Introduction
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 its importance is 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:
S Jaya Kumar, Consultant, Component Supply Chain Management
Conatct
him at:
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