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Design engineers and obsolescence - the distributor interface

Component Obsolescence Group (COG) : 01 May, 2005  (Company News)
According to Arrow Electronics, each desktop computer with a typical monitor contains an average of 4 to 8 pounds of lead. The 315 million computers that became functionally obsolete between 1997 and 2004 contained a total of more than 1.2 billion pounds of lead. This is just one of the very good reasons why we need to take some positive action against the growing mountain of hazardous materials, but the implementation of the EU Directives is likely to add to the already massive headache that is posed by component obsolescence.
Roy Atterbury examines how distributors deal with obsolescence, and why, despite being ideally placed in the supply chain to make a significant contribution, most fail to do so.

Initially, it was the high spec devices for military, aerospace, transport and similar applications that were causing the main obsolescence problems and designers were beginning to turn to commercial off-the-shelf solutions when no other option was apparent. Now, it is the COTS products that will have to undergo their lead-free metamorphosis and many of these are likely to become obsolete as manufacturers re-evaluate their product portfolios. Reliability and performance aspects will have to be properly addressed and component distributors that have treated obsolescence with a degree of indifference may well find themselves moving into the front line.

COG was formed in 1997 to promote a pro-active approach to the management of obsolescence and the development of processes for dealing with it.

The Group now has an international presence and a list of members that includes many of the world's leading organisations. Despite the Group's acheivements, everyone in COG is aware that there is still much to do and that its ongoing task is unlikely to disappear. But in some ways, it is disappointing that some areas in the supply chain cannot work towards a common purpose.

Forgetting materials, which are treated by COG as a pertinent but separate issue to components, the obsolescence supply chain consists of the component manufacturers (who are beginning to make a real response to obsolescence issues); the after-market specialist component manufacturers/solution providers (who are an indispensable part of the chain); the component distributors; and, of course, the customers who exist at the sharp end of the chain.

Unfortunately, and apart from a few notable exceptions, it appears that it is distributors who remain the weakest link. Sitting, as they do, between the manufacturers and the customers, they seem perfectly placed to make a significant contribution to the resolution of obsolescence problems, but most fail to do so. Why?

A reasonable cross section of UK distributors were contacted to assess their attitudes towards providing a structured obsolescence service. It took very little time to find out that their biggest concern was cost.

Downturns, tight margins, increasing competition, and manufacturing disappearing to China and elsewhere combined to make the tackling of obsolescence a very low priority.

And it was interesting to note that most of the people contacted thought that the distribution of obsolescence alerts was, in itself, a significant contribution that required no follow-up unless a customer responded with a query. Invariably, these alerts are sent to buyers and very rarely to, for example, design engineers unless specifically requested. Here, the reasoning was that many engineers were engaged on a wide variety of activities and the majority of the alerts product change notices or LTBs (last time buys) would be of little interest to them. It is the procurement activity that should know which products might be affected by the alerts.

Very few believed that it might be possible to set up an obsolescence management operation and actually make it economic. But the article by Steve Rogerson in this issue should make it clear that, for franchised distributors in particular, such an investment could generate real rewards.

Here, it is worth looking at some of the comments from solution providers and distributors which highlight both the successes and the problems.

Karen Salmon is the managing director of Force Technologies which was a fairly typical component distributor between 1986 and 1995. It mainly interfaced with buyers and specifiers of components. At the time, obsolescence was not acknowledged as a major problem and it was a customer's component engineers who tended to recommend alternative parts. Due to this, most distributors would send the LTBs and PCNs to 'the name on the computer' rather than dig deeper into the company to find design engineers who might also want the information.

She comments: 'As obsolescence has become more of an issue, an increasing number of companies now have specialised obsolescence personnel on board.

However, it is my experience (and I am not alone), that unless a company is specialised in the area, a distributor will still only send out LTBs to the name on the computer which, invariably, is the buyer. Even here, the notice will be issued only if that company bought the parts within the last 12 months.

'As a manufacturer that has provided obsolescence solutions since 1995, we still find that design engineers tend to hide behind the obsolescence manager (if he or she exists!). It's our experience that design engineers are unaware of the LTBs since they design-in obsolete parts.

'We do not sell through distribution because we feel that the provision of obsolescence solutions requires a more in-depth approach than they can supply.'

The Dionics 'fit' within the supply chain is a little different than traditional franchised distribution as the company is independent. Its solutions are typically product-orientated as opposed to information-orientated so it doesn't necessarily pass on obsolescence information to its customers.

A more likely scenario would be for Dionics to invest in an LTB to support customers who are already aware the device is in obsolescence.

The only exception to this rule would be the operation's CASEC reference guides, which demonstrate a manufacturers conversion strategy with relation to the RoHS Directive. These guides can proactively 'predict' potential obsolescence by manufacturer.

Dionics md Paul Chinery suggests that offering high reliability obsolete products off the shelf, sometimes with next day delivery, has to be the most cost-effective way of dealing with obsolescence. He comments: 'Any electronics manufacturing organisation naturally strives to create is a bill of materials free of obsolescence. However, with some 13,000 components disappearing every month, this is an impossible challenge that gets more difficult the longer the equipment is in service.'

Such a service, however, must be dependent on an ability to source the required components.

Passives distributor Charcroft Electronics has invested a great deal of time and effort to break the mould of component obsolescence support.

Edmund Coady, sales director, works on the principle that obsolescence management falls broadly into two categories: retro-fitting for products which are already obsolete and managing future obsolescence.

Coady explains: 'Charcroft not only receives obsolescence notices from manufacturers but also actively monitors lead-time trends and assesses potential new obsolescence issues caused by fluctuation in raw material supply (for example polycarbonate film) and other factors such as the RoHS legislation.

'In both cases, we inform all our customers by letter and also place a notice on the resources section of our website, as well as notifying the COG membership via email,' he added. These notifications usually include details of recommended alternatives and Charcroft gives individual support to help its customers' engineers to evaluate and design-in alternatives.

It can also audit customer parts-lists to help to identify products which may be at risk of future obsolescence.

Ron Bannister sales manager of Rochester Electronics, has come up with a compromise in terms of distribution. He recognises that mainstream distribution for the majority of customers is vital to an effective supply chain, for all products! Most major manufacturers have direct trading relationships with relatively few customers, depending on the particular supplier. This then means that the customer facing obsolescence will in the first instance turn to the supplying distributor to solve the problem. If there is stock to cover the need then the problem is solved. If not, there is still a problem.

Bannister indicates that Arrow's in-house group Zeus offers obsolescence services. They have a relationship with QP Semiconductors that helps in some areas, but, like Rochester, it is geared to strategic customers and the management of obsolescence. QP also offers special die packaging and that tends to be application specials as well as obsolescence products.

'We are on their line card along with the big players like TI, Intel and AMD. This is a major differentiator compared to other distribution sources.

They work with us to solve obsolescence problems, for easy fix solutions like stock availability, and also long term continuing support programmes.

Where we cannot help, they will use brokers.

'Future Electronics has an internal group that sources non-franchised parts and this includes obsolete devices,' he says. 'Other large companies like Abacus also use the broker market.'

'Effectively this is an area where the independent distributors operate successfully. Independents include brokers and hybrid companies who have some franchises, some sourcing and even manufacture. From a total market perspective, these are often the most effective 'distributors' for handling obsolescence. But it also opens up the prospect of poor trading, poor services and poor support.

'Most of the counterfeit components that we hear about come from Brokerville, usually from the smaller outfits. The good independents, of which in my opinion there are very few, have procedures to screen their supply.'

From the results received during the survey, it is apparent that component distribution as a whole is playing a very small role in dealing with obsolescence.

Those who are offering an obsolescence service seem to be making good headway, but there is no single solution to the problem.

Despite this there will have to be big changes in attitudes and, perhaps, a realisation that the provision of an obsolescence service can actually be profitable.

One area needs more clarification. Who makes the decisions to prolong the lives of selected obsolete components? Who provides the main impetus in terms of selection? Over 150,000 devices obsolete per year suggest that only a very small percentage are given a new lease of life... why these?
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