Demand forecasting top of mind for supply chain leaders

A recent survey conducted by the consulting firm ICognitive found that supply chain executives in the semiconductor industry consider improvements to demand forecasting to be their greatest concern. Ninety-six percent of the 50 survey participants cited that as their top supply chain issue, followed by delivery reliability (88 percent) and inventory reductions (78 percent). All of these challenges, the report's authors note, are a "direct consequence of the lack of visibility of the demand signal."

One reason for that lack of visibility, according to the study, 2010 State of the Supply Chain Performance Report, Focus on Semiconductor Industry, is that the emergence of "fabless" manufacturing has made the supply chain model in the semiconductor industry more complex. While original equipment manufacturers (OEMs) still design chips, they rely on contract manufacturers across the globe to produce the products they design. This change has resulted in longer lead times and more lead-time variability, both of which make accurate demand signals even more important.

Not surprisingly, then, respondents said they are working to improve demand visibility and collaboration with partners. Almost all (95 percent) of the respondents said they employ best practices in supplier collaboration, 92 percent said they had adopted sales and operations planning, and 74.5 percent were deploying an end-to-end supply chain visibility tool. The most popular of those tools included forecasting software (86 percent) and supplier management portals (75 percent).

This year's semiconductor survey is the latest in a series of benchmarking studies that ICognitive conducts each year on the state of supply chain performance for a specific industry sector.