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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (2326)	3/23/2001 11:38:47 AM
From: CommanderCricket	Read Replies (2) \| Respond to of 23153

Gottfried, Business was soo goood the last several years that we got sloppy and didn't understand how to engage with the EMS providers. In the future, long term agreements will be put in place and electronics distribution will be used to help with supply chain issues. We'll think hard about extending credit to an EMS provider. A dirty little secret that I haven't seen mentioned or discussed is that the EMS providers are holding the bulk of excess inventory. They haven't fessed up, but they'll have to soon. Here's how they got into this mess, Last year most electronic components were on allocation and any product was immediatley shipped (at least for us), thus the component suppliers didn't have time to accumulate large inventories of parts. The EMS folks had to purchase parts and get in line or they couldn't keep contracts (The Cisco's, Lucents, etc.. forced alot of costs down). Their WIP's are longer and more involved than they lead on to. When Northpoint and other CLEC's starting to go under, the end customers immediately starting canceling orders, but the EMS providers had pipelined and had material inventories to support the current business. When they finally starting canceling components, we only lost backlog. If you want to have some fun, Check Avnet or Arrow Electonics. These electronic distibutors are in heated battle with EMS folks to determine who owns "the inventory". The end user (Cisco, Lucent, etc..) and the component suppliers are going to come out of this downturn much quicker than the contract manufacturers. I work with these companies every day and believe that the supply chain models and the discussion about how no one has inventories liability is a bunch a bull. Enjoying my day off. Us KEGGER's are alot happier today than yesterday