Proving the Business Case for the Internet of Things

OEMs need to rethink supply chain for electronics, STM chief tells conference

Steve Rogerson
December 3, 2015
 
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, Alberto Della Chiesa, vice-president for supply chain at ST Microelectronics, told last month’s Future Electronics Supply Chain Innovation conference in Leipzig, Germany.
 
Della Chiesa told the audience that they needed to re-think the way they managed their demand for electronics components if they were to handle the risks inherent in an increasingly complex supply chain.
 
The conference was organised by Future Electronics and held close to its EMEA Distribution Centre, one of Europe’s largest stores of electronics components. Some 150 attendees from all over Europe were at the event, which included visits to the centre and to the largest DHL logistics hub in the world, on the site of Leipzig airport.
 
Della Chiesa, told the conference that ecommerce 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 required between eight and 12 weeks to produce a finished, packaged IC.
 
He said the increasing complexity of the interactions among semiconductor manufacturers, foundries, packaging facilities, test establishments, OEMs and end users meant the supply chain’s traditional reliance on inventory management alone was becoming ineffective. He said it was only by combining demand management, demand propagation and inventory management with an intensified focus on manufacturing excellence that the entire electronics supply chain could handle the increasing volatility in demand that it was facing, something that ST Microelectronics calls flexible networking.
 
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.”
 
He said services such as Future Electronics’ Bonded Inventory Management (BIM) programme would 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,” he said
 
Delegates to the conference also heard contributions from DHL, Witron, BMK, Artemis Group, IBM, Peiker, ADR International and Bird & Bird.