A May 2012 report from the U.S. Senate’s Committee for Armed Services noted that of 1800 reported instances of counterfeit electronic components between 2009 and 2010, 30% were not obsolete. These parts were likely purchased based on price or availability not found in the franchised market—an inexcusable act. Buying in the independent market when not necessary increases the odds of getting counterfeit parts into your supply chain. It’s that simple. And the savings just does not pay off—especially if bad parts get into your supply chain.
For one thing, you are going to have to pay for excessive testing to prove the parts are counterfeit. You will also have to pay for rework, writing reports and meetings—not to mention all the explaining to your customers. The other big reason purchasers turn to the independent market is lead time; poor planning or wrong lead times in the system force many companies into the independent market to meet schedule.
I would like to offer a successful mitigation plan that will reduce the number of buys in the independent market and help purchasing organizations get their arms around obsolete parts and planning. Many companies have combined their planning with purchasing and now have buyer-planners who are expected to both purchase products and comply with the company’s counterfeit mitigation plan. My first piece of advice is to install a commodity specialist in obsolete electronics. Instead of trying to qualify 10 buyers in your supply chain to purchase obsolete electronics in the independent market—and keep them up-to-date on all the changes and recommendations by the many standard-setting organizations—it’s easier to have one or two well-trained obsolete electronic parts buyers.
Having these specialists can make improvements, but it’s just a start. Next, you’re going to have to have a proper counterfeit mitigation team, which should include the design engineer, the manufacturing engineer, the quality engineer, the component engineer and the project/sales manager. Companies that do not have all these titles on staff may need to double up on duties to cover all the bases. The team’s first task is to invest in an obsolete component tool, such as Silicone Experts or IHS or Total Parts Plus. All the current electronic bills of materials (BOMs) and spares assemblies should be loaded into the software program to identify which electronic parts are obsolete or going to be obsolete and which are end-of-life components. This can be done by the component engineer.
This software is a valuable tool; if you can’t afford it, many distributors offer BOM scrubbing, which allows users to upload bills of materials and track current information on their electronic components such as production status, datasheets, and product change notifications. Users receive early warning on end of life, and are able to view potential drop-in replacements as well as additional sources that offer equivalents, availability of electronic components, and environmental compliance data.
Next, the design engineer reviews the obsolete and soon-to-go end-of-life parts and identifies the biggest problem parts. Managing obsolete is not that big a job; once all the BOMs are scrubbed you should end up with a list of parts fewer than 10% of your BOMs. Your manufacturing engineer and quality engineer must be aware of the recommendations and training provided by the G19 committee in its AS5553 and AS6801 standards. The quality engineer will have to study and learn the latest inspection processes and recommendations from this organization. These engineers will also have to learn how to perform various other technical processes to meet specific customer needs.
The program manager will firm up the forecast, review the engineers’ recommendations and follow up with the customer. As one example, contractors’ assemblies used in the defense industry are often needed inside of lead time—sometimes you need to provide them within 18 weeks for parts that have 21- or 24-week lead times. The defense or prime contractor will release purchase orders for these parts ahead of the contract to cover long lead-time items. The contract manger can coordinate these purchase orders ahead of contracts.
The buyer should be providing resources, such as the manufacturer’s field application engineer’s recommendations, to the counterfeit mitigation team. The buyer’s job is to review the lead times regularly and make sure they are always up to date. Another valuable tool is a subscription to an inventory search engine. Net Components, which specializes in the independent market, and the Electronic Source Book (SourceESB) are good resources. Knowing the availability of the obsolete parts you categorized in the independent market can save you money and keep you ahead of the curve.
It’s also important to have regular meetings with your counterfeit mitigation team; this will go a long way in managing your obsolete, end-of-life and long lead-time parts and reduce purchases in the independent market. There is so much to learn from each team member. Again, we’re talking about less than 10% (hopefully) of your electronic parts in the design. Keeping close communication with your team can help keep those independent buys down and decrease the chance of finding a counterfeit part in your supply chain.
