The Link Between Obsolescence Management and Transparency

By Logan Wamsley

Although many manufacturing cycles in the last century have been defined by periods of consolidation and diversification (aerospace being a notable example of this), few analysts would argue that the electronics supply chain has not grown substantially more complex in a relatively short amount of time. Many industries that rarely had need for much beyond Tier 1 and Tier 2 suppliers have now moved four or five tiers deep, and many manufacturers in industries ranging from specialized healthcare to consumer electronics have widely adopted the use of contract manufacturers to meet rapidly escalating demand.

While this state of affairs speaks volumes about the health of the electronics manufacturing industry as a whole, such a tangled web of parties, when improperly handled, significantly impacts an OEM’s ability to maintain a consistent level of transparency between all levels of the supply chain. In a recent article published in Forbes, it was reported that eight out of ten companies do not know where their second and third tier supply is sourced. Going further, only 15 percent of companies have active supplier development programs capable of quick response in the case of supply chain disruption.

These findings have implications that are both profound and varied. For example, should a disruption occur, such as one related to component obsolescence, it can be a struggle to determine where the responsibility of resolving the issue lies. The relationship between contract manufacturers and OEMs is particularly susceptible to this scenario; in most supply chains, the contract manufacturer is first in line to receive notification of impending component obsolescence — and without proper transparency procedures in place, there can be significant delays as the contract manufacturer negotiates with their OEM customer to determine who is responsible for payment.

As one can see, transparency and obsolescence management are interlinked; without a proper commitment to one of these in an intricate, multi-layered supply chain, the other inevitably proves lacking at best, and completely ineffective at worst. This is why the incorporation of a BOM Monitoring Solution is so necessary in the modern supply chain.

One way BOM monitoring dramatically improves transparency is in its inherent ability to centralize all information related to an OEM’s bill of material onto a single intuitive platform. One Partstat BOM Monitoring customer, for example, is allowed up to 20 additional seats on the platform, allowing them leeway to share all the information available to them regarding average market pricing, lead times, lifecycle determinations, PCN notifications, and much more with any necessary parties. Where an OEM might previously have been caught off-guard by a contract manufacturer requesting an immediate last time buy purchase, both the OEM and the contract manufacturer now have immediate access to the same information and can immediately move forward however they see fit.

With over 50 billion points of Big Data at the customer’s disposal, Partstat BOM Monitoring also makes it much easier for an OEM, as well as all additional levels of its supply chain, to maintain a complete overhead view of the market for any given electronic component or semiconductor. With real-time trending charts available that instantly consolidate information from thousands of manufacturers and authorized channel partners, all applicable parties can be on the same page regarding how to best insulate their supply chain from obsolescence-related disruptions.

Transparency and obsolescence are both issues that require constant attention regardless of the state of the market or the complexity of the supply chain in question, but it is a mistake to believe they exist independently of one another. Any obsolescence management strategy adopted, whether it is Partstat BOM Monitoring or any other equivalent, must take care to address both. Otherwise, one step forward will always come with two or three steps back.