Posted on 21 Aug, 2014 by Neil Sharp
If your R&D teams overlook advances in technology or new legislation, or fail to react quickly enough to ever-changing customer demands, the life expectancy of your products could be cut short.
Alternatively, you may be faced with a problem of a different sort: what if the design and demand for your goods is strong but material availability within the supply chain is being threatened by an underlying condition? If left untreated, component obsolescence can be incredibly detrimental, paralysing your product and leaving you way behind the competition - or worse still, without a business at all!
In this blog post we highlight some of the steps you and your Electronic Manufacturing Services (EMS) partner can take to help extend the life expectancy of your products - before you are forced to make some very difficult decisions.
Prevention is better than cure
It’s virtually impossible to stop electronic components from being made obsolete by the manufacturers; they are under the same pressures as you when it comes to technology, legislation and consumer demand, and have to react accordingly to change. Regrettably, this can lead to a halt in production or a change in specification to some of the parts that you use. So, if you can’t prevent the process from happening, what can you do to limit its impact?
As a minimum you should be made aware of when these changes are planned to take place. Component manufacturers release notifications months in advance, so make sure your EMS company has procedures in place to notify you of these. Some Contract Electronics Manufacturers (CEMs) offer obsolescence management programs which proactively monitor the lifecycle status of each component part within your design, so you don’t have to. Any issues are flagged to you, so you can then decide what form of treatment makes most sense from a commercial perspective. For example, you may decide to redesign the printed circuit board (PCB) to accommodate an alternative device or the change in component functionality. Or perhaps it makes sense for your assembly partner to proactively secure enough last time buy stock now to guarantee you an additional number of years of product supply.
Opening up the grey market
If you’re unable to redesign the PCB, or the last time buy date has passed, you may have no alternative but to try and secure obsolete stock from the grey market. Unfortunately this can be a challenge for whoever is managing the supply chain for a couple of reasons:
- Price - If there is still a strong demand within the market for the components you need, expect to see an increase. Brokers run very successful businesses by ensuring they know what the current market price is for the stock they have - and obsolete component deals can be extremely lucrative for them. Whether you are free-issuing material to your EMS provider, or they are sourcing on your behalf, make sure you have 2 or 3 quotes from different suppliers available so you can determine if the price you have been offered is still competitive and, more importantly, can be absorbed back into your unit costs. Avoid asking more than 3 suppliers though as this risks the broker market seeing an artificial demand, meaning you could end up paying more in the long run.
- Availability - It’s not uncommon for brokers to advertise that they have stock available immediately when in fact they don’t. You can’t blame them as it helps generate sales enquiries and, of course, they couldn’t be expected to hold stock of every part. Be wary however of suppliers who advertise stock in their warehouse in exactly the same quantity, with the same date/lot code information, as several others. One source, I'm sure, will have the stock, unfortunately it may take some time to work out exactly which one. And, you certainly don’t want an order being placed for such critical parts with nothing more than a hope they will be secured for you at a later stage.
It’s important then to always remain vigilant. Make sure your assembly partner has stringent supplier selection policies in place. Ideally, they will be working with a small number of ‘approved’ grey market sources, which they have audited, to help minimise the risk within your supply chain.
This critical stage is often overlooked. Unfortunately obsolete components make prime targets for counterfeiters. They are sold through grey market channels for huge profits, often going undetected for long periods of time, due to the advances in the techniques now being used. Unlike before, when such components simply wouldn’t work when powered up or tested, today the supply chain is faced with having to try and detect cloned or re-badged devices. Often these use much lower specification devices as their base which, in some instances, will pass basic functional testing. It’s then not until your product is tested to the extremes of its tolerances that failures or malfunctions start to be seen.
So although your immediate problem may appear to have gone away, the ordering of obsolete devices is really just the start of such a delicate operation. If the items are not supplied through a franchised source, or the vendor is unable to provide you or your partner with proof of provenance, it’s highly recommended that additional levels of test and inspection are carried out. These help verify that the parts fitted by your EMS provider will function as expected within your design. And, if your Contract Electronics Manufacturing partner hasn’t already established their own counterfeit avoidance procedures, or invested in in-house equipment such as X-ray to carry out the levels of inspection needed, there are a number of third party vendors available to them that offer these services.
So if you want to continue to enjoy your products and the revenues they generate, they need to remain healthy. By continually monitoring the wellbeing of the components inside, you can make informed decisions on any treatments you may need to administer at a later stage. And, if infection has already started to set in there’s still hope. Just make sure you run additional tests on the donor parts to make sure your product doesn’t reject them after the initial operation.
Image by Megan Smith