In these series of articles, we will be covering some of the fundamentals of component sourcing/procurement in electronic design and manufacturing companies. The component procurement engineer can save huge time and money by using smart sourcing strategies. It's not just saving of time and money even more important aspect of smart sourcing is ensuring component reliability and overall quality of the end product. Along with buying skills the technical knowledge of procurement specialist plays important role in selecting complex semiconductor ICs and other such high-tech components/chips and devices.
The success of electronic system design and manufacturing companies, small or big, largely depend upon the success and effectiveness of their various functional teams such as design and development, sourcing and procurement, manufacturing and distribution, marketing and sales, etc. The company as a whole and the individual teams need to have a reason, plan and, action aligned to the company's goals and objectives, "the mission", for their continued success and growth. It's about start doing the task and learning by doing it using a Plan-Do-Check-Act (PDCA) cycle.
The company, at all times, with effective systems, processes, expertise, software/applications, etc., can control the product development right from conceptual design to the product release. However, one should not forget about the importance of gathering, storing, updating and, reporting the required-right-recent-reliable data at various stages of product development. The paradigm should also remain focused on other parameters whether directly or indirectly affecting the production cycle. To name a few of those parameters:
1. Health and safety: Impact of the social and environmental regulations (RoHS REACH, new materials introduction, etc.,) around the world are nowadays the hot topic discussed and worked upon by minor and major companies to stay in the global market and competition.
2. Supply chain: Geo-politics, regulations across various regions, counterfeits, obsolescence, suppliers, quality-centric processes and required-inventory availability determine smooth production flow and reduced production costs. Few of these factors, if left uncontrolled, shoots up the production costs.
3. Market, shareholders and customers: The instable global economy, performance pressure on the company, bankruptcies, natural disasters, managerial directions, etc., all have a direct impact on the overall business.
4. Globalisation, partnerships and skill: The presence of the company in various nations helps bigger organisations to capture a higher market and utilize the natural resources effectively. The employees and the intellectual property are the biggest assets of every company.
5. Software: Based the size of the organisation, nature of products or services offered, customers, etc., the applications software, content-collaboration tools, Enterprise Resource Planning systems (ERP), and others can be chosen. The software may be developed in-house or purchased from 3rd parties based on the budgetary availability and the purpose.
6. Information: The external information such as governmental and regional regulations, safety certifications, visa-policies, etc., and the internal information such as product briefs, Bill-of Materials (BoMs), costs, patents, inventory details, engineering, suppliers, processes, training materials, etc., should be well-maintained. The depth and types of the information, its visibility, accessibility and user-friendliness guides the company to decide nature of storing mechanism.
Also, the processing methodologies, systems, quality initiatives, talent's expertise, etc., are also important in delivering the product or service successfully. Lean principles help the organisation to achieve improved customer satisfaction, process improvements, reduce production costs/time and improve job satisfaction. Bigger companies adopt quality-centric processes to achieve the best quality with low cost, less lead-time, best safety and high employee morale by eliminating the waste and redundancy. Thus, the information, which is of the right quality, available at the right time to the right people, can reduce redundant efforts, time and cost to the company in a big way.
What is component information, where it is applicable, what's the importance and how to manage the component data in the supply chain or organisation?
The company (OEM) is dependent on other company's products or services for one or the other reason and the dependencies are so high that there is absolutely no company who is not dependent on other company for any component, or service. Typically 60% of the finished assembly consists of components derived from the companies other than the original equipment manufacturer (OEM).
The component engineers study the datasheets of different electronic components from various manufacturers and interpret the key specifications to present them in a standard template and in a better way. This task is not just mere translating the technical information from one file to another (of course the format of the files varied …!). Several questions such as who uses this translated information, how the company would make business out of this and how will this information serve the customers and so on. The same technical and commercial information is represented in many ways from various manufacturers in their data-sheets/catalogs and the comparing between them becomes easier and simpler, if presented in a single file with customized search options. This helps the design engineers to select a right component in terms of specifications, form-factor, cost and other advantages. So one of the basic requirements in component sourcing is component information need to be presented in a single file or database to help the design engineers/ procurement egineers to save their time hugely.
The engineering and sourcing teams are very much dependent on suppliers' catalogs to procure components. The mode of presenting the catalogs initially started with hardcopies which had its own limitations. As the technology advanced, both suppliers and buyers have taken the full advantage of reaching and capturing the market. The catalog's format changed from paper copies to soft copies (scanned or tiff images) to searchable soft copies (pdf) to online search engines, etc.
We know that the culture, language, presentation, and methods vary from region to region and company to company. So, global companies consider these variations while developing any product. It's an added task to the design engineers to select the best-fit component out of these differently presented datasheets. The task is much complex and time-consuming if the number of components and products are more.
Few variations (inconsistencies) in the representation of component information:
1. The resistance code of a 1 kilo ohm resistor is represented as 1K00, 102, 1001, 1K, etc; similarly picofarad, nanofarad and microfarad are used variably.
2. Ordering part number nomenclature is not the same or consistent for all the manufacturers globally and even sometimes varied within the same manufacturer for the same category of components.
3. The usage of unit of measurements differs across regions. Component dimensions are represented in millimetres, inches, or sometimes both.
4. Differences in presenting the component's description by various manufacturers across different regions and component categories.
5. Orderable part numbers are to be formulated using the enumerated values (E3, E6, E12, E24, E48, E96 and, E192) in the given resistance or capacitance range for passive components.
6. The simple currency differences across nations.
So, the information, is just not limited to the electrical and mechanical specifications, but extends to any set of technical information such as life cycle, manufacturer or supplier contacts and transfer history, alternate components, thermal parameters, package dimensions, application notes, reliability predictions, product change notifications, wafer substrates, chemical compositions, material declarations, cost, etc.,
Technical information is required at all levels of every department in a company for one or the other reason. For example, product management requires the life of the critical components and the product's market placement to decide for an alternate new product introduction (NPI). The sourcing team needs the information about the required stock of a component based on the components annual usage, safe/warranty stock figure and in how many products the same component is used. The design team feels happy to select a component which is already used in the existing designs because the design engineer can re-use the associated component's design framework or pads layout or researched materials and thus can save the time. So, the next question is about the accessibility, format and storage of the technical information. This depends upon the size of the organisation and many other factors. To keep it simple, small companies can utilise MS-Excel spreadsheets or MS-Access databases while the bigger organisations can develop their own custom databases using Oracle, etc. Also, the companies can think of external vendors for maintaining these component information databases.
Thus, technical information becomes the part of the component-supplier management and this has become a very important activity in present day's competitive world either to introduce the new products quickly or to watch the market for break-through technologies or to make the company ready for natural disasters. There are many other benefits that can be availed from a well-developed component-supplier relationship.
Few of the reasons and benefits to have a strong component-supplier management system include,
1. To prepare smart bill-of-materials - avoids duplicate parts
2. To optimize the inventory and BoMs - reduces substitute and duplicate parts, helps placing bulk order and re-use the same part
3. To trim down the suppliers list - supplier management becomes easier and smarter
4. To improve component database - NPIs can be driven faster, inventory cost can be minimised
5. To reduce the load on PLMs and ERPs or other databases - achieves better maintenance of the applications
6. To become proactive rather than reactive - unproductive work minimized, excess capital reduced and limited parts usage
7. To avail value engineering or direct material productivity - promotes smart inventory for smart business
When we learn about component information and component engineering, there are many activities relatively performed to support different groups in the supply chain and engineering. The activities include component selection and qualification, supplier selection and qualification, testing, failure mode analysis, reliability predictions, availability, mitigating end-of-life (EOL) risks, availing component cost benefits or affordability, product change or discontinuance notices tracking and evaluating their implications on the products, etc .,
We shall start learning in module-based topics to understand the important component engineering activities that helps engineers in both, small and big companies.
Part2: Counterfeit components: Methods to protect against fake parts: Save reputation, severe loss of time and money by not buying fake parts
Part3: Green Component Sourcing through environment conscious part selection:: Selecting electronic components causing no/least harmful to environment
Part4: Electronics component supplier and device selection guide: Evaluation and selection of semiconductor IC chips and other parts and their suppliers
Part 5: The principles and process of electronic component selection: Component Selection; "an art" for SMART and cost-effective designs
Part 6: Electronic components Life Cycle management: Methods to manage sourcing issues of obsolete components
Author: Jayakumar S, Senior Consultant, Component Supply Chain Management
Contact him at: firstname.lastname@example.org