Legacy products are prone to fake parts. How to mitigate.

Ensuring component integrity is an increasing challenge for electronics manufacturing service providers focused on industrial products. Short consumer product lifecycles, the electronics industry’s conversion to lead-free components, and general weakness in the global market have increased the speed at which components are becoming obsolete. At the same time, industrial products often mature into legacy status due to the cost of redesign and qualification that drive very long life-spans.

In some cases, OEMs assume their best option is to avoid the cost of redesign and task their EMS providers to take reactive measures to source through independent brokers as components become unavailable. Ultimately, this can be false economy, because when a component goes obsolete, many hidden and unexpected costs creep in over time. These risks can include:

• Inability to support market demand if components are not available.

• Purchasing counterfeit parts through unknown independent distributors if component supplies are extremely limited.

• Higher fallout from using legitimate parts with older date codes.

• Higher fallout from parts that have been reworked and sold as new through the gray market.

• Disappointed end-customers if parts pass in manufacturing test, but fail prematurely in the field.

Best Practices
What are the alternatives to reactive procurement practices in supporting legacy product? First, establish a plan and team with both the EMS provider and key manufacturers within the component supply chain to address obsolescence as early as possible. Second, since material costs will increase over time on a long lifecycle product, periodic redesigns should be budgeted and planned. Finally, since some purchasing of components through independent distributors is likely, it is important to establish relationships with the best suppliers – ones that will provide some level of guarantee that the source and integrity of the parts provided are reliable.

For example, one of our customers scheduled a revision spin of a complex industrial process control board. Before the redesign was finalized, we performed a lifecycle analysis of the components and identified nearly 20 parts at risk for obsolescence. The customer analyzed the alternate component suggestions and adopted about half. The remainder was left unchanged because substitutions would have required a complete re-layout of the printed circuit assembly. While this type of team effort and planning added some time and cost in the short run, the end-result is much more time and money saved over the life of the product.

The Real World
Even when lifecycle analysis is performed and regular redesigns are scheduled, legacy products can still experience unanticipated obsolescence. Component manufacturers give good advance notice prior to ceasing production on their components to companies with scheduled demand. However, with low-volume legacy products, components may be purchased as infrequently as every 12 to 18 months. In those cases, the first notice that the part is obsolete may be received only when the order is placed.

If known independent distributors don’t have a critical part, the next step becomes searching lesser-known independent distributors, and this requires a strong teaming focus. The customer may have suggestions on distributors they have used successfully, and the EMS provider is likely to have a network of companies that are potential suppliers. Regardless of how potential suppliers are identified, the customer should maintain awareness of any untried independent distributors being used. Counterfeit parts do exist, and some of these parts are so well packaged that only destructive test sampling or high failure rates in the product will lead to their discovery.

Whenever unknown suppliers are used, the original source of components should always be ascertained. Components also should go through a more rigorous incoming inspection. If either of those activities generates concerns, sending a component to its original manufacturer may offer an additional measure of safety, because the manufacturer can easily compare part numbers, lot codes and date codes with its database.

When parts from an unknown source must be used and can’t be tested prior to assembly, producing and testing a small sample run may be a good way to uncover problems quickly. Even if parts are legitimate, issues such as age, improper handling or reworked parts sold as new may drive higher-than-normal failure rates. The sample run also can help set cost expectations if the higher failure rates are deemed an acceptable tradeoff.

When supporting legacy products, it is important to realize component-sourcing problems due to obsolescence will occur at some point. Similarly, counterfeiting is prevalent enough in the electronics industry that it is no longer a matter of “if” illegitimate parts will end up in your legacy product, but “when.” Robust incoming inspection, sample builds and testing can help when tradeoffs to standard procurement practices must be made. More important, establishing a plan with your EMS partner, good supply chain qualification and management practices, proactive product lifecycle analysis, and regular redesigns can help mitigate the risks to customers and the bottom line.  CA

Dennis Gradler is director of business development for Industrial Solutions at Kimball Electronics Group; dennis.gradler@kimball.com.

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