The Connection Between BOM Monitoring and Last Time Buys

By Logan Wamsley

The inventory procurement process in the middle of a production run for most manufacturers moves so fast that many engineers do not stop to consider exactly how the process is typically structured. Rather than viewing the process as a singular event, it instead can be broken down into a three-step process: notification, inventory discovery, and inventory purchasing. Each step comes with its own inherent risks, and when taken for granted, each has its own potential for significant disruption.

To streamline these steps, Partstat offers three unique solutions designed to eliminate supply chain disruptions regardless of any market fluctuation, large or small. These are:

1. Partstat BOM Monitoring, which monitors and predicts obsolescence and allocation for all electronic components and semiconductors using Big Data analytics and advanced algorithms.

2. Partstat Part Search, which draws over 50 billion data points collected from thousands of component manufacturers and authorized distributors to help OEMs source and purchase critical electronic components and semiconductors at the optimal price, from suppliers who uphold the highest levels of transparency.

3. Partstat Last Time Buy Solution, a one-of-a-kind solution in which we buy all the inventory necessary to complete an OEM product’s lifecycle in a single transaction, store it in an industry-leading secure infrastructure for as long as necessary, and then ship it anywhere in the world on a personalized delivery schedule — all without the OEM having to sacrifice upfront working capital.

Each of these solutions has significant stand-alone value, but to use them to their true potential, engineers and product managers need to consider how each of these solutions work in sync to create a secure supply chain guaranteed to mitigate the effects of all known forms of disruption.

The process begins at the point of notification when an electronic component or semiconductor transitions into obsolescence. Even at this stage, many OEMs find themselves struggling. Of the millions of components obsoleted each year — a number that has only increased as the market has grown unstable due to fluctuations of demand and supply — less than half are done without the issuance of a product change notification from the component manufacturer. Even more concerning, of those that are issued, many come with an immediate late time buy date that gives customers very little time to react. Once this point is reached, the OEM has to commit to one of three options: quickly locate a third-party distributor who offers the obsoleted component at a significant markup, commit to a costly production redesign, or, in extreme cases, discontinue the product altogether. Not only does Partstat BOM Monitoring provide customers instant notice once a PCN is issued, but its ability to predict obsolescence weeks or even months before the rest of the market buys OEMs precious time to make a decision on how to proceed.

One such option, and the preferred option in most scenarios, should be to initiate a last time buy. This is true for several reasons; not only does this course of action minimize the amount of pivots a supply chain needs to complete, but it also preserves any long-standing relationships an OEM has built with current suppliers. Additionally, component manufacturers can complete large single bulk transactions at a lower cost than standard orders, which unlocks the potential for bulk purchase discounts should such savings be passed to the consumer.

These benefits, along with the ability to preserve multiple years’ worth of working capital, are what brings BOM Monitoring customers to the Partstat Last Time Buy Solution. Upon notification of impending obsolescence, Last Time Buy Solution customers are able to stay two steps ahead of the market and immediately ensure the integrity of their supply chain is preserved for five years, 10 years, or even over 20 years, regardless of the quantity of inventory needed. This is also true without the use of BOM Monitoring, but without the added benefit of obsolescence prediction, the OEM risks reacting with the market rather than staying ahead of it, thus leaving thousands of dollars of savings on the table.

The solutions Partstat offers are based on the lifecycle of an OEM product, and only when all are fully realized and implemented does the true value of the greater whole manifest itself.