Crista Souza EETimes Supply Network (01/26/2007 3:21 PM EST)

Aiming to reduce the amount of cash tied up in inventory, EMS provider Jabil Circuit Inc. has licensed the Multistage Inventory Planning & Optimization tool from SmartOps Corp.

The software is designed to dynamically generate optimal inventory targets for each stage of the supply chain, while providing visibility to let users make whatever trade offs are necessary to meet desired service levels, according to SmartOps (Pittsburgh, Pa.).

In a release, Jabil (St. Petersburg, Fla.) said it is looking to strike a better balance when it comes to having the parts necessary to complete customer orders: not too much and not too little. "With SmartOps, we expect Jabil to drive sustainable inventory reductions while continuing to provide excellent service to its customers," said Courtney Ryan, senior vice president of global supply chain.

Excess inventory is a chronic problem with EMS companies, which must have the right supplies on hand at any given moment to support varied customer programs at multiple sites around the world. The vagaries of the electronics industry mean that requirements can change on a dime, and a sudden shift in demand can leave a pileup of unwanted parts.

iSuppli Corp. (El Segundo, Calif.) reported earlier this month that the industry had accumulated a surplus of semiconductors worth $4.3 billion in the fourth quarter of 2006, up from $4.1 billion in the third quarter. While most of the excess was at chip suppliers, the situation at EMS companies appeared to be worsening, the market researcher said.

In 2005, Jabil saw its inventories rise 25 percent from 2004, to $818 million. Data for 2006 is not yet available.

According to SmartOps, MIPO integrates with existing enterprise systems. SmartOps is an SAP Endorsed Business Solution partner, which was one of the reasons Jabil chose to work with the company.