SMC - Managing Material Obsolescence

Avoid Costly Surprises by Managing Material Obsolescence

With the everyday emergence of new electronic component technologies, obsolescence has become a virtual buzzword.  What is obsolescence?  The word derives from the Latin word obsoletus, meaning unused, discarded, or antiquated (for example, a part needed to keep a system operable is no longer suitable for current demand or obtainable from the original producer or manufacturer). The speed of new developments poses a significant threat to systems reliant upon these components, particularly if an important requirement is a long lifespan.  Life cycle mismatches resulting from obsolescence can mean high sustainment costs.  Needless to say, we must monitor the aging of our systems, while hoping that a surprise breakdown doesn’t paralyze the process—and strike the budget a noticeable blow.

We aren’t telling you something you don’t already know.  All of us are aware that the dilemma of unprocurable parts exists everywhere.

Obsolescence management has become necessary, not only just as a process to be considered.  This strategy saves time, money, and capacities due to redesign.  Work closely with suppliers to establish a clear life cycle management plan.

Component obsolescence can negatively impact:

  • Life cycles of our own systems
  • Production Costs
  • Support of, and service to, the customer
  • Costly redesign of our own systems
  • Expensive requalification and certification of systems through the respective authorities 

Obsolescence Management (OM) Analysis

It is important to maintain a mix of options in the supplier chain.  Having a variety among original manufacturers, franchise distributors, catalog distributors, and brokers is a big step toward procuring the right parts, on time and of the desired quality.

Original manufacturers provide direct technical support and minimize the danger of substandard products.  Flip the coin, and you have annual volume requirements and, too often, no obsolescence management beyond end of life (EOL) and part change notifications (PCN). A part change notifications does not always mean that your piece is being rendered obsolete, but it is an alert that some design change is taking place in the manufacturing process. Communicating with your supplier to get samples of the new parts to test with other components can help determining if this change will affect your bottom line.  Component manufacturers are typically a reliable source of information helping to plan for future need to update systems, as they routinely communicate expected changes for upcoming component designs.

Substandard or bogus parts are about as probable as an intergalactic conference call tomorrow in your conference room.  Yet, the most prevalent concern remains counterfeit parts. Even when purchasing from ‘gray market’ sources, the problem is rarely a matter of poor quality as it is poor communication. A much more pertinent concern should be a focus on knowing what pieces in your existing supply chain are in danger of being rendered inoperable due to a conflicting design. It is worthwhile to check with producers on your supply chain to determine how they manage notifications involving their changes.

The advantages of a catalog distributor can be things like offering damaged packaging items and no minimum order quantity (or, for a small order, development or repair issues).  Still, the catalog distributor does not present any strategic, proactive, or reactive obsolescence management practices.  Some of the reliable brokers offer tactical, active supply chain support and the prospect of vigorous obsolescence and excess management.  Considerations of technical support and quality issues are sometimes part of the bargain.

When dealing with brokers, give some thought to the “3 Broker Rule.”  The benefits are:

  • Up to three possible independent quotes
  • Good market coverage and feedback
  • Possible combination of various suppliers under one account 

Supplier Selection as a Part of Reactive Obsolescence Management

Supplier selection is only one of the beginnings to effective obsolescence management.  Predicting equipment life cycle is another. There are supply chain resources you can use, such as life-time buy, which involves purchasing and storing enough obsolete items to meet the system’s forecasted lifetime requirements. The chief benefits of life-time buy are readiness and avoiding reclassification issues, but the downside is storage.  In the design stage, the number of suppliers and manufacturers that are producing a particular component should be taken into account before including it.  Many proactive steps can be taken to lessen the effects of obsolescence.

The goal of obsolescence management is to ensure that there is a functioning plan in place to identify and mitigate risk when parts, spares, equipment, skills (people), and software become obsolete.  We have presented merely an example of the first steps to this peace of mind.  Check our blog regularly for more hints and ideas.

About SMC

SMC is a print circuit board assembly manufacturer, custom cable assembly provider, system integration/box build manufacturer that is located in the heart of Kentucky. Our two locations provide quick and easy access for the technology industry in the eastern region.

We specialize and are certified to manufacture products in the medical, security, military/DOD, industrial controls, construction, and transportation industries.  To maximize customer support, we have created five separate engineering departments: process, test, customer, system integration, and quality engineering. These departments offer world class engineering support and product development. SMC has the EMS solutions you need to ensure quality electronic products at a competitive cost.