January 10, 2017
It’s interesting that in an industry that’s over 100 years old we would be re-visiting past or seemingly settled topics to bring new perspectives. Even more interesting is that these concepts are not driven by the traditional march of technological development, but by market forces to which we need to respond. In our case, those forces are the increasing demands driven by obsolescence – which is regularly dictated by . No matter what the cause, the effects are stark and can be devastating.
In my last Converge blog I introduced the ideas of content, context and control and their place in the decision-making process. Today I’ll dig into why the actual process followed for decision-making is often confused and hobbled by the volume of data that companies have to process. Many companies don’t understand the difference between information and communication and choosing to make decisions based on information (content), instead of the communication that arises from information (context). Therefore, they lose control of the ability to make good decisions.
If we evaluate the process for problem solving, it generally follows the same outline, or the three D’s: drive, direction and decision.
Drive is what starts your process. This could be a reaction to a market event, a response to a client request, or an instruction from colleagues or leadership. Regardless of what you’re reacting to, this is internally motivated.
Direction is what you want to achieve in response to the drive. Specifying obstacles and options, identifying partners and contributors, and planning an approach and managing that approach can be a long-term strategic plan or a short-term fix.
Decision is the execution of the direction within your company structure and its constraints. As with drive, this is an internal process because it’s internally executed.
The mistake a lot of companies make in this process is also treating the direction piece as an exclusively internal analysis point. This direction segment of the process should be massively influenced by what you’re experiencing from the marketplace. Technology development and availability of product, volatility of a chosen component manufacturer, export controls, life cycles of components … anything at all that is beyond the internal control of your organisation should be considered when formulating a response.
This is a key reason why high-reliability and high-criticality components users – like aerospace and defence manufacturers – are so often hit with obsolescence problems. Two of the external factors they need to contend with are the qualification of designs against the original specification and then the certification of those designs for their intended use. Both of these factors are expensive and time-consuming … so these industries tend to have a higher than expected reliance on common, reused, tested and certified components. This means that current known issues are often simply replaced with future unknown issues – purely based on cost and simplicity, not on external factors influencing the correct decision. Studies by Cranfield University show the VASTLY lower costs of cannibalisation of existing components compared with the cost of redesigning the assembly (top of page 21).
Open market knowledge is a key area and will become increasingly important as more obsolescence affects our industry in the coming months and years. OEMs have a difficult time acquiring this data simply because they tend to be removed from the “front lines” where components are bought and sold. We’re trying to educate companies to move this balance of control back into their own favour. We’d be delighted to talk to you about your experiences and for you to join our community of like-minded experts. Visit our new website and join our community to stay up to date.
December 14, 2016
A number of years ago, I was involved in an eye-opening debate about data tools (often provided to customers in a Software as a Service – SaaS-or subscription model) and the security that multiple subscriptions offer the supply chain for electronic components. At face value, this is sound logic – the more data sources you have, the better chance of capturing critical information. But as the debate progressed, the main limiting factor became apparent: people and their capacity to interpret the sheer volume of information. Realistically speaking, the law of diminishing returns applies very quickly when using any method to process multiple sources. However, when relying on people to make decisions, it’s very easy to overwhelm them with volumes of data.
In a previous blog, I mentioned a statistic from IBM regarding how much data we actually produce daily, and it’s quite difficult to wrap our heads around that number. However, IBM also demonstrates that the 'volume' of data only makes up part of the problem; we also need to consider veracity (correctness), variety (how many types of data) and velocity (how quickly the data changes). Unless companies can contextualise this massive flow of data, analysis paralysis will occur. It’s been shown time and again that making no decision is easy, but it’s often more costly than making a poorly considered one. So where’s the balance?
In another blog post, I outlined a presentation that I delivered earlier this year at Electronica in Munich, Germany. I opened the discussion stating that there are three distinct phases to data acquisition – content, context and control – and significant obstacles arise if you don’t have either of the first two.
Content we’ve previously discussed. This is gathered from external sources. Perhaps you have feeds of component obsolescence or product change notes (PCN) from your component distribution partners. This is content because it’s external. It just exists as data points, which don’t change regardless of the audience. This data stays the same no matter who you are.
Context is more interesting. Context is the environment within your company into which you pull this content and the market conditions that your company exists within. The reason you conduct contextual analysis is to make decisions. Those decisions change depending on any number of reasons: material availability, suitability of components, longevity of supply, customer considerations, engineering and design specifications — the list goes on. The key point is that context is internally dictated, whereas content is externally generated.
The final pillar to this triumvirate is control. Without being able to place external content into internal context, you cannot have control in your supply chain. The reason that anyone expected to utilise varying data sources makes poor decisions is that they still believe that the pure data is the most critical aspect of their process, and they fail to contextualise this external content against their current position or wider needs compared to the marketplace.
External companies, with data, experience and a deep understanding of the global markets, as well as agnostic of industry vertical, can help. However, they must be part of your overall strategy. Content in context gives control. Successful organisations control their supply chains more than they react to them.
I’m keen to understand your thoughts and discuss further. Contact me at email@example.com and we can talk.