Electronic Manufacturing Service (EMS) providers are often asked to do the impossible. In most cases “the impossible” refers to the delivery deadline. Industry veterans know what it takes to produce their products, and they consider the timeline challenges of their EMS when planning product launches and production runs. Those who do not, often find themselves wrestling with supply chain and product delivery issues. Since we all deal with enough surprises that are beyond our control, it is essential to get in front of what we can. We hope that after reading this article, you will be better prepared to navigate the electronic manufacturing waters.
Advantages of understanding
You make yourself more valuable to your team and your organization
You can better manage stakeholder’s expectation
You improve your project and product management, planning, sourcing, and delivery skills
Original Equipment Manufacturers (OEM) often rely on electronic contract manufacturers (ECM) to supply the printed circuit board assemblies (PCBA) for their products. A critical part of the supply chain logistics is having these, and other product components arrive just in time for final assembly, testing, packaging, and shipping.
Bare Board Manufacturing
Bare board production is one of the most critical pieces of the product puzzle, and it typically requires the most significant lead time. On average, you can expect bare boards to deliver to your ECM within 4 to 6 weeks. Expedited turn-around is available, and you should expect to add the following price increases, should you require a faster turn. A two-week turn will add about 20%, a one week turn, about 70%, and if you have an emergency and costs is a non-issue, you can get your product in two days, but expect to add between 250 & 300% to the price of the board.
The electronics industry frequently has component supply issues. Year after year, experts speculate on future demand. Unfortunately, the predictions have been unreliable. One thing we can be sure of is that many component manufacturers will underestimate the need for some components and overestimate the need for others. In many cases, ECMs are not aware of a shortage until they have a project that requires the part. When demand exceeds supply, at a minimum you should expect to pay more for these items. More often than not, your lead time for the piece can grow from a few days to several months and in severe cases more than a year. It is hard to imagine that one small, yet critical, surface mount device could undermine your efforts and devastate the life of a product, but it does happen. No product to ship turns into no shelf space and even worse, no space in the mind of the consumer. In a highly competitive market, where product differentiation is minimal, this could be the beginning of a product death spiral.
How to avoid catastrophe
Here are a few simple, yet powerful, tips to help you circumnavigate the supply minefield.
“Be proactive” a standard mantra, and we hear it all the time. While proactivity can increase opportunities for success; it can also be overdone. Since our most scarce resource is time, it is essential to find a balance between the time invested and the expected benefit. So, as you develop your proactive strategy, you should also be prepared to rationalize your time investment, based on the potential risk avoided.
The BOM diddy
Each PCBA requires the development of a Bill Of Materials (BOM) a comprehensive list of all the necessary board components. The BOM is a great place to begin developing your proactive strategy. Many OEMs allow their ECM to source all the parts and that works well when you have a great working relationship, and your production runs are on a set schedule. In which case your ECM will monitor the availability of parts and notify you the moment there is a supply concern. At which point you can work with your EMC to develop a strategy to mitigate the impact of the supply issue, and in most of these cases you have sufficient time to protect your product.
If you do not have that kind of relationship with your ECM, you should plan to take the necessary time to get familiar with all the parts on the BOM. Determine which ones are ordinary, everyday components, and which ones are critical. Even if you depend on your ECM for sourcing, this exercise will be beneficial to you. You should also work with your electronics engineer to develop a list of acceptable component substitutes. The worst time to create a list of alternatives is when you find your parts are not available anywhere, at any price, so do this in advance, keep it up to date, and protect yourself from possible disaster. It may require a significant investment of time to determine how an alternative component might affect the product, but the long-term benefit far outways the investment of time.
Plan to monitor the global supply of your critical, no substitute items. If your ECM sources all of your parts, lean on them, ask them to keep an eye on the supply for those “one of a kind” items. Your ECM should have long-term relationships with several distributors, and they more than likely have the ear of someone who and can provide accurate and timely information. If a shortage is on the horizon, your EMC may reach out to you and request a PO for a large quantity that will protect you from scarcity and escalating prices. Stocking up is often the only way to maintain your future production schedule. EMCs are usually the first ones notified when a part has reached “end of life” which means it will no longer be manufactured. You may need to consider buying sufficient quantities that will allow you ample time to redesign your boards if alternative parts are not an option.
Lastly, a good EMC will help you find costs savings on your printed circuit board production. Areas we like to explore are your annual projections. While you may require a monthly, or quarterly delivery, your EMC might suggest purchasing supplies well in advance to reduce costs and to provide a supply cushion. The EMC may also suggest panel design revisions to increase production efficiencies and save money over the life of the product.
We hope these tips will help you be better prepared to manage the lifecycle of your electronic products!