Figures released by the information and analytics firm IHS Markit indicate that electronic component vendors issue 28 product change notifications (PCNs) and 22 end-of-life (EOL) announcements per day. For product designers, manufacturers and purchases, this rapid turnover poses a logistical nightmare.
Due to the rapid rate of development within the electronics industry and the recent spate of high profile mergers and acquisitions, the lifecycle of electronic components is decreasing at a dramatic rate. A component that has market-leading functionalities today could be superseded within a year. Today it is not uncommon to see parts enter its end-of-life phase after 18 months of manufacturing.
Unfortunately, a natural by-product of the supply chain is excess, and this potential pitfall is more prominent when parts can be classified as obsolete. This makes it even harder for manufacturers to accurately plan their purchasing strategies and simultaneously guard against obsolescence and surplus inventory. And then factor in that product designs can be altered to accommodate newer parts and technologies, leaving companies to honor existing commitments to purchase now-outdated semiconductors that are no longer required for production purposes.
Under normal situations, excess and surplus stock is seen as a negative. This excess inventory is typically a drain on resources, as it inflates labor, warehousing and management costs. Many companies opt to liquidate this stock, though this process can increase short-term overheads.
However, as Frank Cervino explains; “manufacturers left with a surplus stock of obsolete electronic components can work with a third party that focuses on the management and marketing of said inventories.
“Unlike the standard liquidation process, this approach could ensure a financial return on the stock that has, effectively, been marked for disposition.”
For purchasing departments that need to balance the books, this method could be extremely beneficial – not to mention profitable.
- Posted by Lantek Corporation
- On February 15, 2018