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Component Purchasers’ Ultimate Nightmare

Everyone knows the worst-case scenario: A critical component cannot be found anywhere in the supply chain because it is no longer being produced, and even the original manufacturer has no clue as to how a buyer could solve the problem.

It's a problem many in the electronics industry grapple with every day. Here's how it goes: You have just released a product to manufacturing from R&D; Marketing has made preliminary product announcements (brochures, press releases, and ad placements in the various media); the factory has reviewed all the build and test specs; and the ball has been passed to Purchasing to send out the Request for Quotation (RFQ) and assess the MRP status on the parts already in the Item Master showing materials on order and on hand.

Everything looks normal so far. But then you hit an unexpected snag. One-by-one, the RFQs from vendors and suppliers come back with the various costs and availabilities, but one part comes up as “No BID” from all distributors — not even the original part-maker has any inventory in stock. Purchasing starts to call around to find out more details and discovers that the part went “end of life” (EOL) over a year ago, and the last-time-buys expired before the bill-of-materials (BOM) was released from R&D to production. I did say “worst case.” But, as we all know, this really does happen, and all too frequently. What really happened?

The design engineer (DE) found a part number on the Item Master, retrieved it from the stockroom, and began to build the first breadboards or prototypes. The DE knows he may go through several iterations of the design and is planning for a minimum number of board spins. When he checks out the engineering stock quantity, he gets enough parts to stock the parts bins, and he is off to the races. He pulls the part specification either from Document Control or an attachment to the Part Master software tool, or he goes online and downloads the datasheet from a service like Datasheets.com, which claims over 180 million part documents in its archive. Any new-to-the-company parts are researched very carefully and qualified for use by the DE, Purchasing, and the component engineer. Again, the focus is on new parts.

As the development progresses, the factory has bigger fish to fry, and Engineering is working against a schedule agreed upon by management across many company departments. The message is: “Leave the engineers alone and let them do their work. They have a deadline to meet.” The materials department is focused on existing product factory forecast and orders. As the Buyer becomes aware of the part unavailability, a red flag goes up and a decision must be made quickly. This usually involves two immediate possibilities: 1) Can the DE or CE find another substitute part quickly? or 2), Can Purchasing try to find any stock from any source, gray market included? (The gray market is becoming an increasingly dangerous alternative as part counterfeiters thrive in this venue.) (See: Counterfeiters Meet Their Match in DNA Tagging.)

This did happen to an engineer friend who works at a world-class company we would all quickly recognize. The offending part was a Xilinx Virtex 2 series FPGA, and the DE had not been told that Xilinx had released obsolescence notices with the last-time-buy information over a year previous to this fire drill. The company had been using the Virtex part on several of its board designs, and the core logic was “cut and pasted” from an earlier FPGA design to facilitate R&D development. Let me be clear. This new board had several Virtex parts using old cores lifted from previous designs, so the designs had already been proven.

Now, anyone working with Ball Grid Array (BGA) packaging knows that trying to find another manufacturer's part and package with the same pin count and pin-callouts is nearly impossible. When the engineer heard about the FPGA's unobtainability, he hit the roof. Nobody had told him not to use the part in new designs. The engineer became so upset with Xilinx that he switched to Altera and swore never to do business with Xilinx again. I asked him if he had told Xilinx about his discontinuing the use of its products and he said, “It wouldn't do any good. They don't care.” I did not take the conversation any further, but we all know it was not Xilinx's fault at all.

If we analyze this at the systems level, we find that there were several omissions in procedures that could have spared this company a lot of money, time, and anguish. Here is a shortlist. You may think of others:

  1. The company did not have a functional, organized part obsolescence management process.
  2. The company did not receive an obsolescence (EOL) notice.
  3. The company did not incorporate a “Materials Strategy Procedure” in its development cycle.
  4. The part in the Item Master was not flagged as going EOL.
  5. Purchasing had failed to notify engineering of its last “risk” purchase.
  6. The CAD system had not been updated to eliminate the part number from new designs.
  7. Materials did not participate in any New Product Introduction (NPI) or Concurrent Engineering meetings.
  8. EOL notices were ignored.
  9. Everyone assumed incorrectly that the Item Master had been maintained and kept current.
  10. All of the above.

When you think about how much finger-pointing goes on in a situation like this, the cost to the company is not just measured in scrambled resources: There is the intangible economic hit brought about by an atmosphere of distrust in the company's existing processes and procedures. The design engineer most likely took the blame and is not the happiest camper in the park.

At the very least, a company should employ the use of a part alert service such as EEContent.com, Total Parts Plus, IHS, or a number of others that exist to prevent these kinds of wildfires. Don't let your company get burned. Be sure you have a service that pushes to your email any PCNs, EOLs, and other critical alerts that are matched up to your Item Master or BOM part listings. Failing to do so will put your product's continuing availability in jeopardy.

The next Best-Practices article will cover what is involved in a Materials Strategy Procedure.

24 comments on “Component Purchasers’ Ultimate Nightmare

  1. Nemos
    April 16, 2012

    Very nice article,  I think the key part to solve and to avoid situation like the above is to update and to connect the CAD software with the parts of the stock house. It is the only way if you want to avoid having EOL parts in your design.

  2. dalexander
    April 16, 2012

    Nemos,

    That is exactly right. The CAD program should incorporate the company's internal part numbers to avoid any confusion. CAD is always on the alert circulations and when the Design Engineer uses a new part, the CAD folks should update their libraries concurrent with the Part's approval.

  3. Himanshugupta
    April 17, 2012

    the first two bullets are crucial for not loosing a customer. Usually, if the company notifies its current and previous part purchaser company then the buyer company can keep an inventory, in case the obselete part is crucial. But if an engineer is working on a new design then it might be diffcult to keep a track of the parts that have gone obsolete.
  4. Barbara Jorgensen
    April 17, 2012

    With the population of part numbers out there–including the fact that two numbers may be assigned the same part to ID on as RoHS-compliant–it is easy to see how easily this can happen. Suppliers put out EOL notices and for the most part are “passive” about them–if customers want the information they can go find it. Others are active–they push the EOL out to known customers. Companies that cull this information and centralize it are providing a real service, but even they can't be certain they have every EOL available.

  5. rohscompliant
    April 17, 2012

     Can Purchasing try to find any stock from any source, gray market included? (The gray market is becoming an increasingly dangerous alternative as part counterfeiters thrive in this venue.)

    Legitimate U.S.A. independent “grey” market disti's are one of YOUR 1st lines of defense when it comes to identifying who is selling and what are counterfit parts. More commercial and mil / aero OEM's and their CM's are turning to this market when the chip mfg's obsolete a part and it disappears from the 'normal' supply chain.

    Many of us, in this specific industry, have partnered with industry leading test houses to combat and identify counterfeit or sub standard parts.

  6. Michal Mondek
    April 17, 2012

    Hi

    When I'm reading this arcticle I'm feeling nervous, because this is realy true.Everybody doing same fault, they are forgot to use life cycle management tools provided by 3rd part comapany. I know this consume money, it is payed services.This service can be undestand like waste of time but this is wrong interpreting. From the long time view it can bring more benefits like prevent to use NRND components, autoamtic ALERTS about PCN, PDN, EOL of the components in BOMs and ERPs.I know two good provider of this services, IHS and Silicon expert.Silicon expert have toll call BOM manager , yu can use trial demo and check how they are working…Other possibility is to hire army of component engineer which will doing scaning of the MPNs in ERP database and looking for EOL, PCN, PDN in a manufacturers pages.They can have at each manufacturer own account to PCN service if MFG have this possibility.Those account will sent automatic email to Component engineer mailbox and they will have daily hundred and hundred PCN, EOL, PDN messaged for analyzing…this is the worst scanario…welcome in real electronics industry life

  7. dalexander
    April 17, 2012

    Barbara,

    I can't begin to tell you how frustrating it is to find out that a recent design is in danger of not being able to ship because of a missed EOL. The distributors typically don't let their customer's know about EOLs and for the smaller companies, the factories are not aware of who is using their parts. Consequently, they do not push EOL or other PCN alerts to the end users. PCNAlert was a life saver for me when I was the components guy at Microsoft. Everyday I would receive ALL alerts against any parts on any BOMs I had uploaded to PCNAlert. I never had another EOL line-down outage ever again. PCNAlert was sold to IHS, and now EEContent.com, founded by the former CEO of PCNAlert, is one of the companies that are saving the day…daily.

  8. prabhakar_deosthali
    April 18, 2012

    As I understand from  this article, it is clear that , for 100 % assurance against any oversight in using an EOL part in a design, one must run his BOM for the new design through the EEcontent.com site before releasing the same for purchase action.  This will filter out any EOL parts inadvertantly used and force the designer to think again for the alternate parts .

  9. William K.
    April 18, 2012

    I have been down that trail with a product design that I inherited from an engineer who left under unpleasant circumstances. The instrument amp IC that he used was out of production and the US government had purchased all available devices for their use.

    I learned from that, and developed a policy that any component that is not multiple sourced must be verified as an ongoing product by the manufacturer. Analog Devices was very good about providing that information, some others have not been, with the result that their product is not on my design's BOM. I don't depend on purchasing or third parties to make that inquiry, it is something that I do myself.

    Not only does it save me from a lot of grief and pain, it also allows some price shopping and makes my designs less expensive to produce. 

  10. Barbara Jorgensen
    April 18, 2012

    Douglas touched on a point about CAD and I'd like to add some input: most CAD programs have to be manually updated by users and don't automatically refresh. And, for security and other reasons, CAD tools don't go out “searching” for EOL or part number data. Premier Farnell/element14 has done something I think is pretty cool: if you use the CAD program on the Knode site, the program will update itself with information as it becomes available to Premier Farnell. Distributors often get EOL and PCN notices directly from suppliers because they act as an extension of suppliers' salesforces. I'm not sure if EagleCAD–the tool on element14's site–refreshes lines not carried by PF/elemnt14, but if it isn't, I'm sure that will happen eventually. Distributors are trying to become increasingly agnostic about parts data: although distrbutors are charged with helping suppliers, they better serve customers if they can provide information on all parts, not just the parts they are franchised for.

  11. cliffk3ll
    April 18, 2012

    To be honest, no service can claim 100% assurance, but because PCN/EOL changes happen daily, it is wise to run a scrub during each phase of design to supply and before manufacturing runs to minimize downstream issues during the BOM lifecycle.

    Even after running the scrubbing process, the BOM should be set up for automatic monitoring so alerts can be proactively delivered to all of the stakeholders (design, supply, manufacturing) when new PCN/EOL changes are generated.

  12. surferdude
    April 18, 2012

    There is a third alternative. I work for Twilight Technology, Inc in Anaheim CA. that re-engineers obsoleted or EOL products for customers who need to extend the life of their product or are caught in the  ever growing component availability pothole. EOL does not always mean End of Life as we know it! Sometimes a design could be hit with several notices when there are simple reasonable cost replacement alternatives available but are unknown because it takes an engineer to figure it out. i.e. The example of the FPGA manufacturer EOL a particular package type or lower gate density device. The larger gate density part can be put onto an adapter, pinned out and with the same footprint as the EOL device. I have done this several times for customers. Memory makes up a large part of most digital systems. An easy fix for lower density devices that go obsolete is to package larger density die, but waste half or more of the memory when bonding it out and provide a drop in replacement. There are replacements suggested by the information services and then there are value added replacements that Twilight provide. I welcome any challenges!

  13. dalexander
    April 18, 2012

    Surferdude,

    When you replace an obsolete part with your own redesign, do you make these parts available to the general public or are they specific to the customer who has requested your services?

  14. bolaji ojo
    April 18, 2012

    Surferdude, Thank you for this important contribution. In fact, I would like to put a twist on your comments and say that in the materials business, end-of-life (EOL) notice shouldn't translate into termination. There are different ways to keep a particular equipment going for decades with the right input from companies that have the capability to manufacture the required components. End-of-life from one supplier can easily mean BOL (beginning-of-life) for another supplier. It might seem like marginal business but it is critical business and support for OEMs.

  15. surferdude
    April 18, 2012

    Most of the time they are available to the general public. On a few occasions, for competitive edge reasons, a customer will want to retain the rights to the design and we will agree to it. That is usually in very special circumstances.

  16. dalexander
    April 18, 2012

    When you make them available to the general public, do you use your own part numberwith your own datasheet? How would someone know there is a part out there already made that will replace an EOL part? How many parts do you have available know and what are the industry cross reference numbers?

  17. surferdude
    April 18, 2012

    We are a small firm with limited engineering staff. We do not always produce a new datasheet. Typically,we provide certificate of conformance to the origional Mfr's Datasheet. We will assign a Twilight part number, but it is typically the same basic part no. as the origional device except a 'TT' prefix instead of the other Mfr's prefix.If we feel that there is a larger market for the device, we would generate a datasheets and marketing material, adding it to our standard product offering. Honestly, we don't do a real good job in letting the industry know what exact part numbers we have provided replacement solutions for previously. I would say we market ourselves as after market solution provider service first and have a short list of typical products we continue to support. We do need to balance resources with demand so we cannot be all things to all people. Our reputation has driven our growth and repeat  sales. We are working to improve our communcation with the industry on what obsolete or EOL products we have available.

  18. elctrnx_lyf
    April 19, 2012

    This article explains a real practical problems in an organization that doesn't employ right people to manage EOL and Obsolscense parts. It is very important for any company to have focussed people working in this area to manufacture the product without any issues.  

  19. syedzunair
    April 19, 2012

    @surferdude:

    Do you think an Electronic Data Interchange (EDI) with other companies help your cause? I think it will make life easier for your company and coordination will become much easier. Using EDI you can float a list of EOL products and inform other industry partners about the products going down. 

  20. dalexander
    April 19, 2012

    Syredzunair,

    Using a CM with a direct EDI is a good solution for immediate communication and data updates. The EDI should contain an alert module for when the OEM sends over an ECO/ECN. Having said that, computers are not foolproof, so I suggest whenever a time critical request is sent to the CM, there is a follow up email or voice communication to make sure the EDI system is in sync with the OEM requirements. I have seen where a line nedded to be stopped and nobody was monitoring the EDI system. We never want to become totally dependent upon computers anyway. That's a dasngerous precedent for all types of business…not just Electronics.

  21. syedzunair
    April 19, 2012

    @Douglas: 

    I agree with you on using a combination of email communication with EDI. It will ensure that the information has been sent through on two channels and therefore will have a greater chance of actually being read/used. 

    On the other hand, I would disagree with you on being totally dependent upon computers for business purposes. Traditionally, people argued about the advantages that automation (based on computing) brought to the enterprise. However, today most enterprises have learnt that deploying enterprise wide software system not only helps in effective management but also helps to reduce wastages and curtail costs. 

     

  22. Barbara Jorgensen
    April 19, 2012

    Interesting discussion. I'll admit I put too much faith in my computer, especially when it comes to assuming an e-mail has gone through. Now I check junk mail and quarantined mail daily so things don't languish too long.

    I hadn't though of EDI as a tool for EOL, but I guess that would make sense. The information would depend on how many suppliers you conduct EDI with, correct?

     

  23. dalexander
    April 19, 2012

    Barbara,

    I think you want to limit your EDI to trusted, main suppliers as much of the data exchanged is of a sensitive nature. The way we implemented EDI was with a long-term Contract Manager with emphasis on ECO and ECN management so volume production rework cost were minimized through instantaneous timely alerts of any changes to the product in house. We sent drawings, documents, and material notices that needed immediate attention. In turn, we got back confirmations of implementation cross checked with document numbers and revisions. If we didn't receive an acknowledgement email back from the CM, we would follow-up with a phone call to talk to our project lead resident at the CM location. Ultimately, a human has to make sure the EDI exchanges and instructions were happening in real time.

    This is what I meant by the statement about not relying on computers 100% of the time. There should always be a back-up plan if the Internet goes down or a server fails. We all know that happens.

  24. Barbara Jorgensen
    April 19, 2012

    Sounds like a good system. Getting information straight from the source is awlays preferable. I guess it gets down to the question of quality vs. quantity: EDI is great with the strategic and most important partners, but can't cover the world. A backup is needed. But that's the nature of the supply chain–otherwise, second-source agreements wouldn't exist.

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