Hi Mary, RE: "It's not like they wake up one morning and decide how much they spend on technology the following week."
Generally speaking, it sort of seemed like that's what happened last year in the industry.
RE: "Intel should stop spending so much money running those cute little ads with the funny looking men painted in blue"
I heard the ads are incredibly popular overseas, though I prefer warmer ads.
RE: "spend it on some real marketing people and forecasting tools."
We had one chip company stop by and ask us how many chips we'll be buying. It was a bit creepy to realize that their forecasts could be based upon a bottoms-up count of what all their buyers claim them to be. A bit of the blind leading the blind?
Regarding your comment about IBM and capex, generally speaking, if there's a sudden IT/capex cut, that could change a forecast on a dime. Then there's the double-bookings that build up inventory. That creates havoc in the industry too. Try being a good citizen, plan your orders, and not over/double-book and you can get slammed - limited chips limits revenue.
And in some cases the distys don't help these types of industry problems because their allocation procedures seem somewhat questionable at times. For example, how do you explain an incredibly long lead-time on a b/o part that suddenly shrinks exactly the same moment you happen to put in a larger order with a disty? Coincidence? Or, a disty's allocation system possibly based on order-size, not FIFO? (I may be beginning to understand why firms double-book and the incentive to do so.) The stories get even worse. How about a disty that tells you, "if you say <abc - some bizarre comment unrelated to the biz>, then I'll get you all the parts you want." Boy, that rather random comment sure lends a vote of confidence and trust in a disty's so-called allocation system. And this, from supposedly one of the most reputable distys in the industry. Allocation systems (by some certain distys, not the mfg) are beginning to sound like they may be corrupt, sleazy, and dishonest. Though there are some distys that have been very squeaky clean, there are others that give the impression that the disty business isn't particularly clean at times.
One time I received a random cold-call out of the blue from an "Intel representative." To ensure it was an Intel employee and to distinguish the caller from a mfg's rep (which is an outside rep), I specifically asked the caller if they were an employee with Intel and which group they worked in at Intel, and the person said "I work in the --- group of Intel with xyz." So, I let the person visit us the next week. But the person's introduction of their position seemed noticeably evasive to me, so I poked. Turns out the person wasn't from Intel but appeared to claim to be, in order to get their foot in the door. And guess whose foot? Intel's overseas competitor (a competitor according to a fellow SI poster, that I had never head of before). This person was not an Intel employee as they had originally lead me to believe. I back-tracked to find the source of how this person even discovered us. The person claimed they received our name from a person at Intel (which I knew wasn't true.) With more poking, I discovered it was a highly reputable Intel disty that gave our name to a mfg rep, yet this so-called "Intel rep" talked about Intel's competitor, not Intel.
I dug deeper to find out how the person would be paid if product is bought from them - surely they must get paid commission for their "sales efforts." (We're not under NDA). The mfg pays the mfg rep a "cut" based upon disty sales, and this is regardless if the account was in place prior to the appearance of the mfg rep.
I didn't like how the disty gave our name to someone that misrepresented themself, so I called the disty on it. Unfortunately, that negatively impacted the relationship, and given that a disty has the power to cut your supply off, the direct method was definitely not a wise way to handle the matter and probably the biggest business mistake I could ever make.
What would be really great is a 1-800# to anonymously call to report the occasional bizarre disty behavior (1-800-bad-disty) to the legal department of the manufacturers, (not sales/marketing departments where bonuses could possibly be tied to disty sales volumes.)
AMD seems to be classier in their aggressive methods (than the overseas company's mfg rep) - at least they don't misrepresent themselves. One-time, out of the blue, back when we were deep in stealth mode, I received a fax from the Dir of Sales at AMD to solicit our business. It turns out a disty that I had called, had leaked my fax number to AMD without my permission. I was rather glad I didn't give out any information to the disty other than my fax number.
Building accurate forecasts is based upon more than knowledge and tools, it's also based upon trusting forecast information too from customers, which includes the distys (approx 33% of the chip business if I recall the market reports correctly?). Cut out any potential corruption that generates a situation of double-bookings, and create a FIFO allocation system, and the forecasts would get better, though this still would not completely fix the problem since demand can change on a dime.
Regards,
Amy J |
