3 Simple Characteristics of a Successful Obsolescence Management Strategy
An obsolescence management strategy that mitigates the issues associated with end-of-life electronic components does not mean having the ability to quickly negotiate a last time buy, nor does it mean having long-term contracts with preferred OCM partners to fulfill inventory over a long-term period. It also doesn’t mean having the infrastructure to know when a component has been obsoleted the moment a PCN is issued.
An obsolescence management strategy is a combination of all of these things — and much more.
The electronic components you deem necessary in initial product designs, the companies you choose to involve in your supply chain at any capacity, the factors you consider when forecasting the life cycle of your product, the infrastructure you have available to store critical inventory once acquired, the options you have available to increase or decrease on-hand inventory if needed — they all play a role, but none of them eliminate the obsolescence problem on their own. To turn obsolescence into a deflationary issue, it must be accepted as a greater whole comprised of many moving parts. Should one of these parts not do their job, everything around it will feel the effects.
To simplify the complicated definition of an obsolescence management strategy, it helps to look at it from three different angles, each of which we have taken the time to highlight below:
1. Supply Chain Transparency
The ideal obsolescence management strategy requires transparency from all parties involved in the supply chain. These parties include the equipment manufacturers (OEMs) who design the consumer product, the EMS providers who assemble them, and the component manufacturers (OCMs) who provide the critical components necessary to bring the OEM’s vision to life. No role is more important than the other, and all must hold themselves accountable to the absolute highest standard.
At the point of origin of a product’s conception, establish clear, defined, and open communication channels between not just those willing to talk to you, but those that have the authority and oversight to make meaningful decisions that have an immediate impact on final output — in whatever form that may take. So many obsolescence-based disruptions can be avoided between OCMs, EMS providers, and OEMs by taking this simplest of steps to keep one another informed.
2. Supply Chain Efficiency
When efficiency is discussed in the manufacturing industry, it commonly refers to the efficiency of the products they are creating — although if a supply chain is not prepared to bring these products to the consumer, it doesn’t matter how innovative the product may be. Both from a technical standpoint and human standpoint, supply chains of all shapes and sizes must make every effort to maintain peak performance at all times. This means having the proper infrastructure to manufacture (equipment, qualified professionals, etc.) store (warehousing, specialized equipment for critical inventory), and fulfill inventory wherever it’s needed, whenever it’s needed. Part of the secret to overcoming issues related to obsolescence is maximizing capabilities of what you already have on hand; when additional variables outside of component obsolescence are in play and force you to juggle priorities, your path to success becomes that much more difficult.
3. Supply Chain Flexibility
Not even the most efficient supply chains can claim to be immune to all forms of risk — although the most successful obsolescence management strategies in the world pride themselves on appearing so.
They accomplish this feat by wisely using on-hand working capital in a proactive manner that maximizes downstream revenue potential. This approach can include stockpiling finite raw materials, launching new warehousing and distribution centers in diverse locales, and even supply chain consolidation through the acquisition of component manufacturers who would benefit from the resources of a market-leading OEM (who, in turn, benefit from the ownership of new IPs now unavailable to industry competitors). It’s impossible to predict the future, but the proper investments in the proper places can make all the difference.
Bonus: Supply Chain Trust
There is an inherent paradox involved with the supply chain concept; while so many associate successful obsolescence management strategies with analytics, efficient manufacturing equipment, and other such technical factors, all supply chains are still built from the same DNA of Henry Ford’s original model. What made his system work? Simple: trust in people to do their job, and do it right.
As one of the world’s premier supply chain partners with some of the most proactive analytics-based strategies on the market, we at Partstat still believe that supply chains are only as successful as the people within them allow them to be. Just as we have made the human element essential to our solutions, we believe that the success of any given supply chain is dependent on our ability as social animals to trust and rely on one another for support.
Every other aspect of a supply chain, regardless of industry or scale, is supplementary to these simplest of simple ideas. And it’s Partstat’s job, through our solutions, to play a vital role in helping our customers achieve their full potential.