Can Buyers Be Proactive About Obsolescence?

Ever changing technologies and fluctuations in supply and demand in the semiconductor industry lead to more cases of component obsolescence—a historical response to evolving technology or shifts in the supply chain. More than 70% of electronic components become obsolete before they are installed and buyers are always trailing behind their suppliers as they develop newer, more capable parts.

This can likely occur through discontinuation of certain parts or various other factors that could leave buyers wondering where to purchase their next batch, or even source new models to advance their technologies. 

With multiple drivers of obsolescence, companies may not always be prepared for the disruptions to come, but they can develop proactive strategies, keeping them in the loop with supplier activities and potential changes to products as a result of evolving technology needs. A proactive approach to obsolescence management need not be a problem for buyers, more a necessity, and we will be looking at some of the ways that businesses can get ahead of the game and understand the likely periods of change.

Causes of PCB Parts Obsolescence

Obsolescence is largely due to an item’s end-of-life (EOL), which is generally determined by the supplier and communicated among customers in time for new or replacement products to enter the market. 

While some versions may not require action, discontinuation of certain parts springs procurement teams into action, opening sourcing efforts and searching among new and existing suppliers, or integrating new parts into the current designs of their products. 

Other factors instigating obsolescence include: 

• Advancement in technology: Manufacturers deliver parts that meet the needs of evolving technologies. 
• End-of-life declaration by manufacturers: A product is discontinued as a result of one of the factors mentioned below.
• Changes in regulations: New requirements are taken into consideration and new models are brought to market. 
• Supply chain challenges: Disruption to supply of components causes manufacturers to tighten their production and reduce production.

What are the Impacts of Parts Obsolescence?

Challenges arise as components become outdated faster. Post-obsolescence, necessary parts become more expensive—a result of manufacturers discontinuing goods—driving up prices among both authorized and unauthorized sellers. 

This also raises questions as more unauthorized vendors deliver the goods, and buyers purchase parts with minimal guarantees of receiving genuine products. Manufacturers often prefer the safety net of goods bought directly from the supplier, but in such circumstances must seek the most suitable parts they can—and for the cheapest price (if possible). 

Obsolescence could mean one of two things in the long term: alternatives must be found to continue manufacturing a product or new products must be integrated into the current design. The ability of companies to implement a proactive approach to obsolescence management lies with procurement teams and the relationships they build with their suppliers.

Defining Parts Obsolescence Management

There are various strategies for tackling parts obsolescence, but to avoid complacency, perhaps it is worth looking into the management aspect and why this has become so important to companies globally.

Here are the core reasons why obsolescence management is important, and how it can make or break a product’s lifecycle. 

Product Design Becomes Obsolete: Electronics designs are created to stand the test of time—with minor changes here and there. However, discontinuation of a single component could be the end of a product and the hopes of any future models. 

Cost Management: As a component becomes obsolete, procurement has little time to waste if it is to acquire components from another supplier for the best price. In the case of product redesign, the team will be forced to spend time and resources acquiring new components.

Quality Assurance: Without a proactive approach to obsolescence management, there is no way of knowing—anticipating rather—when it will occur. This is where supplier relationships come into play as, ideally, procurement teams need to be aware of component obsolescence in good time. This will reassure that an equal part can be sourced and avoid rushing to find an alternative—more time to assess the quality and suitability of a product. 

Environmental and Technology Regulation Changes: On occasion, obsolescence could be a result of changing industry standards and regulations. To remain compliant with regulations like the Waste Electrical and Electronic Equipment (WEEE) Directive, Restriction of Hazardous Substances (RoHS) Directive, IPC, and others surrounding technological advancement and environmental management, manufacturers must make significant changes to their components and their compositions.

Proactive Strategies to Mitigate Obsolescence

There are various different approaches to take in order to overcome parts obsolescence, but this depends on specifics of the business and the foreplanning in place to proactively integrate changes and updates to current parts. 

The varying degrees of actions to take in the event of obsolescence will be determined largely by inventory capacity, visibility of the current supply chain, and the design of a product.

Lifecycle Planning

Managing obsolescence requires visibility and intrinsic insights into a product’s lifecycle. In most cases, customers will be made aware of parts discontinuation, but leaves little time to waste—sourcing teams must kick into gear and figure out the next, least disruptive steps.

Realistically, the procurement challenge is to minimize the impact of obsolescence on the flow of manufacturing. There are a couple of ways in which this can be achieved, but eventually, buyers will be forced to acquire new products, or new models of the components they need. 

Lifecycle planning is a proactive approach to obsolescence or, indeed, mitigating the impacts of it. By understanding when a product, albeit a component or finished product, reaches retirement, procurement teams can strategically integrate component sourcing into their life cycle analysis, putting them one step ahead of potential changes in the supply chain. 

Diversification of Suppliers

Reliance on a single supplier puts buyers in a very vulnerable position. If a company discontinues a necessary component, this can lead to a period of uncertainty as they look for a new supplier or a surplus of their desired part. 

Octopart’s PCB parts search engine can support in such scenarios, but can also be leveraged to shortlist various suppliers and parts that match their requirements. Moreover, when searching for new suppliers, it can be difficult to sift through an abundance of aftermarket resellers, namely Quest and Rochester Electronics are featured authorized vendors. 

Redesign and Find Alternative Parts

In the event of obsolescence, parts will inevitably be discontinued, resulting in—at some stage—sourcing of new components, and the need to integrate them into product designs. Liaising with manufacturers in the early stages of the EOL process will help determine a course of action. This may consist of upgraded parts from the same supplier that integrate seamlessly into a product, or a redesign to accommodate new ones. 

Proactivity and Supplier Relationships Ease Obsolescence

In an ideal scenario, active efforts will be made to reduce the impact of parts obsolescence in any product. 

Understanding the volatility of component markets and that they are susceptible to change means that electronics makers should be considering the risk implications of discontinued or faulty parts. 

Moreover, as environmental and technological demands change, there is likely to be a major shake-up of components in the coming years. The dawn of AI and increasing focus on environmental compliance will be key factors in the changes to come.