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Politics : High Tolerance Plasticity
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To: Gottfried who wrote (2301)3/23/2001 7:36:48 AM
From: Think4Yourself  Read Replies (1) of 23153
 
That makes sense because the customer doesn't need to know or care about the supply chain. Herb Greenburg even claims that the ECM's have been stuck with the inventory but I don't believe that for a second. The management of the ECM would have to be awfully dumb to allow a customer to cancel firm planned or released orders. Normally you don't cancel or make major changes to manufacturing orders once parts/subassemblies are ordered because it plays merry hell with the supply chain. When you decide to stop producing widgets, there is still a pipeline of work that needs to be completed. No intelligent ECM is going to let their customers have a contract that could stick the ECM with this pipeline, especially given how quickly technology widgets become obsolete.

IMO the trend towards outsourcing will continue. With fabs running $1-$1.5 billion, and climbing by the minute, most companies can't afford to build their own. Foundries are the future.

The same trend appears to be happening at the circuit board level. There is another advantage to outsourcing for cyclical companies. When the cycle turns down they don't have to lay off their own workforce. The ECM might not have to either. They simply redeploy them to other product lines, unless the entire set of industries they are servicing turns down. Customer X has ordered too many memory cards and needs to stop for a few months? Fine, we will redeploy to make more printer boards for our customer Y.

Over the next 10 years I believe we will continue to see a trend towards a two level structure emerge consisting of many specialty chip/board design houses and a much smaller number of flexible manufacturing companies.
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