The most effective purchasing professionals understand the significance of anticipating changes that could derail carefully laid out procurement plans. One challenge is sourcing replacements for items on a component list that may need to be swapped for a variety of reasons, including temporary scarcity or a supplier's decision to stop making a part.
How should electronics procurement professionals manage this process, and what guidelines should they follow as they navigate what can be a treacherous path filled with the possibilities for overpaying, purchasing counterfeit or substandard parts, and even acquiring components that may seem suitable for the job but may not quite match the specs and therefore delay production?
The following guidelines can help electronics purchasing professionals when considering alternate part sourcing. I will discuss this subject further during a live chat to be hosted at noon EST on Thursday, June 14, on EBN. To register and participate, click on the following link: Alternate Parts Sourcing: Challenges & Opportunities.
- Don't take anyone's word for the validation of a second source, except the design or component engineer's. This is not a slight on purchasing, but no company should just take the word of distributors or alternate manufacturers. They do not know your design, and there may be circuit-related particulars that cannot be compromised. An example might be a high-frequency inductor placed in a circuit where adjacent components can trigger the self-resonant response. A design or component engineer would take this into consideration before validating an alternate.
- Don't add a new alternate to the item master until it has been tested on several boards under operating conditions. The specifications may be in alignment, but you still need to verify the accuracy of the datasheet and the quality of the part. I am not being paranoid here. Datasheets are notorious for being wrong. Some manufacturers (mostly overseas ones) cut and paste specifications from other manufacturers' documentation.
- Don't give too much weight to alternate component pricing. This is particularly true when you are facing a line-down emergency, but it also holds true for general buying practices. If you have been able to find only one alternate source, you may have to pay a higher price for your immediate requirements, but the tradeoff of not having the alternate is much more costly than the price of the component. Many item masters have a "preference" field in the approved vendor list (AVL) for designating which manufacturer should be sourced first. If your item master does not have this feature, you may enter the preference either by rearranging the order of parts in the AVL or by adding the field as a custom entry.
- Check the product lifecycle status. If the part is going to reach its end of life in the near future, you may want to consider a last-time buy and/or continue looking for an alternate part.
- Pay attention to environmental regulations. If your company has environmental standards such as REACH or RoHS imposed for your products, check the specifics before considering adding the alternate part to the AVL.
- Examine the alternate part's standard packaging quantities. Your database may have a different reel quantity count. If you have an equation such as 5,000 parts on a reel and your economic order quantity or lot buy is "1," make sure the new part's reel count is identical, or you may buy too little or too many of the parts against the materials requirement or MRP forecast.
- Watch out for parts that are less expensive than your original part. Processes, materials, and labor are usually similar for the same form, fit, and function part, no matter who manufactures it. A super-low price should be a heads-up that you may be buying used or counterfeit parts. Buyers, beware.
- Verify your source. As much as possible, avoid sourcing from brokers or independent distributors, unless you know them and have confidence in their business practices. Counterfeit parts enter the channel mostly through independent distributors and brokers.
- Use an engineering change order (ECO) to document the new part addition. This creates a valuable audit trail -- authorizing signatures with dates of approval are on record. In addition, the routing process for an ECO informs all impacted departments or individuals of the alternate part inclusion.
- Validate the data entry into your item master. One typo could engender the purchasing of the wrong value, package, temperature, or speed grade.
If you follow these procedures to the letter, you should be on very safe ground. Anything less will endanger your operation and cause or extend an emergency situation. Get all these 10 lines up, so you won't have a single line-down due to poor alternate sourcing.