BOM Monitoring: Putting Obsolescence Management Back in OEM Hands

By Logan Wamsley

Traditionally, equipment manufacturers have viewed obsolescence management as a strategy that requires implementation only when the market explicitly declares it necessary. Through a product change notification (PCN) or other similar channel, the buyer would be notified when a pivot is necessary.

Under certain circumstances, this is not necessarily a poor strategy — such a model has cemented itself as an industry standard for the last 30-40 years — but it is one that, for better or worse, relies on several variables outside the control of the equipment manufacturer. The electronic component supplier market has become more competitive, volatile, and prone to unexpected disruption, which by extension has left the integrity of several buyer supply chains in jeopardy.

For example, one such variable is simple consumer demand. Automotive, consumer electronics, and IoT markets in the last three years have grown beyond even the most conservative estimates, and electronic component manufacturers (OCMs), wary of escalating production too quickly in response. Even a decade following the beginning of “The Great Recession,” the memory of thousands of OCMs left with surplus inventory in a suddenly diminished market is still potent to many. Even as lead times for components such as simple resistors have escalated in some cases over 70 weeks, or sensors over 45 weeks, the idea of expanding capacity for OCMs is still less preferable if it means increased overall risk. As a result of this dilemma, OEMs are left nearly entirely dependent on component availability determined by what the component manufacturer is willing to produce — and by the time the OEM realizes that OCM product availability does not meet production needs, it is too late to consider alternatives without sacrificing significant capital or accumulating additional risk.

In the future, OEMs have to accept that this reactionary form of obsolescence management, while sufficient in a high inventory volume, low competition market that works in their favor, is no longer going to be enough — especially as industry projections seem to point to demand continuing to increase even as OCM capacity gradually expands. This requires the acceptance of a new, proactive line of thinking involving obsolescence management strategies that stay ahead of potential disruptions instead of responding to them.

At first glance, such a suggestion might seem somewhat ivory tower-esque; while it is easy to say OEMs should be more proactive in their obsolescence management approach, it also implies that supply chain professionals would have to work even harder. Maintaining the pulse of each individual component market is an expensive, full-time responsibility that requires extensive email chains, a large quantity of phone calls, and significant investment in acquiring accurate real-time data. In some cases, this responsibility might also require learning new skills related to software and data analysis, or even hiring new employees who have such skills. Maintaining a reactive approach, even if is no longer feasible, still has appeal in that it’s easy; additional work is only needed should a disruption occur.

Partstat BOM Monitoring is designed to be an answer to this dilemma, providing OEMs an accurate, proactive solution that both monitors and predicts obsolescence and allocation on their bill of material without the need for any additional resources. In one simple interface, Partstat allocates over 50 billion points of Big Data on over 23 million individual electronic components and semiconductors into a series of easy-to-read trending charts, each of which provides detailed information regarding inventory quantities, average lead times, and average prices. This, along with the Partstat team’s ability to confirm component lifecycles on the customer’s behalf, allows the OEM to realize all of the benefits of a proactive obsolescence management strategy that stays ahead of the market, while avoiding all of the reservations one may have making such a transition.

Despite recent issues involving component shortages and unreasonable lead times, the current state of the market might just be the catalyst OEMs need to regain control of their own destiny. A proactive obsolescence management strategy allows manufacturers to leverage the market to meet their needs, rather than bending to its volatile will. The future is a proactive one, and BOM Monitoring is a good place to start preparing.