Anyone delivering a product that relies on the electronics industry is acutely aware of the supply chain issues and parts shortages. The tight supply of components has heavily impacted the ability to produce printed circuit board assemblies, with ripple effects touching every sector that depends on electronic controls in its finished goods and devices. No semiconductor company is immune, large or small, including big names such as Microchip Technology, Analog Devices/Linear Technology, NXP Semiconductors, STMicroelectronics, and others.
Adding to the chaos, many OEMs, anxious to meet deadlines, double- or triple-ordered components in hopes at least one order might make it through the system. This created the Bullwhip Effect mentioned in our blog article Navigating the Supply Chain Crisis. Shortages still exist in many areas, while overstock of delivered parts awaiting the remaining components of a Bill of Material (BOM) are lining the racks of many suppliers.
That said, good news has emerged as some critical parts supply issues appear to be easing up. Emphasis on “some.” In this report When Will the Chip Shortage End? by consulting firm Bain & Company, we see relief on certain components, with others still not expected to recover until 2024 or beyond.
As companies continue to navigate these challenges, there are proactive measures to mitigate the effects of the current supply chain’s long and unpredictable pathway – including designing or re-designing for supply chain availability.
Designing to mitigate ever-increasing End-of-Life (EOL) notifications
Unsurprisingly, the myriad factors affecting the supply chain have prompted several companies to issue EOL notices on mature and less profitable components. The move toward producing only those parts with the highest demand is real and required to meet capacity constraints.
To alleviate the overstocking and scarcity that stems from EOL effects, consider designing your electronic assemblies in a way that doesn’t restrict common components with single-source directives. And by expanding your approved vendor list ahead of time, you’re better prepared for the scramble when EOLs are inevitably issued.
CO-AX diversifies its supply partners and uses industry-leading software to manage customer BOMs and obsolescence issues. Our design engineering and supply chain teams will guide you through EOL notifications, suggesting available alternatives for many commodity parts, such as resistors, capacitors, and connectors. We ensure substitute components meet ISO 9001 and any other regulatory standards and requirements for your industry. In addition, we continually monitor orders with vendors to ensure parts are hitting the confirmed delivery dates.
Soaring chip prices – the other elephant in the room
We’ve already witnessed a surge in chip prices over the past two years and can expect those to continue. Rising wages and the cost of raw materials used in the manufacture of semiconductors have gone up as much as 20%, with experts predicting additional increases in 2023.
While global inflation cannot be fully deterred with substitute components, the ability to switch to a functionally equivalent part may improve your margins and free-up resources for additional R&D projects.
CO-AX takes a proactive approach to BOM cost management. Our Quarterly Review process ensures you stay informed of fluctuating parts and labor costs, and our culture of transparency in all we do prevents unwanted surprises.
Leveraging design engineering to shorten time to market
Design for manufacturing flexibility is paramount to continuing to thrive amidst the ongoing chip shortages. Even the simplest design changes on select components will often reduce lead times from 50 to 20 weeks and help you deliver your products within the desired timeframe. And while designing for supply chain availability may seem daunting, working with a qualified electronics contract manufacturer (CM) can help you achieve your goals for functionality, quality, and deliverability.
A knowledgeable CM brings enormous value to designing new electronic assemblies. From Design for Manufacturability (DFM) and BOM evaluation to prototyping to production, a capable contract manufacturer provides many tools and resources that can shorten your time to market. Leveraging one with access to a diverse list of global suppliers also opens new pathways to parts availability.
On existing designs for manufacturing, a CM with in-house design engineering capabilities provides much-needed support for your internal engineering teams to make designing for availability efficient. A competent CM partner works closely with you to ensure all regulatory standards are met, components are fully traceable, and all your documentation is up to date.
Trusted Electronics Contract Manufacturing
At CO-AX, we have a dedicated prototyping line to quickly build units to test. Whether a new or modified design, our engineers assess your design and then create prototypes to ensure your product can be assembled without defects or inefficiencies. We aim to offer sound engineering advice to foster a shorter production schedule while simultaneously managing your NRE costs.
CO-AX has more than 25 years of experience navigating parts procurement for printed circuit board assemblies (PCBAs) and can also help guide customer decisions for parts availability to expedite production. We can help substitute common components for existing builds or provide design engineering advice for new concepts – enabling design for supply chain availability and the smoothest road to market.
Whether designing a new board or ordering a restock, the best practice to optimize your assembly and hit production targets is to engage with a knowledgeable partner like CO-AX for an agile, flexible, and productive approach to supply chain management.
Reach out to us for additional information on electronics contract manufacturing.
