This dialogue occurred on Thursday, June 14, at 12:00 p.m. EDT.
Finding replacement parts for items on a components list can lead a procurement expert into a quagmire. It is possible for a seasoned procurement professional to end up with an "alternate" component that doesn't quite fit the bill. During this live chat, veteran components engineer and supply chain consultant Douglas Alexander will discuss specific problems buyers face when trying to secure alternate parts, offer tips for cost savings, and discuss strategies for achieving optimal results when replacing parts on a components list.
I want to thank you too Douglas for answering our questions and the insight. Thank you to all participants too for your comments and for making this a lively exercise. We will be hosting another Live Chat soon on EBN. Please check the site for our promo soon.
@Tirlapur, Double-ordering has also in the past boosted sales into the broker market because it distorts demand/supply. In the end, manufacturers end up returning or reselling components they can't use, which end up at brokers and can lead to the mix-up of genuine and fake parts.
A CM may have an onboard CE but you never want to take that advice more than just a suggestion. It is a good starting point but again the DE and CE needs to approve the part. In the end, the CM is not responsible for your product integrity. YOu are.
Double ordering can lead to allocations in the worst case. The book-to-bill ratio goes off the map and that causes a panic buying spree and price escalation. Of course this is not always the case, but after awhile a distributor figures out that you are double ordering when you pull in and push back order receipts too often.
@Barbara, An industry standard for connectors? That wuld be good but it's not going to happen. Why? Because even the lowly connector market has gotten technology! And, the after-market support service providers don't want it. The HDMI connector for my phone costs $40! It's just a cable with some pins at the end but because it's special to the phone I had to order it direct from Samsung! That's the way companies keep after-market support sales inhouse.
When the DE has moved onto other companies, another Engineer should be assigned to the mature product. There has to be a three-way connection among the R&D, Manufacturing, andCustomer Service at all times.
@tirlapur: I don't think it's easy. I believe it is less of a problem becuase double-ordering was one of the reasong for the glut of 2001. So many companies got burned that double-ordering is no longer SOP. But that's from distrbutors...was wondering what buyers say
The service and reapir departments have to handle the EOL parts replacement and many a times the original design team and related documentation may not be even traceable. In this situation the service dept has to rely on external help to get alternate parts
@TaimoorZ, Everything should be documented with the change order notice and information provided to all parts of the supply chain. The problem is that many companies just don't have the processes in place when a change occurs.
@Anna-need not be so.There will always be a first time for any such task.U have to be willing to experiment a little.I like to do that during the Beginning of the Financial year(when company is flush with funds) and I know its easier to get them to release cash.
Maintenance and Repair have to be compliant as well. Usually the depot or OEM Repair and Return departments of Customer Service are tied into the same Item Master AVL database and therefore all replacement parts are drawn from specific part numbers that are RoHS compliant as well.
@Barbara, Correct. The other point to note is that the design might have even changed. The enclosure might be slightly different or a particular connector could have been dropped in favor of another one. Sometimes I think about the day Apple decides to drop the connector for charging the iPhone and the iPod and replace it with something else. Does anybody have an idea how many Apple devices could suddenly have to find alternate support?
@Ariella, the game of quoting double of what you are willing to settle for is something I have never understood. It's a game everyone plays knowing it's a game. Then when there is someone that doesn't play the game he/she is taken as someone who does just the same.
A good point Douglas on drop-ins. From what I understand, even after-market manufacturers such as Rochester can make a component two ways: the first is an exact replica and the other is "performs like."
Good point. Anytime an exec is involved in makes things happen faster because priorities are adjusted. IN ISO 9001 or QA in general, the Execs make the enforcement happen. They have to sign up or the program fails.
@Tech4people, The issue is not just money. It also has to do with qualifying the parts and also depends on the nature of the component. There are application specific parts that cost millions and which may be available only through only a handful of suppliers. In this case, what companies try to do is ensure they can second source -- but from the same supplier. That doesn't sound as impossible as anyone may think. They just try to ensure that the same supplier has enough redundancy built into the production system that one line down doesn't shut down production.
Similar is a dangerous word when it comes to alternate part qualification. For the most part, you are looking for drop in replacements with the same form, fit, and function. Substitute parts using Temporary Manyfacturing Deviations accommodate higher voltages like for capacitors, but they are not alternates because you do not want them in your item master as direct drop ins as case height may not work in another assembly.
A separate sourcing team with more power to control the part sourcing will produce better results than engineering team over seeing both design and part selections. The more focus put into this by the executives they would result in more right time deliveries.m
Not just cost savings, but these guys are concerned with Company reputation and sales potential. I have seen a CEO get involved with personal contacts to help buy parts from a competing company to keep the lines up.
To reduce the burden on DE and also to have the technical opinion on whether an alternate part is a perfect fit for a given design, we need third party reports from distributor companies who can invest in such parts evaluations. It is similar to the drugs - for any given drug there are always alternate brands with similar formulation
The recent workshop i attended organized by AVNET people who presented and recommended components and parts to vendors were design engineers. Even a participant asked question at AVNET stand the guy there said he has no clue about the question - "sorry am not a technical person please wait let me for the guy who could answer your". question
@Brian75137, I agree and also in the medical as well as industrial markets too. There are challenges as well as advantages to these markets too. In many cases the components go end of life long before the devices but this also opens up opportunities for after-market suppliers to support that product, which can inject counterfeits into the system ...
Douglas, By the way, you didn't highlight the role of the C-level executive in this situation. CFOs and CEOs have become highly interested in supply chain issues and in procurement because they realize these are areas of potential cost savings. How do they influence this process?
@tech4people I have done sales. Though I never misreperesented the service, I found that many in the same industry did. Consequently, I was tarred with the same brush. For ex. it was always assumed that the price I quoted was inflated, and that I could be bargained down. That's b/c it is typical for people to quote double what they are willing to settle on.
@Tech4people, I agree but you just highlighted a potential problem with that scenario. Even if a company outsources all production, it should still keep some insight into the BOM. Not to do this could be corporate suicide.
@Ariella-Typically what tends to happen is Salespeople move around a lot(Jump companies whenever it suits them);so they are more focussed on closing the deal rather than whether the customer gets the right product.
@tech4people, That would be the morally and obligatory thing to do but often companies don't want to lose a sale and don't think about the longer-term relationship with the customer. I believe one of the things Douglas has emphasized in previous blogs is that the final responsibility for the bill of materials should never be transferred to a third party no matter how important the relationship. A company must maintain control of this kind of decisions.
If there is a requirement to buy obsolete components, then the sources must be pre-approved or quickly surveyed and approved before buying from them. This is a main highway for counterfeit or used parts. There are certification programs for distributors of obsolete parts. These certificates are based upon having anti-counterfeiting procedures in place and in action.
@TaimoorZ, I would say the best answer to your question would be that it depends on the resources available to the company and the nature of the product being sourced. A recent article by Ken Bradley talked about companies that have "Virtual Second Source", which in reality may be qualified sourcing partners but in reality may not be viable alternate sources for various reasons.
Suggestions are good. But that is just the starting point. There can be a serious conflict of interest issue and many times the sales person is not familiar with your particular design idiosyncrasies and parasitic issues. That is to say, they are not your engineer familiar with all the gotchas of your product subtleties. In the end, they are trying to sell you a product. It could be your end if you take their advice as gospel.
@Douglas-As an Engineer I have faced this issue many times when the Supplier tends to mislead u regarding the Availibility of such and such part.IN such a situation would'nt the best option be to straightaway say No.We don't have it and don't know where to find it?
May be it is the joint responsibility of the DE and component engineer to identify the need for alternate parts sourcing and give the approved alternate parts list to purchase people for keeing the sources ready to supply
@tech4people, Correct. At many companies the design engineer is also the components engineer, manufacturing engineer and the procurement guru. For companies like this the responsibilities merge quite easily.
Please dive in with your comments or questions for Douglas. It's important to note he may not be able to answer all questions. EBN editors will respond as necessary to some and we welcome the views of people on this live chat too.
@Bolaji, Correct. The DE is consumed with Development. Sometimes there is a Manufacturing Engineer or Sustaining Engineer that can handle the alternate part emergencies along with the Component Engineer.
There's an interesting dichotomy here. Do design engineers design all the time with alternate parts in mind or do they leave this to purchasing? Do design engineers get involved in issues such as green certification, etc., or do they just leave all these to the procurement guys and the components engineer. These are some of the rhetorical questions I wonder about in this process.
@Barbara-Its a very real problem;very often Design Engineers select parts that the Buyers are unable to locate easily.This creates a lot of heartburn for all concerned;simply because of the delays involved in the project.
The line has come to a stop because the part on a PCB or other assembly cannot be completed and so higher level assemblies cannot be produced. This is a very "HOT" emergency because not only the line goes down but other resources are redirected and costly set-up and tear-downs are instituted to redirect the labor force. In the worst case, there is a complete work outage and people are sent home. Field Emergency – Customer equipment cannot be repaired This can severely impact customer satisfaction with not just your products, but also your company. Your reputation is on the line as some companies are so tightly connected together through industry trade connections or the supply chain in general; word of mouth from an unhappy customer to a prospective customer may kill future sales.
Nothing rattles a production operation more than a line-down emergency due to a component availability problem. Be prepared for the "Big One". There really is no better disaster preparedness than knowing when, where, and how to identify, qualify, and source alternate parts needed to resolve and rescue a factory in distress.
A solid engineer will try to find an alternate during the design stage of development. The Design Engineer takes ultimate responsibility for the product design including component selection. This does not let the Component Engineer off the hook, but the CE needs the Design Engineer's approval before adding to the AVL. Hopefully, the company is using formal ECO/ECN procedures with routing authorization signatures. There are services like Datasheets.com that list "suggested alternates and also Total Parts Plus, pay service, so there is no shortage of resources out there, but the buyer must also have the final approval of the Design Engineer before purchasing the part. Unless there is a routing specification on EOL Notices, the DE usually doesn't hear about an EOL situation on a mature product unless the subscriber to the service lets him or her know. Also, the Item Master database should also note EOL under "Part Status" field.
Thank you for joining me on this discussion. I would like to start by asking: When is an alternate part search performed and who does this? It is best not to have to do a part search as an emergency response but life happens and not having approved alternate parts plan is like living in an earthquake region without an emergency plan. You don't really know when the "big one" is going to hit, but it is best to be prepared by taking specific precautions to meet the potential disaster.
First, some housekeeping. Teh views expressed here today are those of the individuals and don't necessarily represent those of EBN and UBM LLC. To start, we will ask Douglas for some opening remarks to be followed by questions from EBN editors. Please hold your questions and comments until we open up the floor.
Welcome to today's Live Chat with Douglas Alexander, components engineer, consultant and regular blogger on EBN. Today, Douglas a veteran of the electronics industry will be addressing the subject of alternate parts sourcing and focusing on the challenges as well as opportunities in this area.
Good morning. This is Bolaji Ojo, editor in chief at EBN. Our Live Chat session with Douglas Alexander on the challenges and opportunities of alternate parts sourcing will begin in approximately 20 minutes.
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