Authors: Ivor Lanning, Cathal Heavey
The advent and continued growth in the electronics and EMS (electronics manufacturing services) industry has precipitated research in this area in recent times. This paper addresses issues surrounding the development of supply contracts in the resulting outsourcing arrangements. A case study is presented which investigates exceptional occurrences in the form of transient demand upturns with little or no forewarning. The EMS provider wished to examine inventory holding and service level issues in this environment. The case study is described in some detail and initial experimentation is carried out using discrete event simulation to analyze how this demand, coupled with problematic lead time and sub-supplier capacity constraints affects the system. Results indicate that parameter interactions are non-trivial. In addition useful information from simulation modeling can aid in negotiations of supply contracts where OEMs wish to maintain service levels under reasonable supply chain costs.