With the current component shortage and obsolescence challenges present in today’s manufacturing climate, transparency is needed now more than ever. Transparency not just regarding knowledge of where components originated, but transparency in all aspects of supply chain management. Here are three tips you can implement today to help your company accomplish this.
Communication is often lacking in supply chains. OEMs and EMS providers often report understandable frustration over sudden and unexpected PCNs. “How am I supposed to meet production and service commitments if I am given no warning?” they may ask. “How will I know if the components my product relies on are transitioning to obsolescence?” It’s not a good position to be in.
This lack of communication has ramifications down the road for manufacturers. For example, if manufacturers don’t secure the inventory needed to support production and long-term service commitments, they are more susceptible to making counterfeit purchases on the grey market. This all points to the timely need for consistent and accurate information-sharing on all levels of the supply chain, from OCM to authorized distributor to EMS provider to OEM.
East West Manufacturing describes this as building not a supply chain, but a supply “network.” “Start with those vendors whose involvement affects your bottom line the most,” they recommmend. “Approach them with an intention of collaboration and mutually beneficial gain. Take an incremental approach, focusing first on key vendors and then moving through your network based on each supplier’s impact on your processes.”
It goes without saying that with shortages and obsolescence on the rise, a growing number of counterfeits are entering the supply chain.
“Current estimates for the annual loss to the electronics industry due to counterfeit components is north of $5 billion,” says Bill Cardoso of Creative Electron. “With rewards that high, it’s no surprise that criminal enterprises are getting more and more sophisticated in their efforts to cash in on counterfeit parts.”
Ensuring counterfeits do not enter your supply chain requires a counterfeit mitigation strategy, involving actions such as using authorized channel partners for component sourcing needs. Not only this, but you need to identify if your supply chain partners have a defined process in place for mitigating counterfeits, and if so, a thorough understanding of how their process works. Are the protocols consistent, logged appropriately, etc.?
In all stages of the manufacturing process, the need for transparency is vital — especially when critical inventory approaches end-of-life. Dealing with various vendor channels in a scramble to secure inventory is not only stressful, but carries significant risk.
Last time buys are a common strategy manufacturers use when obsolescence is approaching for critical inventory. Instead of juggling multiple lines of communication with numerous vendors post-LTB date, an EDX Last Time Buy allows you to maintain a single, clean channel of communication with a trusted partner.
As part of our Last Time Buy Solutions, we will purchase, own, warehouse, and provide global custom fulfillment of LTB inventory on up to a 10-year schedule to support production and long-term service commitments. We do this with our own capital, so you don’t have to spend yours.
Read more about the benefits of an EDX Last Time Buy and supply chain best practices: