The Great Inventory Correction

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What information does Flextronics have that its clients do not? Why? How can Flextronics leverage?

Flextronics is one of the worlds largest EMS companies, with 12 billion in revenues, had an on usually good vantage point of the inventory surplus. The Singapore – based company makes everything from printed circuit boards to cell phones for a variety of high-tech clients, including Cisco, Lucent, Nortel, and Ericsson.” The telecom guys thought, ‘We can do no wrong,” says Dan Pleshko, vice president of global procurement and strategic supply-chain management at Flextronics In 2000, The Company’s stock list ballooned from $470 million at the beginning of the year to $1.7 billon at the year’s end. Flood of the century or not, tech companies are taking steps to limit their exposure to the next traumatic event. Some are revising their inventory models; others are implementing supply chain software and setting up Web supplier hubs. Everyone wants tighter collaboration with suppliers and timelier information from customers. Tech companies are trying, in short, to make their supply chains shorter, transparent, and as flexible as possible. Rethinking of supply chain management at large networking, telecom equipment, PC and chipmakers is the remedy in this unstable condition. The consequences have proved tremendous resulting in huge amounts of write-offs, including, Cisco’s 2.25 billion and Altera’s 115 million. Together with the inventory glut there are several other problems we need to mention, including, volatile demand, forecast uncertainty, and the communication gap amongst partners of the supply chain.
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