Managing Ever-Lengthening Lead Times
You’ve probably been hearing all about it. Perhaps your contract manufacturer is complaining, or someone from your purchasing team is frustrated.Across the board, lead times for electronic components are getting longer. More parts are going on allocation and shortages are becoming the norm.
These lead times are a headache for products already in mass production, but it can be even more of a challenge for the New Product Introduction (NPI) process. How can you iterate quickly when nearly everything on your BOM takes more than 10 to 20 weeks to acquire?
Developing Your Unique Strategies
There’s no silver bullet here, but there are a handful of simple strategies to help mitigate some of your toughest supply chain problems during the NPI process. Many of these strategies involve careful consideration of the trade-offs between development cost and time-to-market — of course, this is a consideration you should already have for any NPI effort.
The advice that follows is also geared towards companies that use contract manufacturers, and don’t necessarily run a manufacturing operation. These strategies are still relevant in all cases but will require some tweaking to meet your specific situation.
Working With Your Contract Manufacturer
If you already have an established relationship with a contract manufacturer (CM) and plan to manufacture your new product with them, they can be a considerable ally if you involve them early in the design process.
There are a number of ways to involve your CM early on to help manage supply chain issues:
Get Your BOM Sorted Early
The earlier you can give a BOM to your CM, the better. You may still be working on your PCB layouts, but if you can push your BOM out while you’re still finalizing design details, your CM can get to work sourcing those parts.
Release a Partial BOM
If you can’t get a full BOM together, assemble a partial one. Identify the components critical to your design and the parts that may be especially difficult to obtain. Give that partial list to your CM, and let them go to work.
Issue a Blanket PO on Long-lead Parts
When your CM finds the parts on your final or partial BOM, you’ll need to give them the go-ahead to start ordering those parts, even if it’s ahead of the release of the design. Be ready to spend some money to secure the parts that you will need.
Get Your Secondary Source Options Sorted Early
In a perfect world, you would go into production with every part on your BOM having a secondary source option (if not a third or a fourth). Unfortunately, that’s hardly ever the case. Now’s the time to make identifying potential options a priority in your development schedule — especially for your critical parts.
By lining up those crucial second sources, you and your CM have much more room to negotiate with suppliers and get those lead times down. Maybe one of those second source parts will come through on a much better schedule than your original part.
Working Directly With Distributors And Suppliers
At the outset, you’ll need to establish a rapport with your suppliers and distributors. By doing this, you can reach out to them and organize potential solutions quickly.
Here are some examples of how you can build and leverage this business relationship in productive ways:
Develop a Deep Relationship Directly With Your Suppliers
In long-term mass production, your CM will be handling the relationship with your suppliers. To get started, you need to have a healthy relationship with those suppliers. A friendly sales engineer at a supplier can help you by making your product a priority in the queue for parts.
This is especially useful for small volume products that would not usually get the attention of a large supplier.
Work With a Distributor to Gather a Stock of Parts
Working with distributors has its ups and downs. One of the key benefits of working with a distributor is that they can help you track down inventory and keep parts on a shelf for you to use up throughout your early manufacturing builds.
Similar to working directly with a supplier, a friendly sales engineer can help you secure the parts that you need and keep a stash of them on hand to cover the lead time gap.
Explore and Understand Your Spot Buy Options
If your builds are small enough and the parts common enough, there’s always a spot buy option. Order the parts online and get them shipped overnight right to your door (findchips.com is a great place to see which vendors are carrying available stocks of the parts that you need).
This is a very fast, if expensive, option to secure stocks of your most common parts — and let’s face it; even ceramic capacitors are seeing their lead times spike.
Be Ready To Spend Some Money
Long lead times are captured as either a project risk or a surefire delay in your schedule. Be ready to spend some money to mitigate that risk or shorten your schedule. It’s up to you to figure out how much money you’re willing to spend on them.
Remember that initial costs will have some variance from your long-term budgeted BOM. The first production builds will be more expensive to reflect that. Whether you’re ordering spot buy parts, stashing extras at a distributor, or sending your CM out to buy parts quickly, you’re going to pay for that speed and that risk mitigation. Don’t let this come as a surprise.
Lastly, be ready to discard parts. Design changes happen, often later in the game than we’d like. When that does happen, be ready to remove some of the parts you set out to get early on. Who knows, maybe you can offload them to somebody else in desperate need.
Long lead times will be a hassle for the foreseeable future. With careful planning for your NPI effort, you can still get your product to market quickly and realize all of the benefits that come along with it.
