Why OEMs Are Struggling to Store Critical Electronic Components

By Logan Wamsley

When it comes to storing electronic components, it’s not a matter of if an OEM needs to find a solution for it, but when — and at what cost.

Virtually all companies at some point are forced to accumulate large quantities of inventory necessary to complete the life cycle of their product. This can be done through a large purchase order, a last time buy, or, in some cases, the use of third-party vendors. Regardless of how manufacturers acquire inventory, however, the issue they then must face is the challenge of storing it properly, securely, and safely – all in a way that has minimal impact on their tightening quarterly budget. It sounds simple in theory, but with each passing year OEMs across the globe are learning just how difficult such a task can be.

Assessing the Limits of an OEM Infrastructure

Properly storing electronic components is a far more complex issue than simply leaving them alone in an onsite warehouse. Here are just a few of the questions that may go through a logistic manager’s mind when deciding on how to most effectively store critical inventory:

• Do we have the capabilities to store and distribute this inventory on our own? And if not, who does?

• Does our profit margin allow us to store this inventory on our own?

• Does our inventory require highly-specialized care and handling? If so, are we equipped to provide it?

• Are our storage capabilities prepared to handle any and all unforeseen catastrophes that may affect our assets?

• Can we trust our storage capabilities long enough to fulfill the entire life cycle of our product?

Answering yes to all of these questions, especially in today’s industrial marketplace where narrow profit margins are the norm, is rare. As comprehensive as an OEM’s infrastructure might be, at the end of the day these companies are designed to be manufacturers, not storage specialists. When they are forced to manufacture products and store critical inventory, it can add as much as 25 percent annually to a component’s total cost.

The Limitations of Alternative Solutions

In the event an OEM cannot store the inventory on their own, the only other option (outside of a product redesign or discontinuation) is to seek out an alternative solution to assist them. Many of these partners, however, have to this point failed to offer services their customers need to ensure long-term business continuity.

Authorized distributors are one such alternative, commonly offering to store customer inventory for up to 12 months. While this may be sufficient for an OEM product with a limited life cycle, a product with a five, 10, or even 15-year life cycle makes a 12-month storage limit, at best, a temporary fix.

There are often limitations to the type of critical inventory alternative storage solutions can offer, as well. In an effort to lower production costs and protect their IPs, for example, many OEMs are now turning to the use of application-specific integrated circuits (ASICs), which can be custom manufactured to fulfill a very specific, unique role for a single product. Unlike a generic assembled component, ASICs can be banked in their basic die and wafer form. Having a critical component in such a basic form can help manufacturers avoid upfront packaging, assembly, and testing costs – but in return, die banking requires storage in highly regulated, climate-controlled conditions until the raw wafer is cut into individual die.

To store such critical inventory in a way that ensures proper functionality at the time of assembly, significant investments in the necessary equipment must be made – and, unfortunately for OEMs, authorized distributors, and other such companies that consider the storage and fulfillment of critical inventory a vital part of their business model, that is something they simply cannot afford.

These are precisely the kinds of industry need the Partstat Custom Storage & Fulfillment Solution addresses.

The Only True Solution

Partstat is renowned for its commitment to innovation, and our state-of-the-art storage facilities are a big reason why.

In addition to maintaining both ISO:9001 and AS9120 certifications, as well as a dedicated staff with extensive training in inspection, ESD, and MSL packaging protocols, we also offer customers the option of storing sensitive, high-value components in a climate-controlled vault chamber suitable for any kind of electronic component – including sensitive wafer and die.

Taken together, these amenities included in our Custom Storage & Fulfillment Solution guarantee years of business continuity while saving OEMs an average of 42 percent on annual inventory carrying costs.

With Partstat, what was once a shortcoming in your supply chain will suddenly become its greatest strength.