Inventory Inside

As anyone who has played the beer game will attest to, effectively managing inventory and demand in a multi-stage supply chain -- especially one in a fluid customer environment -- is incredibly challenging. Balancing the need to maintain as little safety stock as possible with the ability to deliver on variable customer (i.e., demand-driven) expectations is both an art and a science. And now it's one that even some of the best managed companies in the world like Intel are having a difficult time accomplishing well. In the current semiconductor market, Intel alone is helping drive up global inventory levels due to a miscalculation it made earlier in the year, initially resulting in "excess inventories of parts [being] carried over from the first quarter." But more recently, according to the above linked article, "the problem worsened in the second quarter when Intel instituted price cuts to clear out lingering inventory in advance of its new product launches. This triggered a price war with rival Advanced Micro Devices Inc. (AMD)." Over on E-Sourcing Forum, Michael Lamoureux posted a series of blogs over the weekend on Demand Driven Supply. Given the situation with Intel, it would do us all well to bone up on the basics of demand driven supply chains, a topic which AMR Research has written so eloquently about over the years.

Jason Busch

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