Reprinted from the December 2000 issue of Spread Spectrum Scene Online.
Dealing with Parts Shortage Nightmares
-- By Danny Simpson, Pegasus Technologies
Say you come up with an idea for a new product that will revolutionize our way of life.
This idea creates excitement among your family, friends, and coworkers. You do a market survey
checking on the marketability of this product, and it comes back overwhelmingly in your favor.
If you are looking to produce this product yourself, you will need to look around for some seed
money, so next you scope out some venture capital. Again you're in luck! You find that for your
idea, there are plenty of investors that are calling you back begging you to take their money.
You tell yourself, "This is IT. This is the product that the world has been waiting for!"
Next, you need to meet with various people to check on the reality of being able to produce such
a product. You have several meetings with engineering personnel to explain your idea. After they
do their research, they tell you that they can indeed come up with a design that will do what you
envision. So next you meet with your manufacturing organization to see if they can produce such
an item, giving them tentative start dates and the quantities they can be expected to produce.
After crunching some numbers, they come back and say, "We can produce tons of these widgets
for you. We'll need to work with Engineering on the details and we may need to gear up for the
additional overhead, but we can do it."
Now if you are working within a corporate structure, it's time to go to upper management with
your game plan. You also need to show them the information you've collected from Marketing,
Engineering, and Manufacturing to back you up. If you are on your own, using various external
resources to design and produce your product idea, you will need to go back to the investors
with your plan. They will need to do some additional research on your idea, just
as upper management would need to do within a large corporation.
You're now ready to get on with your plan after getting everyone's approval, right? Well,
there is one little detail we're overlooking here. We need to verify that the components that
are to be used in the production of your widget are readily available, not only for usage in
the design stage, but also for future manufacturing requirements. Too many times, a great idea
cannot get realized as a physical product because this step was omitted during initial
planning and throughout the design process.
During the past couple of years, many electronic components have been in short supply.
Component shortages started mainly in the semiconductor industry, but now have proliferated
into the passive component industries as well, even for such common parts as capacitors and
resistors. Even without today's unusually serious shortages, there have been uncountable
instances in the past where various electronic components have gone on allocation, foundries
have had serious yield problems causing semiconductor shortages, or a new hot industry popped
up and caused an overall shortage for certain components There was even one famous case where
a foundry in the Far East caught fire and was out of commission for a long period of time,
resulting in yet another shortage.
The best medicine for this problem is a preventive antidote. During the initial design
process, Engineering personnel need to verify the current and future projected availability
of all components that are expected to be used in a new or updated design. This cannot be
overlooked anywhere in the design stage. As a general rule, small organizations are at a
greater disadvantage than large corporations in parts procurement. This is due to the buying
power of the larger organizations. If a particular company uses hundreds of thousands or
even millions of dollars worth of electronic components a year, it has a much better chance
of acquiring enough parts for production of their products. In addition, big companies are often
"savvier" about how to make the system work for them. A big company typically has an
excellent working relationship with the various component manufacturers, representatives, and
distributors. Their purchasing departments work closely with these various resources so they
can obtain their components when they are needed. They know to advise these resources well in
advance when the components need to be delivered to meet anticipated product manufacturing
schedules.
This kind of savvy starts way down the line. Marketing and sales people need to let
Purchasing know the projected sales figures and delivery schedules for a product, so that
components that are used in the manufacturing process of this product can be procured in
time for Manufacturing to meet these schedules. Sales projections can and generally do
change, and Purchasing needs to stay on top of them, especially if the sales figures are
exceeding initial estimates.
Now, where does all this fit in with a new design idea? It's nice to have a great idea that
many people are excited over on paper, but the idea of a new product on paper usually does
not put bread on the table. This design idea first needs to become a tangible working item
that people can see in actual operation that still gets them excited. Now that is a work of
magic! Anyone can come up with a great idea, but coming up with a working model of this idea,
having overcome challenges all the while, is a totally different animal.
Many times in the past, new designs are worked on for long periods of time, either by small
design teams or by several groups of teams, only to find out at the end that the new product
is not manufacturable because of a shortage in even a single component. This component may only
cost a few pennies, but it is essential to make the product work. As mentioned earlier, this
shortage could either come from uncontrollable circumstances or it could be the result of not
doing all proper research up front during the design stage. A lot of additional money is
usually put into redesigning the product at this time to come up with the changes necessary to
work around the shortage and get the product out to market. Not only additional engineering
costs are involved here, but Purchasing, Manufacturing, and Marketing come back into the
arena as well. Marketing needs to change sales forecasting, Purchasing has to change delivery
schedules, and Manufacturing needs to adjust its production planning.
When selecting components for a new design, there are several guidelines to go by to
minimize parts problems:
Try to use as many components as possible that are readily
available from several different manufacturers. This can take a fair amount of time up front,
but can save all involved countless hours - and dollars -- later on. Many times, however,
there is not a lot of choice in using a sole-sourced component, especially with technology
changing as rapidly as it is today. If you strive to stay on the leading technological edge
of product designs, you are more likely to run into unavoidable component shortage situations.
You may run across a single new component that can replace several components that were used
in the past in a particular circuit design. Use of this new part may result in substantial savings
in cost and increased reliability, but its availability may be suspect. If you have room on the
printed circuit board, you can include the older standard design using the additional components
in "parallel" with the newer design circuitry. If enough of the new parts can be found,
the "extra" components can be left off during manufacturing. Where high demand for the
new component results in shortages, however, the parallel circuit can really "save the
bacon" for the product manufacturer. In this case, you simply don't use the newer component
while it's in short supply, but instead populate only the additional "paralleled" circuit
instead.
When selecting a component with a small footprint, make certain that it is readily available.
Larger sized versions of the same part are sometimes easier to obtain. If possible, leave enough
room on the circuit board so you can utilize more than one size of the same component if
necessary.
Be careful when choosing two or more manufacturers of the same part. Sometimes one of the
pins on one of the components does not have the same functionality as the others!
Be careful when using specialty integrated circuits that are not widely available from
several different manufacturers. Components that have been on the market for a number of years are
likely to become obsolete during the lifetime of your product. Special integrated circuits that
were a hot item at one point in time are especially likely to become obsolete quickly, as newer
technology replacements will be developed first for high-demand applications. Backfitting an
existing design with new parts is probably one of the worst nightmares in manufacturing.
Most importantly, work with manufacturers' representatives and distributors up front to find
out about any potential component availability problems that may be on the horizon. Develop a
close working relationship with these representatives and distributors early and maintain this
endeavor throughout the design process. Give them the initial bill of materials list up front
and keep them notified of any changes to it that they need to know about. Ask them to keep you
posted of any upcoming changes with any of the components on your list. You will be rewarded
many times over in the future for this additional effort.
All this extra research, liaison, and design workarounds do take more time, but may make the
difference in turning your product idea into reality in the marketplace! At Pegasus
Technologies, we help our customers go from concept to an actual working design. We are concerned
not only about a good product design, but also are genuinely interested in manufacturability
and continuing product support for our customers. For this reason, we verify to the best of
our ability that the components that we use in our designs will be there so your product will be
ready to ship on schedule, both now and in the future.
