Semiconductor manufacturers are in a quandary as the economy recovers and customer demand changes. The recession fueled an intense round of cost cutting and capacity reduction. Despite today’s increasing upturn in demand, many semiconductor companies are still uncertain if or how they should make new investments in labor and production in order to meet market demand. As a result, they are facing a growing list of supply chain challenges such as product supply shortage, longer lead time and delayed deliveries to customers.

“With order backlog and book-to-bill ratios beginning to show signs of stability and growth, many semiconductor companies are rapidly shifting gears, trying to capitalize on the global economic recovery,” said Puneet Saxena, senior director, industry strategies, JDA Software. “But meeting panic demand in the aftermath of aggressive supply-side adjustments is much easier said than done.”

JDA offers the following recommendations to help semiconductor manufacturers address supply shortages and capture growth opportunities:

  • Create forecast confidence bands to attend to higher priority forecasts first. To proactively plan for demand surges, semiconductor companies should adjust to operating in a capacity-allocation mode by segregating forecasts into a range of high- and low-confidence forecasts. Instead of trying to produce based on forecasts for all customers, they need to focus on high-confidence forecasts first, and then address the lower confidence forecasts as capacity becomes available. The end result will be an ability to provide supply across a wider set of customers.
  • Establish business rules to prioritize enterprise-wide demand for different customers and products. Once forecasts are segregated into high and low confidence bands, the question turns to which high-confidence forecasts should be prioritized first. Difficult as it may be, semiconductor manufacturers must learn to be strategic about their customers and separate the more critical orders from the lesser ones. Establishing rules to prioritize demands in order to attend to the more significant customers and larger orders, semiconductor manufacturers will better serve all customers.
  • Implement rapid sales and operations planning (S&OP). When dealing with supply shortages and low demand visibility, semiconductor companies must recognize the need for cross-functional synchronization to keep the entire organization in tune with the most current view of demand. Many semiconductor companies are investing increased resources in creating a stronger S&OP process to better synchronize allocations. An important aspect of this improved process is that the planning is conducted on a much more frequent basis. While it may have been conducted once a quarter in the past, companies are now leveraging monthly and even weekly planning to gain the most accurate picture of demand across their main business functions.

With a growing customer roster of world-class semiconductor companies including Fairchild Semiconductor, ON Semiconductor, Marvell Semiconductor, Silicon Image and Texas Instruments, JDA continues to build on the rich heritage of supply chain management success established by i2 Technologies in the discrete manufacturing sector. These customers are part of a premier group of companies in the semiconductor industry that are improving end-to-end processes, enhancing supply chain responsiveness and improving operational efficiencies with the help of JDA Software.

To learn more about how JDA helps manufacturers in the semiconductor industry improve demand planning, advance S&OP and synchronize global supply with changing customer demand, please visit www.jda.com.

About JDA Software Group, Inc.

JDA® Software Group, Inc. (NASDAQ: JDAS), The Supply Chain Company®, is a leading global provider of innovative supply chain management, merchandising and pricing excellence solutions. JDA empowers more than 6,000 companies of all sizes to make optimal decisions that improve profitability and achieve real results in the discrete and process manufacturing, wholesale distribution, transportation, retail and services industries. With an integrated solutions offering that spans the entire supply chain from materials to the consumer, JDA leverages the powerful heritage and knowledge capital of acquired market leaders including i2 Technologies®, Manugistics®, E3®, Intactix® and Arthur®. JDA’s multiple service options provide customers with flexible configurations, rapid time-to-value, lower total cost of ownership and 24/7 functional and technical support and expertise. To learn more about JDA Software, please visit www.jda.com, e-mail info@jda.com or follow JDASoftware on Twitter.

This press release contains forward-looking statements that are made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally accompanied by words such as “can,” “will,” “ensure,” “help,” “enable” and “expect” and other words with forward-looking connotations. In this press release, such forward-looking statements include, without limitation, comments that certain strategies may help semiconductor manufacturers better serve customers. The occurrence of future events may involve a number of risks and uncertainties, including, but not limited to: (a) the strategies may not lead to desired results; (b) there may be implementation and integration problems associated with the strategies; and (c) other risks detailed from time to time in the “Risk Factors” section of our filings with the Securities and Exchange Commission.

“JDA” and “i2” are trademarks or registered trademarks of JDA Software Group, Inc. Any trade, product or service name referenced in this document using the name “JDA” is a trademark and/or property of JDA Software Group, Inc.

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