Sourcing Challenges for End-of-Life Parts

Having a component or product go End-of-Life (EOL) is an inevitable market event for any OEM. However, how EOL situations are managed differs wildly.

A shared challenge with EOL is timing -- whether forecasting demand for EOL parts to meet service and repair needs, arranging last time buys (LTB) to meet current production demands, or scrambling to find parts that have already gone EOL to fill unanticipated demand.

Lead time is particularly critical to successfully handling an EOL challenge. Greater lead times can mean greater success in sourcing and devising alternate solutions. However, cycle times for many parts are shrinking as manufacturers rapidly push through architectures and densities to meet market pressures. The result is a shortening of lead times, as well as the lifespan, for many parts.

Meanwhile, end-product manufacturers continue to have long-life products to support, and the parts needed for these board replacements are going EOL at quickening rates. Therefore, increased agility, more frequent forecasting, and LTBs are happening along the supply chain; pushing many to seek help from trusted suppliers who can manage EOL cycles, LTB, VMI services, and deliver other specialized inventory management solutions.

When a product or process change notification (PCN) is received, forecasts for LTB balance anticipated needs with inventory holding costs. Despite the best forecasts, demand spikes or supply chain interruptions can leave a company short. When original supplier channels cannot source the parts, the open market becomes the primary source. Having a trusted supplier in the open market is essential for quality and security because the EOL market is rife with counterfeits and unreliable sources.

There are trusted, professional, open market suppliers, the best of which provide sourcing services coupled with stringent quality assurance processes and part testing in onsite accredited labs (e.g., ISO/IEC 17025). These labs ensure quality by verifying authenticity against substandard, fraudulent, and counterfeit parts.

Beyond quality concerns, when specific parts are unavailable, locating suitable alternate parts is a significant challenge. Navigating the markets and balancing engineering and sourcing challenges is tricky; the most successful strategies engage teams that combine market, design engineering, and quality professionals in long-term relationships and often within defined contractual arrangements.

The unique challenges posed by EOL parts in the accelerated world of today's manufacturing cycles necessitate partnerships between open market suppliers and OEMs that establish baseline support for EOL requirements using an array of strategies. Best-practices employed by OEMs in this regard include:

• Competitive evaluation and certification of open market partners to assure quality
• Audited, approved, and documented procedures
• Dedicated or on-site support by the open market partner for sourcing and targeted inventory management programs

As supply chain evolutions show, well-executed, long-term partnerships with seasoned open market suppliers offer OEMs the reliable primary source of EOL parts they require. Importantly, these partnerships develop and employ strategies that maintain OEMs' high standards for managing both cost and quality, while keeping an eye on the challenges of inventory and margin management.