Obsolescence is Inherent in the Electronic Component Industry
Obsolescence is an inherent side effect of various supply chain challenges across industries. End-of-life (EOL) and last-time-buy (LTB) notices are particularly common across the electronic component space. Most recently, the global COVID-19 pandemic put a magnifying glass on underlying acute and systemic root causes of obsolescence in the component market. It also accelerated shortage effects across the globe. In these situations, manufacturers are in varying states of preparedness to defend against and work through the effects of obsolescence on their supply chain processes and their product lifecycles. Common causes that trigger component transitions include:
Reduced Demand: Original contract manufacturers (OCMs) discontinue production of parts that have organic lower demand and that cut into profit margins.
Mergers and Acquisitions: An increased rate of mergers and acquisitions in recent years has led to more EOL notices following product line consolidation and technological upgrades.
Innovation: Component lifecycles are compressed as consumer demand for faster and better innovation increases.
Geopolitical Events: Drawn-out trade conflicts, government sanctions, as well as recurring economic shutdowns can unintentionally force product obsolescence.
Extreme Weather Occurrences: Extreme weather is circumstantial per region and has a domino effect across manufacturer operations and logistics. Severe droughts, major earthquakes and flooding can lead to factory shutdowns, longer lead times, limited supply output and shipping delays.
Supply Chain Strain: Logistics pain points, such as material, workforce and chipmaking equipment shortages impact production timelines.
Regulation: Governments pass and enforce regulations that prematurely halt the planned production of parts containing certain substances, which leads to unanticipated EOL notices.
As inevitable as EOL and LTB announcements are in the electronic component industry, obsolescence effects don’t have to leave manufacturers and companies vulnerable to volatile market behaviour. As an independent distributor, Fusion Worldwide takes a consultative approach to partnering with manufacturers on component obsolescence transition plans. Fusion combines its industry expertise and its proprietary service stack to collaborate with manufacturers to create smooth product lifecycle transitions, by leveraging:
Strategic Partnerships: Fusion Worldwide built its business on establishing strong partnerships with both customers and suppliers around the globe. Fusion learns and assesses a customer’s business and its needs, and works to customize component supply plans on an individual basis to best serve those needs. Without such supplier relationships, a customer’s component gap is at risk of continuing to widen.
Market Intelligence: With a vast global network of industry experts and market analysts across its 21 regional offices around the world, Fusion Worldwide is constantly monitoring for obsolescence intel and component availability around the world and around the clock.
Real-Time Communication: Manufacturers who partner with Fusion can expect to receive relevant and up-to-date market and component intel that is impactful to their business in real-time. With this information and communication approach, manufacturers can depend upon Fusion Worldwide to expedite transition sourcing action plans for affected product lines.
Alternative Parts: When a part becomes obsolete, Fusion will leverage its global relationships, resources and proprietary technologies to determine alternative and substitute part options to match a customer’s specified build.
Logistics Hubs: Each customer’s business need is unique, which means every solution should be as well. Fusion provides inventory management support for last time buy and product lifecycle extension purposes.
Fusion Worldwide believes customers do not need to be vulnerable to supply chain challenges regardless of the root cause. The more Fusion gets to know a customer’s business, the better it can partner with and consult on electronic component supply chain plans. Rather than a reactive approach that some manufacturers may find themselves having to employ, Fusion is on the ground and around the world to anticipate inevitable supply disruptions, and is also there to partner to solve them.
Have you experienced supply chain challenges due to product obsolescence? Visit www.fusionww.com to get in touch with an electronic component supply chain consultant today.