3 Ways to Deal with Long Lead Time Components
Are you manufacturing a product that has seen lead times for electronic components longer than before? Maybe you have placed a PO to your contract manufacturer and found the lead time will be 100 days longer because of one component. And you think, what am I supposed to do? I need a product to sell and I can’t wait. You’re not alone.
Unfortunately, these long lead times are here to stay. So, how can you prepare you and your company to hedge some risk from these long lead time components?
A common practice to reduce risk is to have your supplier hold inventory for components with longer lead times. This works by purchasing long lead time components well before you will need them in production. Instead of purchasing your entire finished product, you can purchase those long lead time components first based on your annual forecasts.
Your contract manufacturer will hold these for you and proceed with fabrication of other parts and components and assembly when needed. Therefore, your supplier is not waiting longer for those long lead time components to arrive.
Source Alternative Components
When sourcing your PCB, not all of these components are critical to the design, they are not all key components. If you have some components with longer lead times that are not key components, why not try to find an alternative?
You can achieve two things here, a better price point and quicker lead times. Go through your entire electronics BOM and look for the components with long lead times and those that are not key components. If you are using a contract manufacturer, ask them to find alternatives to those components.
Use Component Distributors
Are you willing to pay a bit of a premium for certain components? A distributor might be the option for you. These distributors will usually not have minimum order quantities (MOQs) but you will need to pay more than going directly to the supplier. The most common example of a distributor would be Digi-Key.
What can you do?
There are a number of things you can do in order to confirm the components you specify and accept will be the components you receive.
To avoid confusion, it’s always best to be as detailed as possible. This usually starts with providing all the required specifications and bill of materials (BOM).
Qualify Alternative Components
Before you switch or before you accept any change request, you need to qualify the alternative components to either meet or exceed the requirements provided. If one supplier runs out of units and can not supply you with the part anymore, you do not want to be scrambling. Do your due diligence upfront and source and qualify new components as quickly as possible.
Own Your Supply Chain
A recent Wall Street Journal article was titled, “What’s Worse Than a Chip Shortage? Buying Fake Ones.” It goes into detail about what might happen if you purchase grey market components. The answer is simple, it’s not good.
The best thing you can do in order to own your supply chain will be to ask your contract manufacturer or supplier for their purchasing records for each purchase order (PO).
Have you been negatively affected by the chip crisis? If you are looking for a backup supplier, send us an email at Hello@epowercorp.com. We would love to chat.