3 Key Ways to Successful Component Obsolescence Management

When was the last time you bought a smartphone? Has it been a few years? Or only a few months?

In either case, has a new and improved model already superseded your current phone model?

There’s no better way to illustrate the blistering pace of new technology than the cycle of new product hype, release, replacement, irrelevance, and finally obsolescence. For the general consumer, this circle of electronics life isn’t likely to impact their life beyond syncing the old device with the new one and then going about their day.  

However, for electronics manufacturing companies that aren’t as focused on equitable digital transformation, this product cycle can spell disaster for their operations. Companies must invest time and resources into their component obsolescence management to sidestep the logistical obstacles and risks presented by an obsolete part.  

Here are the three keys to formulating a successful obsolescence management strategy.

1. Appoint a Dedicated Obsolescence Manager

Much of the operational disasters caused by an obsolete part can be sidestepped with the expertise of an obsolescence manager. The person in this position is responsible for everything concerning the procurement of electronic components, spare parts, and raw materials. Within their job description, obsolescence managers should oversee the following:

• Extreme surges in part demand
• Part scarcity
• Raw materials shortages
• Component turnover
• Part lifecycle risks

To do this job well, an obsolescence manager must have excellent relationships with distributors and have a pulse on electronic component supply and demand. An obsolescence manager must predict the outcomes of various types of disturbances. For example, how will a whispered-about merger and acquisition impact supply? Will new regulations lead to raw material scarcity? Will a vicious typhoon season interrupt distribution?

A data and insights partner, like Datalynq, can assist managers in making more informed decisions. Datalynq compiles real-time inventory and transactional supply chain data to assist electronics manufacturers. Visibility into all the moving parts of the supply chain and entire bills of materials will help your company keep components in stock and the production machine running smoothly.

2. Plan for Obsolete Parts

If your company waits until they receive an end-of-life (EOL) notice to start the search party for a replacement, you’ve waited too long. Leaders must be proactive to adapt to unplanned and planned obsolescence.  

This proactivity begins in the design phase.  

Product design teams should determine alternate sources of acceptable spare parts. This includes removing sole sources, components that have a sole supplier or no active alternates, from their parts list or bill of materials (BOM).

The consequences of scrambling to find a replacement can be dire. As the supply of obsolete parts dwindles, manufacturing leaders become more and more frantic to procure stock. When it gets to the point where they’re facing imminent shutdowns, desperation gives counterfeiters the perfect opportunity to enter a manufacturer’s supply chain. Counterfeiters take advantage of manufacturers in distress to peddle their shoddy wares. They magically appear with large supplies of scarce electronic components at the perfect price, hoping to lure a desperate manufacturer into their spiderweb.  

Before engaging with a new supplier, it’s imperative to vet them, which can be an involved process, much to the chagrin of time-strapped leaders. There are millions of electronic component suppliers around the world. It can be difficult to discern the trustworthy and upright among sophisticated scammers. Sourcengine is an excellent companion in supplier vetting and component procurement. Sourcengine is an e-commerce marketplace for electronic components that provides quality assurance and global logistic support. Sourcengine has more than 1 billion part offers from over 3,500 vetted, traceable, and trustworthy vendors. It eliminates the guesswork and saves manufacturers time and cost, so they don’t wind up with a box of worthless counterfeit electronic component stock.

3. Integrate New Parts as Soon as Possible

A component usually becomes obsolete for a reason. With technological advancements and new security threats emerging daily, manufacturers must constantly upgrade hardware and software equipment. To create the best final product, manufacturers should consider phasing out their stock of obsolete parts and embracing new designs as soon as possible. Aging systems that use outdated parts are difficult to maintain.  

One way some companies attempt to vault over the mire of obsolescence is by agreeing to lifetime buys or purchasing huge amounts of a specific part to sustain the entire run of a product’s life. In some cases, lifetime buys account for a decade’s worth of inventory; however, this is incredibly risky. Most consumer electronics manufacturers run the risk of falling far behind the competition if they utilize obsolete parts due to their low efficiency or performance when compared with their newer, faster, and better replacements. This could, unfortunately, lead to a poor standing among a manufacturer’s target audience.

The Circle of Electronic Equipment Life

According to one source, the United States Department of Defense spent $10 billion to manage the shockwaves of electronic component obsolescence.1 Even if your operation isn’t as vast as the DoD, this figure illustrates that losses can be grave without a solid obsolescence management plan. To keep the delicate supply chain, global distribution, and production process in balance, electronic manufacturers must have solid strategies to address future electronic component obsolescence.

To learn more about Sourceability and how to prepare for electronic component obsolescence, you can contact our knowledgeable staff. Have a part in mind? Send our team an RFQ for your own personalized quote.