Report: EMS Business Practices Must Change To Avoid Another Inventory 'Train Wreck'

Compiled ByDeborah Austin Original equipment manufacturers (OEMs) and their electronic manufacturing services (EMS) providers must resolve lingering supply-chain-relationship issues -- including poor communication and lack of clear task delegation -- to avoid another "inventory train wreck" like that which occurred in 2001, suggests "EMS Industry Adjusts to New Realities," a report from the iSuppli Market Intelligence Services group. These issues -- combined with excess-inventory handling concerns and increased EMS components spending -- could spawn another inventory glut. OEMs and EMS providers must find a better partnership model for assigning such responsibilities with financial terms upfront, suggests procurement and supply-chain-operations services provider iSuppli Corp., El Segundo, Calif. The EMS industry purchased $66.6 billion in electronic components in 2001 -- nearly 24% of total electronics industry spending -- and could spend $71.6 billion in 2002, says the report.