There are clear signs that allocation, not a word heard hereabouts for a while is back on the agenda.
Last week Steve Rawlins, chief executive officer of Anglia, the UK's largest independent franchised distributor asked himself the question "Is cash King?" Nope. He reckons "Stock is King". Drawing on his 30 years plus experience in distribution he put his money where his mouth is four months ago, and made a major investment in inventory across his liner card.
Is it a gamble? "Could be," agrees Rawlins, "but I'm comfortable with the decision. We are seeing allocation on some parts and we are close to allocation on others."
Rawlins' view is that before last autumn's precipitous fall in the components market, there was heaps of inventory ion OEMs and CEMs. That was allowed to wash through, and left little inventory in the supply chain. Now as Rawlins remarks, the clamour for parts is increasing, and there is a lack of availability on some parts.
Mark Larson, president and chief operating officer of Digi-Key is also concerned about product availability. He flew to Chicago two weeks ago the meet senior executives of some Japanese component makers to emphasise the importance of ramping up production. The response was discouraging. The Japanese executives are not convinced the recession is over, and are guarded about making production investments. They remain to be convinced. Meanwhile Larson has seen lead times stretch to 16 weeks for some parts. "Manufacturers just quote longer lead times. I call that de facto allocation."
There are also stories that one leading semiconductor maker has told its channel partners not to expect parts any time soon, unless they are working with automotive customers.
Their views are backed by Malcolm Penn, chief executive of Future Horizons, the leading semiconductor market research company. According to the Mannerisms blog he believes that allocation is on the way due to the low capacity investment in the past 12 months.
http://www.electronicsweekly.com/blogs/david-manners-semiconductor-blog/2009/10/is-allocation-on-the-way.html
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