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Opportunities & Challenges in Alternate Parts Sourcing

Among the various day-to-day tasks for purchasing personnel are meetings with vendors and manufacturer's reps. Occasionally, the buyer will be asked by the vendor or rep for an opportunity to provide a second source for the parts that are on the company's Approved Vendors List (AVL) or Approved Manufacturers List (AML).

Given that it is always good discipline to have alternate sources for as many parts as possible in the Item Master, these few minutes with the potential second-source vendor have a very real potential for saving the company time and money, specifically in the instance where the original part on the AVL cannot be sourced when needed.

However, there are dangers to consider. The vendor wants to win any additional business, so unless you are on your technical toes, the possibility of getting incorrect “alternate” parts is high. The vendor may truly believe its parts are identical substitutes, but because it's not intimate with your designs or any of the electrical and physical parameters of your circuit requirements, the suggested alternates may be unsuitable.

Think of a PC mount, right angle, 9-Pin, male D-sub connector. Well, we all have them on our home computer, modem, or some other piece of common electronic equipment, so we are tempted to think, “You've seen one, and you've seen them all!” This is not the case. Usually the connector protrudes through a back panel at a specific height off the PCB. What if the standard D-sub has no standard height measurement from manufacturer to manufacturer? Obviously, there is a high possibility that the board stuffers won't catch the measurement difference, but as soon as the back panel is included in the assembly, you find the D-sub connector opening is misaligned and the connector cannot protrude through. I have seen this time and again with connectors from offshore manufacturers.

So, what happened? Your visiting vendor didn't do this on purpose. Obviously, some people did not do their homework. The purchasing person may not have the background knowledge or experience to look at all the part details and compare them with the AVL-listed part specifications, and because this second-source checking can become fairly involved, someone in the company has to be responsible for every part's approval before admittance to the AVL as an alternate part. This can be a very time-consuming process, so the more specific the work that can be pushed back to the vendor, the more efficient the internal qualification process becomes.

One standard operating procedure that I have used is to ask the vendor to download and complete this Sample Part Request form and attach one copy to every part being submitted for AVL qualification. I usually have all the candidate parts and forms in-house within two weeks after the initial meeting with the vendor. As you might imagine, the fields on the form for each part give a very early indication whether the parts would make suitable substitutes and warrant further investigation.

Let's look at what part specifications and requirements the form fields cover.

  • Contact information:
  • This includes representative/vendor name, company, address, phone, fax, email address, and who they made contact with in my company along with the date of this submittal.

  • Part identification:
  • Manufacturer's name, part number, description, and package case style.

  • My company's internal part number:
  • Manufacturer's name and part number the vendor is trying to match.

  • Quality assurance issues:
  • Temperature grade (commercial, military, or industrial), FIT/MTBF (reliability), and other — specify.

  • Availability:
  • Current lead-time, sole source (yes/no), production quantities available now, how long the part has been in production, anticipated end-of-life, availability through factory/distributor, name and phone numbers of distributors also carrying this part.

  • Cost information at quantities:
  • Budgetary – 100-250-500-1000-2500-5000-25,000, 50,000, and 100,000 plus.

  • Literature:
  • Attach data sheet and any application notes.

  • Sample count:
  • How many parts they are submitting for qualification, recommended handling procedures.

Now, you can quickly review the form and see if there is a business case for spending the time to qualify the parts.

With the specification sheets attached to the parts, you are now ready to forward this to component engineering to begin the internal process for tracking and testing the vendor's samples. Also, if you have assigned these forms and parts to a numbered Components Evaluation Request form, when the vendor calls you can quickly update him or her on the status of the qualification activities. All the preliminary verification work was performed by the vendor on his nickel and time.

You now have a hard copy record of critical business data for each part. You now have a means for quickly analyzing cost, availability, and lead-times. And, you now have an auditable, time- and resource-sensitive process underway with engineering because your accompanying CER form has a requested “complete by” date. When the vendor calls, you can quickly call engineering and ask for a progress report on CER #XXX and assess the progress quickly.

My next article will discuss the CER form and how to use it for maximum benefit.

6 comments on “Opportunities & Challenges in Alternate Parts Sourcing

  1. Barbara Jorgensen
    February 15, 2012

    Douglas: As a potential vendor, I wouldn't hesitate to provide the type of information you suggest. Even as a second source, there are few companies that can afford to ignore potential relationships. In addition, once a vendor has completed such a form, the information is readily aviailable the next time a potential customer comes along.

    As much as I hate filling out forms, if I am really serious about something, I do it.

  2. ITempire
    February 16, 2012

    I would like to add that when the vendor provides the filled out forms (that contain fields mentioned by Douglas), the company should ideally punch them in the database and the data should be kept, most importantly, in a well designed structured format. Supply chain management system usage would be ideal. Generating reports from such a system, at the time when requirement arises, that analyzes the offerings made by different vendors where the data is appropriately put in a comparable format with all specifications displayed (vendor-wise) would enhance the preciseness of the decision by purchasing guyz.

  3. dalexander
    February 16, 2012

    WaqasAltaf, Good point. In the past, I have used the form generator in Adobe Acrobat which makes the fields live. At the bottom of the form, I add the supplied submit button which is a hyperlink to an email address where the data from each field on the form is sent back to me in an XML format for auto database insertion. The practice of assigning a sequenced form number uses that pre-assigned number as the “key” for MS Access DB. Attaching the forms to the parts and using them as a Traveller allows the tracking of the qualification process and the parts. I neglected to mention, that I always pulled a representative sample of the sample parts and put them in a sample bin file identified with the assigned tracking number on the bin drawer. That way, I kept the original part on file for archival reference. There will be more about this practice in the next article describing the companion form called “The Component Evaluation Request, (CER). This form serves as the qualification routing document. The form generator in Acrobat can start with a paper version and it recognizes what “blanks” can be turned into fields”. Any of the forms freely downloadable from http://www.componentsengineering.com can be made “live” using Acrobat. Thank you for that important reminder.

  4. dalexander
    February 16, 2012

    Barbara, To your point, I have never had a supplier push back and not use the form. They seem to appreciate having the specific guidance a form offer, knowing it is the front end of a tracking system that guarantees their parts won't be lost in the shuffle of the day-to-day. Also, because the forms on the website have CE Consultants and my name as the author, they are designed to be re-personalized by anyone who wants to use them. So I suggest that each person that downloads the form, customize them to their own company's particulars, and repost them as XML ready. Then instruct the supplier to submit both hard copy with the sample parts and email transmittal copies using the added “submit” button at the bottom of each form. It really makes a big difference as to how much time and effort goes into the qualification process. Often, while completing the fields and reviewing the datasheets, the vendor would discover their parts were not substitutes and everyone involved would be spared unnecessary efforts.

  5. bolaji ojo
    February 17, 2012

    Douglas, The blog discussed the alternate parts sourcing from the perspective of an OEM design/procurement engineering team. What happens when the job is outsourced to a third-party such as a contract manufacturer or a components distributor?

  6. dalexander
    February 17, 2012

    Bolaji,

    It has been my experience that most Contract Manufacturers have instituted best practice disciplines internally to manage their own processes and provide a basic business competency presentation to their customers. In the case of a consignment operation where the customer provides the Materials, Bills of Materials, and Pick 'n Place data on a build-by-build basis, it is the customer's job to make sure that the CM does not substitute any parts without specific permission from the customer. The CM's internal kit audit will most likely verify every manufacturer's part on the BOM before any assembly operation begins. Often times, if the manufacturer's number on the BOM is even off by one alpha or numeric character, the customer will receive a notification of the variance and will have to sign a go-ahead or stop build order before any further work is performed by the CM. This is a safety valve assuring that the wrong parts do not get stuffed or used in any assembly. As there are still non RoHS parts being sold or in “left over” inventory, often a part has a package designation that stipulates no lead or leaded parts in the suffix of the part number. This kind of kit audit will detect a part number variance and so a waiver or correction request will be sent to the customer.

    In the event of a turnky operation where the CM is buying all the parts and managing change control on BOMs and drawings, the CM and the customer have taken a long time to build up communications and processes that may include ECO/ECN management to keep the current build to the latest revision. Any changes from the customer are tracked via a Engineering Change Order or Temporary Manufacturing  Deviation and forwarded to the CM who acknowledges the change in writen or online means. When the Customer and the CM are joined at the hip, the CM has a licensed, limited access seat on the cutomers EMS system which includes all routing authorizations for ECOs/ECNs. The CM is one of the signatories on the change order routing so the CM remains current with the customer's requirements. When the customer makes an introduction,change, or deletion for a part or an assembly, then all of the internal controls and processes must be adhered to so the CM is not blamed or excused for an unauthorized substitution. 

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