Question: Scenario: As cloud computing booms, ABC Clouds selling servers gets a giant order for server equipment. ABC Clouds, in turn, sends an order to their
Scenario: As cloud computing booms, ABC Clouds selling servers gets a giant order for server equipment. ABC Clouds, in turn, sends an order to their contract manufacturer, Conductor Experts CE for this server to make as many as they can. CE starts sourcing all the parts they need to make those servers, including two kinds of semiconductors, namely A and B semiconductors. CE searches everywhere for the semiconductors, because getting the parts could take a year. However, once all the parts are finally in hand, the original order changes. Technology has advanced, and demand has shifted. The same servers now use B and C semiconductors. CE is subsequently stuck with warehouses full of the outdated semiconductors A and excess quantities of B creating a very expensive and very wasteful problem.
Question: Which one of the following is a viable solution for CE to reduce excess inventory in future?
Adopt an attitude of rather being safe than sorry and refrain from doing business with ABC Clouds and the like to avoid such situations in future.
CE should realise that this was a onceoff occurrence and the demand spike for semiconductors will not repeat itself.
Instead of ordering all components in advance, CE can only order the components needed to make finished goods in the short term.
If suppliers of semiconductors maximise revenues and organisations like ABC Clouds selling servers order more semiconductors than what they can reasonably sell, contract manufactures like CE is in a safe position as the outside party.
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