Dynamics of Electronic Components

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Living with the Dynamics of Electronic Components: The Importance of Component Event Management in a PLM Strategy discusses the inherent challenge of managing product lifecycles for products that contain electronic components, given that the components often have shorter lifecycles than the parent products. Introduces the concept of Component Event Management (CEM) to combat component obsolescence. Please enjoy the free Executive Summary below, or click the report title above to download the full PDF (free of charge, no registration required).

Table of Contents

  • Executive Overview
  • Product and Component Lifecycles – The Disconnect
  • The Impact of Component Events
  • The Fuses Have Been Lit
  • The Windows of Opportunity Are Closing
  • Enter Component Event Management
  • Implementing Component Event Management
  • Recommendations
  • Conclusion
  • About the Author

Executive Overview

There is a fundamental disconnect in the lifecycle of products that contain electronic components that drives excess costs for OEMs and contract manufacturers that produce these products. This disconnect is not between the products and the electronic components that they contain, but between the lifecycles of the products and the lifecycles of the components. The root cause of the lifecycle disconnect is that the duration of an electronic component’s market life is significantly shorter than the life of the product that contains it. This is often true for the active selling life of the product, but even more true for the maintenance portion of the product lifecycle. With component lifecycles shrinking, it is becoming more difficult to manage the lifecycle of products that rely on the components inside.

The impact of the product-component lifecycle disconnect is that manufacturers must expect and accommodate disruptions in component lifecycles during the active life of their products. This disruption can result in significant costs to the business, as well as significant lost opportunities. These costs can take many forms. In the extreme case, a component change could result in a part shortage that would shut down production or limit the ability to service a product. The direct cost and impact on customer satisfaction in these situations can be astronomic. More frequent scenarios fall short of those high profile scenarios, but accumulate to significant costs. Parts may need to be procured at highly unfavorable rates because of reduced negotiation time, the company may be saddled with excess inventory, or they may face a critical shortage of inventory and need to buy through brokers at significantly higher costs. A commonly reported statistic is that 80% of a product’s costs are locked in at design time. Without proactive management of changes in component lifecycles, that 80% cost is not only locked in as a minimum cost, it is also at risk to inflating rapidly because of a component lifecycle issue. To compound the issue, an increasing amount of product manufacturing is being outsourced, making the problem more complicated as the OEM, contract manufacturer and potentially third party design firms must coordinate to effectively respond to component lifecycle disconnects.

The most challenging obstacle to resolving component lifecycle disconnects is time. Given time, companies can react to component lifecycle problems. End of Life (EOL) notices and Part Change Notifications (PCNs) are an everyday occurrence, but many companies don’t have a process to effectively monitor the impact of these changes, or “Component Lifecycle Events”. With each passing day that an event is not identified and acted upon, the options for resolution become less palatable and more expensive. The time required to address a Component Event includes the time to identify the relevance of the event, to react to the event and to bring the event to a resolution. Without a disciplined process to identify, react to and resolve Component Events, they are like little bombs waiting to blow up the product lifecycle (or at least the P&L).

Component Event Management promises an answer. Component Event Management is a methodology to systematically detect and resolve Component Events in the most timely and efficient manner possible. This paper will introduce the philosophy of Component Event Management and introduce a new category of software that is being developed to help implement this concept and improve business performance.