Inventories Backing Up In High-Tech

Oct. 12, 2006
Average inventory is below 40 days.

In 1991, before the influence of Internet-based supply chain solutions, the electronics industry carried an average of 100 days of inventory. That average has since plummeted to below 40 days; however, according to Merrill Lynch estimates, average inventory days rose by two days -- from 39.7 to 41.7 -- in the first quarter of 2006.

Much of the blame for that rise is due to the semiconductor segment, which saw an increase of 8 days, largely driven by Intel. Merrill Lynch analyst Steven Fox attributes the rise in days to "the channel," e.g., electronic manufacturing services (EMS) and distribution, as well as computing and semiconductor companies.

"We think EMS providers are seeing an excellent environment for new programs contributing to recent inventory trends and that distribution turns still reflect well on the industry's improved supply chain position," Fox observes. "We expect better inventory metrics the seasonally strong months."

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About the Author

Dave Blanchard | Senior Director of Content

Focus: Supply Chain

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During his career Dave Blanchard has led the editorial management of many of Endeavor Business Media's best-known brands, including IndustryWeekEHS Today, Material Handling & LogisticsLogistics Today, Supply Chain Technology News, and Business Finance. He also serves as senior content director of the annual Safety Leadership Conference. With over 30 years of B2B media experience, Dave literally wrote the book on supply chain management, Supply Chain Management Best Practices (John Wiley & Sons, 2010), which has been translated into several languages and is currently in its second edition. He is a frequent speaker and moderator at major trade shows and conferences, and has won numerous awards for writing and editing. He is a voting member of the jury of the Logistics Hall of Fame, and is a graduate of Northern Illinois University.

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