Five steps for managing obsolescence - By Claire Stevenson, Quality Manager, Anglia Components

Thought Leadership published by Anglia

In the light of the looming RoHS 3 deadline, it is extremely opportune to think about obsolescence. Although there is always a regular churn of parts being withdrawn because the demand dries up (or anticipated customer interest doesn’t materialise) sometimes there is a bigger picture. Directives like RoHS 3 result in what might be termed an obsolescence event: a whole slew of devices becoming obsolete at once. Regulatory issues aren’t the only cause for these events though – sometimes other industry changes lead to whole classes of device becoming unavailable. How can prudent purchasing teams avoid being caught out?

Looking at the big picture

With directives like RoHS 3, there normally is plenty of notice. The directive was announced in 2016 and manufacturers have until the 22nd July 2019 to comply. Whilst in this case most parts can be made compliant with little or no changes, there are always devices that end up being withdrawn as the cost of modifying them can’t be justified in the light of anticipated demand. Switched on distributors like Anglia will support customers through these challenges. This means talking to our suppliers continuously as they move towards compliance, and ensuring our own house is in order in terms of eliminating non-compliant stock well before the deadline. It also involves making customers aware as soon as possible of devices that are not going to be manufactured in a compliant form.

Shifts in the high volume consumer goods market (phones, tablets, IoT) can also lead to whole classes of device becoming unavailable. For example, there is a long term trend for manufacturers to discontinue, or make fewer batches of, the larger sizes of chip passives: 1206, 0805 and 0603 as the volume moves to 0201 size and smaller. There is a managed obsolescence programme on some of these larger chip sizes where capacity is being severely restricted. Currently the larger global manufacturers are recommending customers use the smallest chip sizes possible in their designs, this often means 0201 size and below for new designs (Figure 1). Larger sizes are still available with some manufacturers stating they will not pull out of these sizes, however customers should actively start to downsize the chips in their designs. Otherwise, we fear that customers will be caught in an endless cycle of lengthening lead times, restricted capacity and rising prices as larger sizes become increasingly scarce. We also recommend that customers move current designs to the smallest sizes available in the value and voltage required, and to design out the larger sizes at the earliest opportunity – certainly the next time a product is redesigned.

The limitations of ‘equivalents’

If a device in a design becomes obsolete, in the past buyers would often seek a so-called ‘equivalent’. Although it is sometimes possible to identify one, this is becoming increasingly difficult. In a highly competitive market, semiconductor manufacturers try to differentiate their solutions by adding functions and enhancing performance to address specific perceived market opportunities. This means that fewer devices from rival manufacturers really are fully equivalent – increasing the risk when selecting an alternative to the original device on the BoM/AVL.  Even if a device is electrically equivalent, and a match in terms of form, fit and function, there may still be a variation in the detail of the specification that makes a difference.

Truthfully, selection of devices on the BoM/AVL is fully a design decision and purchasing isn’t qualified to second-guess their choices. Any ‘equivalent’ should be assessed by the original design team to ensure that it really is acceptable in the context of the design.

Getting the Bill of Materials right

A lot of messing about finding equivalents can be avoided, if customers make the correct long term choices when drawing up their Bill of Materials (BoM). To make their decision, customers need to know which devices are likely to be available for the lifetime of the design. Online, you can readily obtain small pack quantities of devices which have actually already been discontinued by their manufacturers. Great for service engineers – dangerous for designers. Distributors like Anglia provide detailed availability information (Figure 2) alongside the technical specifications on their website. In addition to notifications of product change notifications (PCN) or product termination notifications (PTN), this should include live current stock levels, stock due and the expected arrival date, and the supplier lead time. This information is published on Anglia Live – so even if you don’t buy from us there is nothing stopping you taking a look.

If designers ensure that the parts on the BoM/AVL are actually available on the open market, purchasing can focus on obtaining the specified devices from competitive suppliers that they regard as reliable sources of supply.  

Inventory management

When it comes to ensuring continuing availability of all of the parts on the BoM/AVL, the key is to work closely with these suppliers. If we as a distributor receive forecasts of what level of requirement you have and when you need it, we are in a position to cushion you against obsolescence. We can let you know when a part you’re intending to continue using becomes subject to a PTN or PCN.  If this causes a problem, we can also to put in place a buffer stock of a device before it gets withdrawn or changed, providing a valuable extra few months of supply to allow the part affected to be designed out. When regulations change we can ensure, that all of your inventory is compliant stock in a timely fashion and aren’t left with a remnant of unusable devices. Many customers now use our 80/20 service, where they hold inventory on site and pay for it as they use it. This service provides a great starting point for us to work together to manage anticipated obsolescence challenges.

Conclusion

Getting caught out by a key component in your design becoming obsolete is largely an avoidable problem. Occasionally a manufacturer does pull a part without prior notification, but most of the time adequate warning is given.  Distributors have a key role to play in feeding this information along the supply chain, making sure that customers using the affected part are aware of the issues and can react in a timely manner.

So what are the five steps to avoid the obsolescence trap?

1. 1.   Pick a good distributor that you trust and can rely on. 

2. Ask them the right questions before including a part in a new design. 

3. Be open and provide the best production forecasts that you have. 

4. Listen to their input on upcoming PCNs / PTNs. 

5. Let them know ASAP if you need some extra inventory to tide you over during the redesign process – they can often help if they know in time.

Do this, and you’ll be able to manage most obsolescence issues most of the time.

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