June 15, 2017

New Obsolescence Webinar – The Future of Obsolescence Management

Whenever I need to research something new, or a topic I’m unfamiliar with I turn to the internet. The information is free, and there’s a wealth of detail to choose from if something is too complex, or too long winded. The trouble with the internet is that there’s no real quality filter. How reliable is the data you’re looking at? When was it written and updated? Was it written primarily to advertise a product or service?

The other issue is that the data I find online is totally disconnected from my own experiences or capabilities. I can find any number of videos online that teach me how to renovate a bathroom – however the reality is that I’m dangerously poor at home maintenance.

In our industry, the internet is an absolutely indispensable tool for our day-to-day work but as I outlined in some detail in the Converge blog in late 2016 more data is not always the answer. Being able to contextualise this vital information is becoming more and more challenging. It’s especially challenging with such dangerous topics as counterfeit components in our supply chains.

With this in mind, SiliconExpert and Converge are jointly hosting a webinar covering data analytics, prevention of counterfeit ingress to your supply chain, solutions in the marketplace and quality focus from your suppliers. The webinar aims to show that while the incidence of counterfeit may rise, there are real-world coping strategies to reduce your risk of exposure, available today.

Please join our teams for this FREE webinar on 21st June for 60 minutes, starting at 1200 Eastern. Register now by clicking here.
Keep innovating!

March 1, 2017

Why Is Component Obsolescence Changing? – The Future of Obsolescence Management

When the Restriction of Hazardous Substances Directive (RoHS – a legislative move across EMEA to restrict the use of hazardous materials in electronics) was introduced in 2003, there had been a huge volume of work in the preceding years to understand the harmful substances involved and their effects on human health and the environment. However, one of the key outcomes, the reluctance of many manufacturers to continue the production of affected components regardless of exemptions (exemptions allowed the continued use of certain RoHS materials in certain use cases – for example, exemption 7b allowed for lead solder in certain signalling and communication equipment), was largely ignored for a number of years due to the prior power of the component-buying OEMs (original equipment manufacturers) in the marketplace.

The reason for this disconnection wasn’t ignorance or apathy; it was simply that OEMs had been conditioned to believe that their requirements for new technology and provision of components would continue to win in the decision making process regarding discontinuance and market support that OCMs (original component manufacturers) employ every day.

In fact, the decision making process by large OCMs was unchanged for decades, as the development of technology was matched by demand from OEM clients. Transistors have been shrinking for 50 years, in line with the boom in thirst for electronics and electronic capability. Generally speaking, as technology developed, natural wastage took care of any obsolescence problems; if manufacturers discontinued products it wasn’t really a huge problem, because the consumers of that old technology had moved on to new things or simply didn’t exist anymore.

As time moved on, we started to see environmental regulations take over as the prime driver of obsolescence. This again wasn’t a real, crushing issue (outside of primarily the aerospace and defence market, where the use of lead is vital) because it was predictable and communicated well. Any new regulations that have been introduced have long lead-in and evaluation/consultation times to enable users to substitute components, or to find alternative ways to continue business. The point is that either technology development or environmental regulation is predictable, publicised and communicated well enough to give realistic coping mechanisms to component users.

In stark contrast, we now find ourselves reeling from two years of sustained consolidation and M&A activity in the electronics supply chain. Through 2015 and 2016, almost $200bn was spent by OCMs acquiring each other. By its very nature, this is hugely problematic because merger activity cannot be communicated or publicised by an OCM or planned for by consumers of components due to stringent financial market checks and measures to protect against fiscal impropriety. Deloitte tells us that one of the first jobs after an acquisition is product line rationalization, and it’s this uncertainty that may, over the next three to five years, cause huge problems in obsolescence and availability in our marketplace, particularly for traditionally technologically demanding and expensive industries such as aerospace and defence, medical, power generation, industrial automation, heavy transportation, subsea service and exploration, and oil and gas exploration/production.

Compounding this, we can see from various studies that incidences of counterfeit components in the marketplace spike every time we see upticks in obsolescence notices from manufacturers.

Further, the algorithms and predictive analysis we rely on from online data services and educational think-tanks are largely useless at this point because M&A completely breaks the behaviour pattern on which these analyses are based. What’s the solution?

Fundamentally, organisations that use components from OCMs recently affected by M&A activity must immediately look inwards at their order books, stock manifests, engineering capability, second source identification and procurement teams to ideally pinpoint best practice and leading industry supply partners. At a bare minimum, they should outline where their key risks lie, and take steps to mitigate those risks both up and downstream in their supply chains.

I mentioned that OEMs are neither ignorant nor apathetic towards these problems, but may simply be too far removed from this M&A activity to feel anything other than insulated from risk by their supply chain. Frequency of build and purchase of affected components by OEMs may simply be too far apart in time to receive timely alerts of obsolescence or other issues.

At Converge we are taking this risk to our customers very seriously, and have developed unique, innovative analysis tools to help our clients understand not only the data, but also the context within which their needs exist globally. Good decisions rarely get made under pressure, and we aim to give our customers the control over their decision making process.

By contextualising the needs of our clients in both availability and technology, we can support global operations in realistic, immediate ways to ensure continued supply as well as mitigate risk of shutdowns and, more importantly, brand damage.

Our worldwide teams can help you understand the risks you now face. Please contact us at any time for more information.

Keep innovating!

January 30, 2017

A Turbulent Industry: The Evolution of Component Distribution and the Future of Obsolescence Management

Since the harnessing of static electricity and the understanding of its production and ultimately useful storage, inventors have been refining the ways in which we can advance technology. Currently, Taiwan Semiconductor Manufacturing Company (TSMC) believes their semiconductor processing plant will be mass producing 5nm process transistors by 2020. (Smaller transistors are preferred worldwide because they allow their “switch” to be reset more quickly, allowing faster data exchange. With a human hair around 75,000nm in diameter and a red blood cell 6,000nm in diameter, 5nm is thus phenomenally small.) The pace of change is incredible and as technology advances, the human element becomes the limiting factor – from iterative design through to simple things like shipping and delivery.

When Arrow Electronics was founded in 1935 in New York City the company was focused on repairing radios, with components that were often as large as your fist. At this stage obsolescence didn’t really exist as a concept outside of the horse/automobile dynamic and certainly not in electronics. Televisions didn’t exist as a massive commercial venture and transistor development only started to make large advances in the mid-20th century.

Today, in stark contrast, the electronics supply chain is one of the largest and most automated industries on the planet, worth hundreds of billions of dollars. The top 25 distributors are valued at over $85bn in annual sales. Many hundreds of companies are franchised to distribute components for original component manufacturers (OCMs), while many thousands more exist in the non-franchised space (concepts explained in my previous blog). With this huge spread of technology and massive choices in supply partners, there is a similarly massive opportunity for nefarious organisations to exploit even the most sensitive supply chains. So who can you trust? When we layer onto this enormous market the knowledge that several well-respected experts place, the consequences of counterfeit electronics at up to 8% of the global market, we start to see larger issues with trust and supply-chain security.  

Experts exist across the market in avoiding counterfeits. Standards bodies such as SAE International, IDEA, and government agencies like UK MOD and US DOD can advise on best practices and offer certification, but in reality only some distributors are adhering to them. 

Of course, not every independent distributor is the same, and as with any industry, some are better able to absorb the cost, logistics, and time commitments needed to adhere to stringent certification requirements. For example, test and inspection commitments are a significant factor when considering partners in your supply chain. What level is appropriate for your customers, though?

Selecting suppliers who have deep investments in x-ray fluorescence (XRF – the measurement and determination of the composition of materials), x-rays (the non-destructive testing of components to confirm internal characteristics), and decapsulation (the destructive testing of components to confirm internal characteristics) technologies in-house is advisable, but this restrains your breadth of choice. Our own quality and compliance expert Dwight Gerardi penned an excellent series of blogs detailing our capabilities; this is an excellent place to start when evaluating future suppliers and partners.

Ultimately, deciding which level of testing, certification, and security in your supply chain is appropriate for your customer base is something that will be unique to every company. However, in an increasingly risk-averse industry, how much of your brand capital could be lost in choosing the wrong partner?

To understand more about industry best practices, or anything covered in our Converge blog series, please reach out directly. I’m delighted to hear from you at rob.picken@converge.com

Keep innovating!