This article was recently published in the November edition of Electronic Sourcing Magazine. You will find it on page 16 of the February edition. Please read below.
Obsolescence is not something you can avoid. It’s a natural part of the life cycle of electronic components. Since this is an inevitable part of every OEM’s business, we have a simple question: What’s your plan to manage it effectively?
We see a lot of companies create spectacular product designs. Their products have all of the features that their customers want. Unfortunately, once the design is set and production begins, your job is not done. You still have to manage your bill of materials efficiently. At some point, there will be parts on the bill of materials that have become obsolete.
And the reality is that components are becoming obsolete faster and faster with the rapid development of new technology. Manufacturers are moving into smaller, faster, less power-consuming components, and always pushing their bleeding-edge products to the market. Often, the decision to discontinue is an economic one for the supplier, possibly because their largest consumers of these devices have migrated to new components. As a product creator, you have to continually be aware of potential parts on your bill of materials that might no longer be available.
Even world-class planning won’t cover all forecast challenges. Quality products will often lead to increased and unanticipated demand. So you need a plan to address potential issues in your supply chain.
Is Multi-Sourcing the Answer?
Think about which components in your design that have a drop-in replacement produced by multiple manufacturers. Sourcing multiple manufacturers is relatively easy for many commodity parts. Creating this option is best done during the design phase. Multiple sources that have been designed and tested can provide options to mitigate this risk.
Remember, this approach is usually only an option for commodity-type parts. And even for commodity parts, this may not be as easy as it sounds. Sometimes a drop-in replacement may not be what it seems. We have seen OEMs use components with different speeds or different tolerance ratings.
As you’re going through the testing, verification, and approval processes, try to source several different “like” parts. This may help you with quick alternatives for EOL or even shortage situations. Remember, for application-specific parts, this strategy is usually not an option, as there are many nuances with specifications that may not match.
Communication with your vendors and the manufacturers of the component is essential. Make sure that your component engineer team who manages your BOMs are all subscribed to distribution lists for announcements and notifications. Your distributor should send you these PCNs (product change notifications) regularly.
As a manufacturer, you must remain aware of the status of all components during the product’s production life cycle. Manufacturing companies need to know the current availability of parts on their BOM. It’s also good practice to know what the forecast is calling for in the foreseeable future. Scrubbing your BOMs with all the notifications and PCN’s should be a consistent, ongoing process.
In setting up your approved vendor list, it is wise to include partnerships with distributors that specialize in end of life and obsolescence. While not a one-stop-shop or your largest spend, expertise in this area will pay dividends at crunch time. The right specialist will help you understand and explore all your options. When you do face a crisis, this can be the difference between having production lines down or not.
Partner with an Expert
Years ago, Flip saw a growing need in dealing with the specific pain points that OEM and EMS were increasingly experiencing with obsolescence. We concluded that every distributor had to deal with this issue. However, no one was good at it. We also found that the “grey” market, while being used as a default strategy by many, was not a very good solution for anyone. So we made it our mission to focus and excel at servicing and solving these real-world supply chain challenges. Our team understands what happens – from beginning to end – when a product is discontinued.
Flip is partnering with many world-class component manufacturers as an authorized source for this type of product. By being an authorized supplier, we help our clients avoid the “grey” market altogether and keep their lines running.