This is part two of our look at New Product Introduction (NPI) where we will look at part availability. If you missed the first articles, get caught up here. In this section, we dive into Part Availability, alternative parts, and lead times.
Products need parts. Otherwise, they would just be ideas.
But they can’t be just any parts. You’ve carefully engineered the exact parts into the product to make it spectacular. But what happens if those parts don’t exist at production scale, or are so expensive they would double the product cost?
You’ve picked the parts that solve the solution. In this section of the NPI process, your manufacturer finds parts that can make the product.
Part Availability Analysis
It’s important to both your team and the manufacturer to ensure that the product will be able to be built at a very specific cost. To achieve this, they will look over your Bill of Materials and assess each part for its availability and if any is nearing end-of-life.
Parts that are hard to find or difficult to buy in bulk create a variable cost that neither side wants to deal with. There are a few things that could cause significant availability issues. Some are temporary (see lead times below) or permanent. Both can cause serious design impacts.
- End-of-Life (EOL). Most parts are eventually replaced with newer versions that the silicon manufacturer believes better and eventually stop production on the current design.
- Extremely high demand. If a large company is about to launch its new smartphone, they may buy out the available product on the market to meet their needs, which will cause a backup for everyone else.
- Natural disasters. Typhoons, earthquakes, floods and other disasters where manufacturers are located can completely shut down production for months as everybody scrambles to relocate.
- New product. Often silicon vendors will share their coolest chips yet and attempt to convince you to use them, but then the details come out that full production isn’t for another year.
Even if a part isn’t suffering from one of the issues above, it may still take a long time to procure. So the other aspect of the availability analysis is checking the lead-time of parts.
This is the estimated time between ordering the parts and having the manufacturer receive them. Commodity parts (resistors and capacitors) are typically just a few weeks, if not fully stocked by the manufacturer already. High demand or high-cost components such as microprocessors can have lead times of 6-8 weeks or even 6-8 months.
Why such a long lead time on parts you can get from Digikey in a few days?
It’s all about scale.
Your manufacturer won’t be buying a small section of cut tape, but full reels of parts. With thousands of parts on each. Combine this with silicon manufacturers not wanting to hold inventories on shelves; it creates a manufacture-on-demand scenario.
The benefits of this mass quantity buying are that the parts come at a significant discount. A $1 part on Digikey could be as little as ten cents for the manufacturer, so your $200 BoM cost for your prototype just got reduced to $20-$30, doing nothing but scaling up.
Most manufacturers don’t buy parts directly from silicon manufacturers. Many are just too small to make it worth their time. Instead, distributors step in to broker between each side, but also to carry a supply inventory for you.
Digikey is often the first distributor engineers think of to buy parts because you can easily buy prototype quantities, but the Arrows and Avnets of the world are the major suppliers for the manufacturers.
Working with the distributor allows you and the manufacturer to pre-allocate parts that have longer lead times so when you are ready to build they have them waiting for you.
Lead time constraints aren’t the only thing the manufacturer will look at, but potential part alternatives as well.
Some manufacturers have a strong relationship with certain vendors which may provide a price break to you. So if they find parts in your design that have real alternatives, they may suggest changing the part vendor assuming it doesn’t alter the function of the design.
Other part suggestions could also involve changing part chemistry as well. Electrolytic capacitors used to be common in designs, but the materials have become so expensive that they are now hardly used.
Alternative parts allow for the manufacturer to find the best price and lowest lead times for parts. So anything that isn’t critical to the design (like processors) may get second (or third) sourcing.
The result of the manufacturer’s Part Availability analysis will be a report of all at-risk items and suggested alternatives.
This report will identify which parts are significant drivers of the cost and schedule so that your team can make decisions on if design changes need to be made.
Sometimes hard to get parts must be used due to design, regulation, or environmental conditions, and this document doesn’t prohibit those parts, but only calls them out to have agreement on them.
With the parts all agreed upon, the next article will get into the first build: the Engineering Verification stage.