Uncertainty is a word that is heard a lot these days in the electronics manufacturing services (EMS) industry.

"We are uncertain of our customers' forecasts and we have to make financial commitments based on those," says John Caltabiano, director of global purchasing at Solectron. "We are uncertain of our supplier's ability to be financially viable and support those commitments that we are making. We are uncertain of the supply demand alignment situations in specific commodities," he says. It is a buyers' market today, but how long will it last?

Buyers are concerned about customer forecasts because forecasts were wrong last year which resulted in double ordering and a lot of companies stuck with high inventory levels.

Some have implemented software tools that will alert suppliers in the supply chain when a forecast changes.

"There are technology approaches such as hooking up your planning engines with suppliers so as soon as your orders seem to be different than your forecasts, you adjust your forecasts from top to bottom in the supply chain," says Andrew Gort, executive vice president, global supply chain management for Celestica." Tools such as I2 or Web based exchanges are used. The idea is to make sure several layers of the supply chain simultaneously see a change in demand.

"Suppliers aren't investing now," says Steve Marston, senior vice president and chief procurement officer for Flextronics. "Cash is hard to come by. It's not just DRAM , passives manufacturers aren't investing either."

There is also concern that some suppliers may feel they have been treated unfairly by purchasers during the current buyers' market and will respond in kind once parts are in short supply.

"I have had conversations with suppliers and they said they feel certain customers did not treat them well. It has been a tough time. 'We will remember' is what some suppliers are saying," says Marston.

There is also some uncertainty about doing more business with China. China is an emerging source of electronic components because it is a low cost labor region.

"There is concern with China over political stability," says Eric Miscoll, chief operating officer for Technology Forecasters Inc. Buyers are asking themselves, " 'Is there an inherit risk in having most of your manufacturing in China and something happens politically,'" says Miscoll.

Gort says there are other low cost areas that are close to China's cost. "It behooves you to make sure you maintain a portfolio."