Download - Company White Papers: Shortage Solutions
Everyone always talks about electronic component shortage
solutions. But what causes them and how can we help to
prevent them? Many things cause electronic shortages. We
will help to identify the main ones here and the solutions to
planning ahead for them. Electronic components like other
commodities are subject to issues having to do with both
supply and demand. Component supply shortages can be
the result of tooling issues, raw material shortages, and nat-
ural disasters etc. The obvious demand shortages occur
when a commodity is flying off the shelves and there is not
enough material to keep up with market with the demands.
Here are some things that cause electronic component
shortages;
· Incorrect forecasting
· Commercial markets drives shortages
· Tooling issues, fabrication shifts, or changes
· Raw material shortages
· EOL products
· Harsh weather or natural disasters
· Product life cycles being reduced
We will discuss helpful ways to plan ahead to alleviate the
risk of your production line coming to a complete halt.
What Causes Shortages?
Incorrect Forecasting
When it comes to incorrect or unforeseen increases in
demand forecasting can seem also next impossible to get
exactly what you need when your customer needs it. Many
OEM/ CM suppliers find forecasting extremely difficult
depending on the type of markets they serve. There are
many suggested methods that can help, however many are
cost associated with having the appropriate tools needed
to make educated decisions. Small to Medium sized
companies sometimes have difficulty finding a solution
that won’t drain their profits. Furthermore, the lack of
material can negatively affect the project’s release, growth,
and potential life-time.
According to researchers, (KENNEDY; PATTERSON;
FREDENDALL, 2002) some solutions include setting up
“...inventory control regarding the type of control, service
level and related costs. The aspects usually considered in
these classifications comprise value, criticality, demand,
and the product's phase in the life cycle.” Many buyers
and engineers have to dig to find helpful data when
looking for solutions. Perfect Parts eases the process help
to make the process swift and also assists in providing
product when needed over long periods of time with
scheduling.
EOL Products
Majority of distributors cannot predict or keep up with
product change notifications or end-of-life alerts.
It’s important to not have too many disconnects in the
process because time is of the essence when trying to
resolve or react to shortages and end-of-life alerts.
Customers must be able to flag and set alerts for parts
they know present a potential issue in the future. Perfect
Parts Corporation offers golden data solutions in this
area. The data we present is audited and offered mainly
through the manufacturer. This allows for a more
pro-active approach as opposed to a re-active approach.
The tools we offer will allow a user to be able to
pro-actively search for solutions to product obsolescence
before it occurs. Product information can change quickly
causing a multitude of buyers to scurry into the electronic
market to procure product for a Last Time Buy (LTB)
leaving those without the alerts left to often sub-standard
material or alternate sources. Perfect Parts helps to offer
our customers alerts as they occur. Something that is
difficult for other distributors to maintain without a
streamline process like ours.
The process most are used to now is a re-active approach.
This may have been the best case scenario in the past.
However, Perfect Parts has taken a proactive approach to
change all of that. We have alerts directly from the
manufacturer so our clients never miss an alert and are
forced to purchase from the open market. We want our
customers to have superior service as compared to the
experience offered by our current competition.
Authorized
Distributors
MANUFACTURER
RELEASES
OEM/ ODM/
CM Customer
Time Delay Tier One
Customers
Search Engines; Ex:
Google, Electronic
Search Engines; Find
chips, Octo. Etc
Time Delay
LIVE PERFECT
PARTS WEBSITE
Frequent Audits
Perfect
Part
Search
Users
Real Time
Real Time
Real Time Real Time
Perfect Parts Data Solutions Flow Graph 1.1
We hope to make our customers satisfied and much more
successful while using the tool we created. We hope to
build a strong foundation for customer success, loyalty,
and the Perfect Parts Corporation brand as well. Our
information also includes that of Life Time Buy (LTB) or
Last Time Buy notifications. We have all the tools our
customers need to increase their success in managing
shortages.
Commercial Markets Driving Shortages & New Emerging
Technologies
As new products and technologies emerge the risk of a
similar old product reaching the risk of obsolescence
increases. The commercial market often fuels the fast
growth of the electronics industry. The volatile changes
in design and development of electronic parts and
products, is often caused by “Increases in speed,
reductions in feature size and supply voltage, and
changes in interconnection and packaging technologies…
Consequently, many of the electronic parts that compose
a product have a life cycle… which (are) significantly
shorter than the life cycle of the product.” (Rajeev Solo-
mon, Peter Sandborn, and Michael Pecht). With constant
desire to improve technology and efficiency both
engineers and buyers face demands to sustain the
commercial markets demands and growth. It’s necessary
to have tools available to our clients. We hope that
providing the tools and information we will to help to
create new innovations and mitigate the risk of not being
notified that the product (s) they use are being
discontinued. With the proper tools in place there are
ways to stay ahead of your electronic component
demands or at least have a strong grasp of the proper
methods to help mitigate the risk of having future issues.
Tracking life cycles on the products you’re using or
planning to use is a great start.
With the perfect parts tool you can do just that. Perfect
Parts helps in all stages of the process from new product
integration to supplying a steady flow of products to suit
your quarterly or yearly demand.
Tooling Issues/ Fab Changes
Many of the shortages are caused by the component
manufacturer experiencing tooling, fabrication shifts/
changes where they face their own internal shortage on
material needed to fix an existing machine. These issues
leave the customer frantically searching to locate
material once they get word that their parts cannot be
produced for a certain amount of time. Those who
cannot wait are driven into the open market to find
sources for the product that they need for their build.
This particular issue leaves little that one can do
depending on the market and the availability of those
products. Perfect Parts helps by assessing the market
and giving the customer immediate feedback of all
possible options in regards to the part.
Some include locating a replacement, mitigating the
customers risk from procuring from an open market source,
and locating OEM/CM surplus inventory which use the same
items on their production line.
Raw Material Shortages
Raw material shortages occur for a number of reasons.
Quite simply there are limited resources when it comes to
raw material used for electronic components. Like all
natural resources we run the risk of depleting or using up
the current supply. From time to time, these issues arise
due to the location of where these raw materials are
sourced. Political issues can arise in areas where raw
material is mined etc. Areas like the Congo in Africa are
fueled by corruption, oppressive political & economic issues
there risky. Sourcing raw materials from these areas can
become extremely difficult to rely on during civil and
political unveils or unrest for steady supply of materials for
production.
It’s highly suggested to take the conflict mineral, substance,
full material disclosure information into account when
selecting a product. Perfect Part search has the data
needed to make better decisions. With access to over
four-hundred million parts in our database - Perfect
Parts Corporation can help to provide information that
will help the engineers and purchasers make the best
decisions possible when it comes to conflict mineral
information.
Harsh Weather or Natural Disasters
Harsh weather and Natural Disasters have been known to
slow down shipments, cause delays and overall disrupt
supply chains. Factories with production in areas which are
prone to having hurricanes, typhoons, and tsunamis pay the
price when a natural disaster strikes. In fact, the last
typhoon in Thailand caused major hard-drive shortages all
around the world. Unfortunately, we can never predict when
a natural disaster even when it can negatively affect our
supply chain. The only approach which has been proven
effective is to mitigate this risk and take a proactive
approach. Our state of the art and innovative tools can be
your first line of defense against these risks to your
production. Our newest features in this area will soon be
released.
Conclusion
Although, shortages occur Perfect Parts has the tools needed
to plan a pro-active approach for your supply chain. We are
the first distributor in the world to take such measures to
support our customers supply chain. Try our data solutions
tool by calling 949-209-1655 or by emailing
References;
1. (KENNEDY; PATTERSON; FREDENDALL, 2002) KENNEDY , W. J.; PATTER-
SON, J. W.; FREDENDALL, L. D. An overview of recent literature on spare
parts inventories. International Journal of Production Economics, v. 76-2, p.
201-215, 2002.
2. Rajeev Solomon, Peter Sandborn, and Michael Pecht. Electronic Part Life
Cycle Concepts and Obsolescence Forecasting. IEEE Trans. on Components
and Packaging Technologies, Dec. 2000, pp. 707-717 1