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Obsolescence


PROCUREMENT STRATEGIES FOR OBSOLETE PARTS


The increasing amount of risk surrounding obsolescence in the electronic component supply chain requires a prudent procurement strategy that promotes adherence to the guidance given in SAE standards AS5553 and AS6081, which prioritizes purchasing through original component manufacturers or their authorized distribution partners.


Naturally, obsolescence complicates this approach.


The continual reduction of component lifecycles means that parts may not be available through authorized sources, requiring a much higher level of analysis and forecasting to plan for shortages, end­of­life situations and last­time buys, thus forcing buyers to go outside the preferred channels to the open market.


Many of the same vendor management principles


apply to both direct procurement by OEMs or contract manufacturers, as well as procurement by independent distributors.


Most quality independent distributors have developed


rigorous vendor management programs for dealing with large numbers of open market or non­authorized suppliers. This is a result of years of experience dealing with counterfeit and sub­ standard product in the supply chain, and an understanding that preventing non­conforming product is more cost effective than inspection and testing.


At 4 Star Electronics, a vendor assessment program has been


developed to score all suppliers, including authorized suppliers, based on a one hundred point scoring system. Some of the parameters factored into the scoring are:


• •


Historic quality and on­time delivery records


• Research in industry databases such as ERAI, GIDEP, and IDEA Certification to government trusted supplier programs such


as the DLA’s QSLD and QTSL • References from trading partners Certification to quality standards such as ISO 9001, AS9100,





ANSI/ESD S20.20, IDEA­STD­1010 • Compliance with industry­standard inspection methodologies • US ownership and stocking locations Surveys and on­site audits


• 22 | February 2014 4 Star office, San Clemente, California


Vendor management strategies can be complicated when the parts to be purchased are obsolete. 4 Star Electronics suggest some useful techniques


Once a new supplier is


added to the 4 Star approved vendor list, continual monitoring is performed to ensure real­time identification of issues affecting quality and delivery. Vendor ranking and scores are then made visible throughout the organization to assist the sales, purchasing and quality departments. This allows 4 Star to make sound business decisions and deliver the highest possible quality products to its customers.


Original equipment


manufacturers and contract manufacturers can use the same principles to develop their own vendor programs. These organizations typically have additional information on the eventual use of their products that can assist in developing risk mitigation practices, which makes it easier to make purchasing decisions.


While independent distributors may have many sources of


supply, including excess or surplus OEM inventory, OCM direct purchases, authorized distributors and multiple open market stocking sources, OEMs and CMs need to use some discretion when sourcing from the open market. There are two reasons for this: thorough management of a large number of vendors is difficult and costly, especially if the management process includes on­site audits; and utilizing a large number of broker or independent sources tends to drive up component costs when only a limited source of supply exists for an obsolete part.


As a result, the trend over the past few years has been for


OEMs to employ a limited number of trusted independent distributors that have been fully vetted whenever sourcing in the open market. This trend is likely to continue as more OEMs gain control over their vendors, as a way to reduce the risks associated with the procurement of obsolete parts.


www.4starelectronics.com www.electronics-sourcing.com


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