Choosing the Right BOM Monitoring Tool for Obsolescence Management
Historically, BOM Monitoring services have been used to help original equipment manufacturers, or OEMs, react to obsolescence in electronic components when it occurs. Upon confirmation of a critical component’s or semiconductor’s end of life, manufacturers would then either initiate a last time buy to secure sufficient inventory to support the entire life cycle of their product, or research the market for a replacement part.
But as the life cycle mismatch between critical components and the products they support continues to grow – especially in the medical, aerospace, and defense fields – taking a strictly reactive approach to obsolescence is no longer sufficient for manufacturers. In 2016 alone, approximately half of all end of life components were transitioned into obsolescence unaccompanied by a product change notification (PCN). Of these components, over 40 percent had an immediate last time buy date, which grants the vast majority of OEMs no time to determine an optimal strategy.
To maximize the investment of precious working capital, a successful obsolescence management system must be not just reactive, but proactive.
Proactive Obsolescence Management
Instead of taking immediate action upon notice of a component’s transition to end of life, a proactive obsolescence management strategy revolves around predicting the component’s life cycle before a last time buy or product redesign becomes necessary. Knowing about impending obsolescence months – or even years – in advance allows OEMs a buffer time that can be used to allocate the resources needed to ensure long-term business continuity.
In practice, however, implementing the proper infrastructure to predict obsolescence can often prove costly in more ways than one. Not only does the investment into the necessary big data from industry analysts represent a significant financial investment, but interpreting meaning from the big data’s findings can be a time-consuming endeavor. If the OEM’s conclusions prove inaccurate, the consequences could include overestimating inventory needs, which can result in additional warehousing and fulfillment costs. On average, proper climate-controlled warehousing of generic components such as random access memory chips cost OEMs an additional 25 percent of the component’s value annually. For moisture-sensitive critical components such as ASICs that require strictly regulated storage procedures, that cost only increases.
The Partstat BOM Monitoring Solution
The goal of our BOM Monitoring Solution has always been to offer OEMs and EMS providers a way to seamlessly implement a proactive supply chain infrastructure that can not only accurately predict obsolescence, but do so in a streamlined, user-friendly, and cost-efficient manner.
Our approach to big data is a good reflection of this goal. For over a decade, we have been collecting data on electronic components and semiconductors. In fact, our open-source big data warehouse Partstat consists of over 8 billion rows of current historical data on over 25 million unique electronic components and semiconductors. From there, this data collected from over 2,000 participating global suppliers is combined with our own advanced algorithms which allow customers to easily price, monitor, predict, and, with our help, confirm the life cycle status of virtually any electronic component, semiconductor, or peripheral product in a real-time model.
But instead of offering our findings to customers to interpret using their own finite resources, Partstat offers an additional human element in the form of our own industry experience. Each bill of materials, once uploaded, is assigned to a product specialist that will confirm each alert, as well as provide a detailed life cycle report at the point of prediction or notice. This allows OEMs and EMS providers to allocate more resources toward what they do best – designing and manufacturing innovative new products that push our society forward.
Implementing a proactive, technologically-advanced obsolescence management system does not have to consume additional working capital, nor does it need to occupy your employees’ limited time and energy. Our BOM Monitoring Solution proves this, and since its introduction, we have helped hundreds of manufacturers turn obsolescence from a significant source of financial strain into a deflationary issue.
When obsolescence strikes, how will your company be ready?