The Specialty Equipment Challenge
The electronics supply chain moves quickly, and it oftens moves faster than suppliers can replenish customers with fresh component stocks. In the midst of semiconductor shortages, long lead times, and high competition for critical components, available component choices are dictating component selection and broader design choices. Companies that want to manufacture new products at high volume need to have design and sourcing strategies that work together so that new products can be taken to market without production delays.
EMS companies and prototype manufacturers providing turnkey services will make efforts to source designs through major distributors, trusted brokers, and direct from component manufacturers. However, in times of supply chain volatility, these efforts do not always ensure sustainable sourcing and production. Companies that want to weather supply chain volatility may need to take a design for supply chain approach, where a new product is designed within the specific limits imposed by the electronics supply chain.
What is Design for Supply Chain?
A new product that implements design for supply chain practices will be designed within the constraints imposed by available components, lead times for out-of-stock components, and lifecycle status of components. The goal in this design practice is to ensure electronic components for the product can be sourced as needed for multiple production runs over the product’s lifetime. A broader goal of design for supply chain is to implement product configurations that consider the evolution of the supply chain infrastructure throughout the intended lifetime of the product.
Short prototype runs can often be completed without implementing design for supply chain practices. In contrast, sustained high volume production runs should consider the velocity of the electronics supply chain and how component stocks may change over time. The limitations imposed by the electronics supply chain will affect design practices in the following ways:
- Limited component selection: Low stocks on a single component can limit the quantity of a design that can be produced when going to market. This should highlight the need to consider alternative components for a design long before finishing a design.
- Specialty components create risk: Production can be delayed by out-of-stock components whenever an alternative component is unavailable or does not exist. The costs involved in a redesign with in-stock components can be substantial, and lost market share can result from production and delivery delays.
- Lead times driving production schedules: Due to stocking issues, production could be limited to lower volumes or delayed significantly. Long lead times for components will place limits on production quantity and the ability to capture market share.
As the intent of design for supply chain is to ensure sustainable sourcing and production, new product designs should be developed around sustainable sourcing and scheduling strategies. Here are some strategies companies can implement to overcome supply chain volatility:
Avoid Irreplaceable Components
Some components, particularly a broad range of ASICs, may be highly specialized and do not have comparable replacements or drop-in replacements. Those that do may require some additional circuitry or come in an alternative package. To withstand potential supply chain problems, components should be selected under the following criteria:
- Components with drop-in replacements are preferable as they require no redesigns
- Components with an alternative package can be selected as they almost always ensure identical functionality while carrying minimal design changes
- Components with alternatives from other vendors and in alternative packaging can still ensure required functionality if #1 and #2 are infeasible
- Components with no replacements should be avoided if possible, and an alternative component set may be needed in this case
Plan for Design Variants
Once preferred components and their replacements are identified, the design team should plan to implement variant designs with these replacements. Some variants could have extensive redesigns, depending on the available components. For example, variants may need to be built with components in multiple packages, which requires changes to routing on the PCB, as well as the potential for additional supporting components. When multiple design variants are planned and are available for production, companies can implement an agile production schedule and can get to market without undue production delays.
Companies should also plan for the minimum number of required variants, and they should work with their EMS provider to ensure NRE costs are minimized when implementing variants. Variants with drop-in replacements are preferable as they carry minimized design costs and zero changes to process engineering once the design is put into production. Once the BOM for each variant is determined, the design team can implement these while the procurement team plans for production.
Lock-in Required Components Early
Once critical components and their alternatives are determined by the design team, it’s important to develop a sourcing strategy for these parts before a design is finished. Procuring these critical components early and planning production schedules around your available stocks, lead times, and held inventory is the best way to eliminate supply chain risk. This strategy reduces cash-to-cash cycle time and time to market, both of which are important KPIs for evaluating supply chains.
The Role of Your EMS Partner
Your EMS provider should do more than manufacture your new product, they should be an experienced innovation partner that can advise on areas like component selection, procurement, scheduling, and last-minute redesigns. Your EMS provider should play a role in eliminating supply chain risk by accommodating shifting in-house inventory and component stocks, as well as tracking component lifecycle statuses and managing production of variants as required. If a design carries excessive supply chain risk, your EMS provider should be able to implement best practices within design for the supply chain to help you get to market successfully.
Companies that want to bring their new products to market should partner with an experienced EMS provider that brings extensive design and engineering experience. PCI specializes in design for supply chain by unifying a design and sourcing strategy to ensure sustainable production. We have more than 30 years of EMS experience focused in consumer goods, industrial, automotive, and medical devices, as well as in Printed Circuit Board Assembly (PCBA) and box builds. Our Lean Six Sigma manufacturing expertise enables us to customize our manufacturing line to meet our partners’ requirements.
If needed, we provide our customers the flexibility needed to quickly scale production as needs arise. We provide our partners with high-quality products at lower manufacturing costs thanks to our shorter change-over time and leaner material control. Contact PCI today to learn more about our capabilities.