Improving Efficiency in the Supply Chain

From C-level suites on down, the electronics OEM industry is being asked to do more with less. Within the supply chain, the process of improving efficiency -- saving both time and money by making the right component selection in the product design phase -- starts with the design engineer.

Design engineers are also being asked to do more with less, and their scope is expanding. Not only do they have to select components with the best performance, but price, availability, and the origin of the component are concerns an engineer has to take into account if a product design is to succeed.

In recognition of this fact, component makers, distributors, tool developers, software vendors, and even search engineers are providing sources of information design to make the engineer's life easier. The real effect? Too many sources of information that can be incomplete, or even outdated.

"Design engineers hold a special spot in the electronics industry," said Pamela Gordon, principal of Technology Forecasters Inc. (TFI), a longtime manufacturing industry consultancy, in a phone interview with EBN.

"They are the beginning of the entire supply chain. Given the fact that everyone is doing more with less, it would be better for the entire supply chain if design engineers could be as efficient as possible and make the most accurate decision on components and materials at the front end of the process.

"When mistakes are made, it costs time. Engineer change orders cost money, and from the moment you make an estimate on the costs of a project to each time you make a change, each successive change costs an order of magnitude more than the previous stage. We are finding that the biggest source of frustration for design engineers, and what is taking the most amount of time is in the area of incomplete information," she said.

To get a handle on how engineers can better use their time, TFI is conducting a survey to pinpoint how design engineers search for information -- and how these sources can be improved.

"We have some preliminary data on where engineers are seeing the pressure points," said Gordon. They include: Too many sources of information on component design; incomplete or inaccurate information; information and technology changing rapidly; difficulty in comparing options and alternatives; incomplete software and file formats slowing things down; and a general lack of time.

According to Gordon, engineers typically review 5 to 25 types of online information before they even start a design, including supplier sites, distributor sites, and Webcasts. "That's a lot to digest," she said. Engineers aren't just being asked to consider a product's design; they have to be aware of environmental and compliance regulations affecting the end product.

"Now, they not only look at price, features, and availability of components; they need to look at the materials composition -- whether some of the materials are conflict minerals, or whether they contain rare earth elements (REEs)," Gordon said. "They have to be aware of which substances are in the parts they use. These concerns actually fall into the realm of political factors."

All the decisions made by designers ultimately affect purchasing, and sourcing components has become as complex as design. "Issues that have to be considered include the country of origin of components," said Gordon.

"Recently, the earthquake and tsunami made it apparent that companies need to check which part of their supply chain originates in the disrupted areas of Japan. Before that, it was toxic sludge in Hungary and a volcano in Iceland that disrupted supply. Practical considerations have to be factored in, and the information being sought around these considerations is being entered into a database that will track the end product throughout its lifetime."

Why is all of this data being collected? Ultimately, an OEM is responsible for its end product, and for whether it is compliant and meets customer expectations. So EEs and buyers, by extension, make that part of their jobs.

"The OEM is responsible, and if there is a boycott of a product for non-compliance, it will be against the name brand. The OEM is responsible, and the proactive OEM is requiring that their EMS and ODM supply them with that information. They are pushing the substance disclosure and now requiring suppliers to provide this," said Gordon.

We encourage electronics-design engineers to participate in TFI's online survey (or be interviewed by contacting AFeith@TechForecasters.com) so that your search for critical information might be improved. Participants go into a draw to win a gift card and will receive a complimentary white paper based on the study's findings, to be published in June.

EBN will share preliminary data, the white paper, and host chats on these topics in the coming weeks and months.