsunami recovery efforts comes less frequently than before, the ripple effects of the disaster can still be felt in the semiconductor industry’s operation strategies.

At the GSA Ecosystem Summit held in Santa Clara last week, Hugh Durdan from eSilicon moderated a panel on the best practices for successful supply chain relationships.  IBM, Intel, Qualcomm and Tensoft, Inc weighed in on some of the changes they’ve implemented since the disaster in Japan.  IBM’s Dale Miller said they’ve made some very subtle changes looking at the whole system.  IBM looks at their needs over a 2-year horizon, not just one year.  They take a longer forecast approach to plan for capacity needs and that involves getting closer to both suppliers and customers.

Intel ‘s Tim Lloyd said they created a hierarchy of suppliers looking at both their upside and downside capabilities.  A blanket increase in capacity, without a corresponding needs assessment, doesn’t always mitigate risk.  The supply chain reaction should be significantly different depending on if the change is due to an overall shift in the industry or limited to one company’s market share.

They all agreed that better communication with customers and suppliers is critical in today’s environment but the question now is how much information do you provide them?

On the customer side, Intel recognizes they are not in the business of predicting  winners and losers, especially in the increasingly volatile computing and consumer markets.  Instead, Intel plans revolve around scenarios with outcomes that cover ranges.  Qualcomm’s Don Esses said they tailor different plans for different customer needs.   Locating hubs or logistic centers close to the customer is one way of keeping lines of communication open.

Multiple sources, better communications and worldwide locations have all gotten a fresh dose of attention this year due to the supply interruption from Japan.   Six months after the earthquake, it was good to see that the disaster has not been totally forgotten.  We certainly hope this type of event doesn’t happen again but we suspect it will.   The subtle changes that have been made as a result of the earthquake/tsunami will help improve the industry supply chain and avert a total work stoppage in the future.

Joanne Itow