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.
The main procedures for alternate part sourcing happen when a new part is selected for a design. The Component Engineer or Design Engineer should only design with a component that has more than one manufacturer. However, there are so many unique designs now, mostly semiconductor with high number of pin-outs and packages, that sometimes there is only one manufacturer that makes the identical part. The Design Engineer should try to accomplish the same circuit function with multiple source components, but if he or she cannot, then the part remains on the AVL as a single source. The Department of Defense has problems not so much with alternate sourcing, but with counterfeits. They believe they are buying the correct parts, single sourced or not, but somehow the fraudulent or counterfeit parts were infiltrated into their supply chain. There should be incoming inspections, either internally or by a second party guaranteeing that the parts ordered were the parts received. It is not enough to check certificates of conformity because these documents are being counterfeited as well. If the ten procedures I write about are performed during an alternate part's qualification, then there should be no problem using the approved part....if someone hasn't made that particular manufacturer's part number a target for their counterfeit operations.
Douglas, good analysis and guidelines, If we are able to follow then fine. We had read many articles about selection of components and how to avoid counterfeit components. But recently I had read about inclusion of counterfeit components in US defence labs. How it had happened? If they are strictly following the scrutiny for components, it won't happen. Am I right? this means thief is always in the floating ship.
Once again, you have hit the nail squarely on the head. If all purchasiing folks would follow this wonderful and accuarte roadmap, the surprises which occur during the normal procurement and manufacturing processes would be seriously diminshed Kudos to you for setting out this timely and excellent article.
Machine-to-machine technology is growing so rapidly that one report says there could be 10 billion connected devices by 2016. That's a big market opportunity.
RFID makes it possible not only to increase the quantity and types of products streaming through the supply chain, but also to build higher-level products and services.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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