OEMs: Regain Control of Your Supply Chain and Predict Obsolescence with BOM Monitoring

By Logan Wamsley

In a traditional supply chain, OEMs take a decidedly reactionary approach toward component obsolescence. Detailed procedures such as a last time buy solution may be in place to help their supply chains pivot to avoid disruption, but even the most sophisticated strategy designed to mitigate the effects of obsolescence does little to get to the root of the problem. OEMs have next to no direct control of when an electronic component will transition toward obsolescence – and even more concerning, when it does, they too often are not aware of it. In a market facing a historic component shortage, obsolescence and all the supply chain issues associated with it are only going to worsen.

Electronic component manufacturers almost exclusively inform their customers of their intentions to discontinue an offering through the issuance of a Product Change Notification, or PCN notice. But while it is typically expected that PCNs provide at least six months’ notice, this is hardly an industry standard. Approximately 40 percent of all end-of-life components are obsoleted with an immediate last time buy date (only 5 percent are given a 9 to 12-month window). But even more concerning, many components are obsoleted without a PCN at all. In 2015, in fact, 41 percent of the 300,000 obsoleted electronic components were not accompanied by a PCN. In 2016, that number rose to almost 50 percent.

To overcome such unpredictable industry realities, taking a reactionary approach with obsolescence is risky at best – and catastrophic at worst. In the unfortunate event that an electronic component is discontinued without notice and the last time buy date has passed, the only viable solution involves either turning to unauthorized third-party vendors, or discontinuing the product altogether.

Obsolescence itself cannot be directly controlled by any one OEM, so proper stock must be taken of what they can control – and fortunately, today we live in a time where that list is far longer than what previous generations had. Now, through Partstat BOM Monitoring, OEMs have all the tools needed to predict obsolescence on their own terms, without the need for PCNs, to predict when obsolescence is going to occur.

Once a bill of material is uploaded, BOM Monitoring customers can view real-time trending charts that provide an accurate overhead view of market status for each part. These charts use over 50 billion points of Big Data to track average price, lead times, and inventory quantities, and together they allow OEMs to create a plan tailored for whatever the market is showing at any given time. If lead times are dramatically increasing while inventory levels are decreasing, then obsolescence might be imminent. That knowledge provides customers with a crucial window of opportunity to react before the competition, which could save them weeks to months on lead times, as well as thousands of dollars as prices continue to escalate.

In addition to these tools, Partstat BOM Monitoring also scans the Internet every 15 minutes to see if any PCNs relevant to a customer’s bill of material. If one is found, they will be immediately notified, and the PCN itself will be available to view right from the customer’s dashboard. Sometimes, not even the most vigilant market analysis can predict obsolescence with absolute certainty; there are simply too many variables in play. A component manufacturer may currently be eliminating production as a result of a new merger, for example, or political instability may suddenly cut off their access to raw materials. When these sudden, unexpected events occur, our BOM Monitoring Solution is still equipped to keep our customers far enough ahead of the competition to survive even the most dire worst-case scenarios.

BOM Monitoring has always been about giving OEMs control of their own destiny when it comes to inventory management, but as long as supply chain integrity is solely dependent on a component manufacturer’s ability to issue prompt PCNs, this is simply an impossible task. Partstat BOM Monitoring changes that by giving OEMs everything the need to predict and monitor for obsolescence. It is one-of-a-kind, and we offer all potential customers the option to try it right here for 14 days absolutely free.