Electronics manufacturers have typically adopted a reactive approach to component end-of-life management. But it pays to be more proactive. Here are the pros and cons of some obsolescence strategies.
No single approach to end-of-life management of components fits every situation. It falls upon each original equipment manufacturer (OEM) to tailor a strategy that ensures the supply of components throughout the product’s natural lifecycle.
The mismanagement of component obsolescence inevitably leads to maintenance and production problems. In a best-case scenario, original component manufacturers (OCMs) plan well ahead and communicate component status with customers, giving them plenty of time to react. But relying on the forecasts of OCMs can, paradoxically, make OEMs prone to dealing with EOL situations in a reactive manner when a more proactive approach is called for.
End-of-life management: Today’s reality
Component shortages have plagued the electronics industry for many quarters, making a reactive stance on component buys much riskier. The past year of pandemic shutdowns have exacerbated the challenges, and the coming year will likely bring the same litany of shortages.
Last month, for example, The New York Times, reported on the battle between automakers and the makers of consumer electronics, all vying for the same limited supply of semiconductor chips.
“Consumer electronics exploded [during the pandemic],” Dan Hearsch, a managing director at the consulting firm AlixPartners, told the Times. “Everybody and their brother wanted to buy an Xbox and PlayStation and laptops, while automotive shut down. Then automotive came back faster than expected, and that’s where you get into this problem.”
This situation is just one of many that has electronics buyers eyeing their obsolescence strategies, well aware of the headache that sudden component shortfalls can cause.
The reality of being reactive
An EOL/LTB notice typically gives users about 180 days to figure out their ongoing needs and put in last orders. But that’s a best-case scenario — there’s often much less notice. In its 2018 Product Change Notification (PCN) report, Silicon Expert found 28% of product change notices were for part numbers with last-time-buy dates of “immediately.”
Unfortunately, most companies don’t have the tools to see years into the future, making a one-time buy that will last the remainder of the end-product’s lifecycle a hard calculation to make.
And stockpiling components comes with a number of drawbacks:
- Expense: Sourcing products in large quantities ties up capital and increases storage costs.
- Time limits: Distributors can be reluctant to hold inventory for more than two years, creating a hard stop for production of the end product.
- Quality: Over time, and if storage is compromised, oxidation issues can occur which affect solderability. Moisture and damage from electrostatic discharge are also a problem.
- Loss of support: Over time, warranties and supplier support for the parts may end.
Although a reactive approach is a common reaction by OEMs, it is rarely the most viable or desirable approach.
The process of being proactive
Taking control of end-of-life management demands time and attention but can yield positive results. OEMs should take the following steps:
- Categorize parts based on their obsolescence risk.
- Calculate risk based on the probability of it going to EOL status and the consequence of the product being unavailable.
- Manage ongoing risk for each category, depending on its importance, with tracking, monitoring, and mitigation. For critical components, an EOL buy may be the best or only option. Less critical or specialized parts are candidates for replacement parts from other suppliers who can be added to the Approved Vendor List.
- Focus on the parts that matter. Starting with critical products, perform regular forecasting, qualification of second sources, and redesign planning.
- Plan regular product refreshes — and redesign products to address potential EOL issues.
The proactive approach has the potential of giving the organization opportunities to contribute to the ongoing quality of the design and to future-proof the end product.
Unlike unplanned revisions, planned revision cycles allow a design team to create space and time for updating the product thoughtfully. Finally, it encourages product designers to explicitly consider the life expectancy of the components used during the initial design — a factor that is often given short shrift.
To summarize: It may be impossible to predict when a component maker will cease production of a specific part, but a more proactive approach can help organizations avoid the scramble after discovering a part is no longer for sale.