Recession creates unpredictable customer and supplier patterns

[Randy Littleson]

The latest edition of the IndustryWeek Manufacturing Business Challenge is out. This month’s challenge focuses on a semiconductor company struggling to cope with the influence of unpredictable customer and supplier patterns brought on by the recession. The full business challenge is below:

Shnouws Semiconductor has never had an easy time of clearly identifying short- or long-term demand and triggering our supply chain based on that demand. Other manufacturers may have the luxury of classic A, B, and C product categories, but at Shnouws we have the entire alphabet. We design and produce nearly 4,000 different electronic SKUs (radio frequency circuits, oscillators, controllers, sensors, semiconductors, etc.) for nearly 11,000 customers worldwide. Nearly half of our business is contract manufacturing.


Managing our complex supply chain and outsourcing relationships — not unlike that of many electronics companies today, including our competitors — has always been a mix of science and art when trying to balance demand and supply. Within the current recession, though, we’ve gone from complex to volatile to absolutely unpredictable: customer orders disappear overnight; outsourcing contracts (for which we’ve already invested in material and assets) are cancelled; suppliers can’t get credit to buy raw materials; other suppliers fail without warning; customers go out of business; and yet some of our markets (green technologies) experience huge growth.


Shnouws needs to develop a more cohesive approach to identifying and segregating our demand and then quickly sharing those signals throughout our diverse vendor base — even amid the current chaos. We must be able to predict demand more clearly, more efficiently aggregate the design and manufacture of our products, and more productively manage our supply chain. We’re not looking for a magic potion, just some better ideas, processes, and tools.

Solutions to the challenge are offered by Steve Banker, director of supply chain management, ARC Advisory Group and Kinaxis. You can find the archive of past challenges here.


Randy Littleson is a Vice President for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with the collaborative and integrated demand-supply planning, monitoring, and response capabilities.