Dylan McGrath EE Times (11/16/2005 12:49 PM EST)

SAN FRANCISCO — The prevalence of outsourcing in electronics has resulted in companies losing control and visibility across their extended supply chain, creating increased risks, according to the results of a survey by Industry Directions Inc. and the Electronics Supply Chain Association (ESCA).

The survey results, released Wednesday (Nov. 16), indicate that both "outsourcers" — original equipment manufacturers (OEMs) and fabless semiconductor companies — and service providers have suffered a serious loss of visibility over their supply chain activities.

The research was conducted in July through October by Industry Directions, an independent industry analyst firm based in Boston. The firm conducted the research by means of an online quantitative survey of 121 electronics industry participants plus qualitative telephone interviews with a group of industry leaders. The effort was guided by an industry council of top executives from Amkor, ConSentry Networks, Flextronics, LSI Logic, On Semiconductor and Palm.

Among the findings, 69 percent of respondents said they have less control over at least five of their key supply chain processes since the outsourced model has taken hold, while 66 percent of providers feel their aggregate risk with customers is high or very high.

Thirty-six percent of providers responded that they feel an increased risk of uncertainty compared to their uncertainty risk prior to the rise to prominence of the outsourced model. Sixty-two percent of respondents described as "problematic" at least two core trading partner management practices, which include performance management and simply agreeing on results.

While the largest portion of respondents indicated that shared risks and objectives are the most effective form of trading partner agreements, they are the least used. In fact, outsourcers perceive increased cost from sharing risk. Some 40 percent of all respondents encounter resistance to sharing risk, according to the research.