Eric

711 Words Apr 17th, 2012 3 Pages
1. How has Altera modified its strategy? Why?
Altera learned a hard lesson in inventory management after losing $115 million worth of inventory in the 2000-2001 timeframe. Altera produced its programmable logic devices and stocked them in warehouses waiting for customer demands. Their thought was to provide a cost advantage to their customers by having readily available stocks. Altera also leaned forward to help customers by building new products from specs. This push strategy backfired, and resulted in the $115 million loss.
Altera has now modified their strategy towards a push-pull strategy. The push strategy is to produce mainstream products in the form of die banks, which is the largest portion of the manufacturing process.
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* Inventory levels will have to be closely monitored as the customer orders will require special handling and production scheduling versus the push mentality of producing many products to stock.

3. How do you anticipate Altera’s customers will react to this new strategy? What are some advantages and disadvantages for Altera’s customer?
I believe Alters customers will react positively to their strategic changes. It should appear to the customers as an obvious solution to establish open communications and seeking more information to help the customer, however there are advantages and disadvantages.
Advantages
* Altera will have better insight into inventory levels of the customers and be in a better position to advise of possible overstocking. * Implementation of supply change management software will improve production and inventory efficiencies. The cost savings may be passed down to Altera’s customers.

Disadvantages * Altera’s customers may see longer lead times for parts. Parts previously received in days are now going to take weeks and months, pending customer orders. Advance notice and more open communication should mitigate adverse effects on production. * The customer may be reluctant to share inventory and