Obsolescence Throws Another Curve Ball in the Supply Chain
Obsolescence Throws Another Curve Ball in the Supply Chain
When the supply chain is squeezed, how do you find parts that are already elusive?
Picture this: You are an electronics OEM working in defense/aerospace, medical, telecom, or the industrial controls sectors – where a large part of your bill of materials (BOM) consists of mature devices. In your world, manufacturers’ product discontinuance notices (PDNs) come out regularly (and are expected to increase) and the hunt for obsolete or near-obsolete components begins.
This is a very real problem for the industry. Once a supplier deems a product or product family as end-of-life (EOL), it sets off a series of events.
- First, suppliers issue EOL notices to their customers, their sales team and their distributor network. They might say something like, “This family of parts is going to be end of life in 2022; you have until March 31 to place your last time buy, and our last-time ship is going to be in September 2022.”
- At that point, everybody who uses those components has to gather all their production information, distributors notify customers that have used this product, customers have to respond with recent forecasts and build out estimates — and ultimately make a decision: How many of these do I want to buy? All these inputs come in.
- The manufacturer takes this collective data and uses it to decide what its last production run will be. And it’s never a perfect match to the real demand will be. It’s just a combination of a lot of forecasts, and a lot of commitments.
For a brief while though, everything’s fine; orders are being processed and it’s all good. But at some point, the EOL product becomes scarce; the OEM moves on to their next design and there’s going to be obsolete product they don’t want that they committed to; or there’s new demand, because somebody didn’t account for a contract they were going to book or a military subcontractor wants to build 100 new navigation systems that include this EOL product. These customers have to find this product.
If you call a franchised distributor – your Avnets, Arrows, Futures – and give them a part number, the inside salesperson’s going to look on their screen and say that’s been declared EOL, there’s no stock in the system. You start making other calls – to the supplier, or independent distributors and see if anybody has parts in stock.
At the same time, the gray market is looking for customers who might have pockets of inventory they don’t need, and trying to match it with customers who do need it. That’s where it can get dicey, with the possibility of counterfeit parts, inaccurate part information, no product warranties, and a level of risk to the buyer. Buying parts through the unauthorized channel means product testing, recertification and other levels of verification that can be time consuming and pricey.
The supply chain squeeze is expected to continue through 2022. The least risky option for EOL sourcing is to buy from an authorized EOL distributor or manufacturer. Authorized distribution partners are focused on obsolescence and can provide part traceability, certificates of compliance, country of origin, date code information. You’ll know the part you’re getting comes from a verified source, even as the parts themselves are going obsolete.
To read the article on EPSNews.com, click here: https://epsnews.com/2022/01/18/obsolescence-throws-another-curve-ball-in-the-supply-chain/