Many designers will, at some point, find themselves in a position where they need to source End of Life Components in order to service a design; parts that are near, or have passed, the point where they are Out Of Manufacture. It may be that a component becomes End Of Life unpredictably in the middle of a product’s lifecycle, and attempting to move to new, more easily-sourced franchise components will prove uneconomical, necessitating the continued supply of this End Of Life part. Or, increasingly, it may be that a company has opted to use End of Life components from the beginning of a product’s lifecycle in order to enjoy the economies this part can deliver.
The need and/or desire to utilise End of Life components, (whether by necessity or by choice), is something we’re seeing more and more in the market. This increase in demand of End Of life across the board is driven by many factors; increasing pressures to drive down costs, for example, or the need minimise redesigns, or to eek more life out of existing product designs. As the pace of innovation increases, we’re also seeing a general shortening of product lifecycles across the board. Product generations are being superseded more quickly than ever before. In such an environment, with often shorter runs of products, the sourcing of a finite number of lower cost, End of Life components as a fundamental design element may be a relatively low-risk proposition.
Companies can make a huge success of End of Life sourcing. However, in order to do so with optimal efficiency, companies need to ask themselves what exactly a good End of Life Component partner looks like.
Obviously the first criteria is to source distribution partners with the appropriate expertise in sourcing from the open market. Open market sourcing requires a very particular blend of skills. It’s preferable to look for a company with some heritage here.
When sourcing from the open market the thorny issue of counterfeiting also obviously needs to be mitigated against. In truth, most distributors worth their salt have got some relatively sound testing practices in place, and as a result this has been of decreasing concern to most companies in recent years. But still, any open-market sourcing efforts should be backed up with comprehensive testing policies and, if possible, lengthy guarantees on all parts supplied.
A question of diversity
However, increasingly, there’s more to this question than the simple question ‘can you source End Of Life parts reliably, consistently and economically?’ All of these things need to be addressed. But in a situation where a product run continues for longer than expected, or a redesign towards franchise components is considered desirable, the traditional open market sourcing model reaches the limits of its usefulness. Generally, such suppliers will have neither the nous to help you design-in different components, nor the scope to supply you with franchise lines.
This is where companies are increasingly seeing the value in distributors that can credibly sit on both sides of the fence, supplying both open market and authorised-line components with equal assurance. A distributor that can not only credibly handle open market requirements, but also franchise distribution, and which has pre-existing knowledge of a customer’s design requirements, stands a better chance of helping companies flexibly transition, where required, from End Of Life to franchise components. And if they can also, potentially, introduce you to franchise partners who will be motivated to assist you in the redesign process, so much the better.
There’s also often a clear economic benefit to maintaining existing supplier relationships under this model. Very often, when companies are forced to move from a traditional open market distributor to a franchise supplier, they are forced to either void pre-existing relationships or deal with a different ‘tier’ of supplier. This creates a sense of ‘sourcing shock’. Being forced to move from, say, a relatively HMLV open market arrangement to a separate franchise supplier in order to service a design can result in either significantly higher costs or a lower position on the priority ladder. Companies will usually get a better deal if they can continue to deal with a single distributor with whom they have a relationship, but which can swap to service both open market and franchise requirements as required.
First and foremost, it’s important to find the most reliable open market supplier you can. But in the current environment designers and purchasers need to take a broader view. Often, I’d argue, the long-term economy of engaging with a distributor with a broader sourcing model will pay for itself many times over.
