Does the prospect of overstocking kill your critical embedded systems?
2011 wasn’t an easy year for DRAM manufacturers. The move from notebooks towards tablets and technology using NAND flash did nothing to bolster a struggling semiconductor industry. In this type of scenario it becomes common for manufacturers to shift their focus from older technology to newer ones. This process often leads to End-of-Life (EOL) decisions and component manufacturers sending out Last-Time-Buy (LTB) notices.
In addition to the immediate challenge of feasibly supporting products with obsolete components, embedded OEMs must focus on latest-and-greatest solutions, developing new solutions to satisfy their customers’ evolving demands. As the embedded industry shifts from older technology like DRAM to newer and more popular applications like NAND, customers can find themselves faced with a choice between over-stocking of so-called “obsolete” components, and phasing out older and less popular systems.
So where does this leave older products that don’t have a lot of sales, but are still used by valued customers?
Embedded computing manufacturers assume that the customers or distributors will most likely choose a LTB solution, to continue to support their embedded applications’ life-cycle. This LTB is meant to provide a bridge while customers transition to the newer technology now available.
This works well for a majority of customers who have quick design-cycles and available LTB funding, but the rest face overstocking risks:
- The application OEM buys too many products and on top of their unplanned LTB inventory investment, they’re now paying storage fees for products they infrequently use…and may never use again.
- The application OEM has forecasting confidence (and funding) for their LTB, but is gambling on the parts being properly stored so environmental factors don’t damage electronics’ performance or life. If all goes well, they’re set for their product’s life-cycle. If not, they’re scrambling for a last-minute solution.
- The application OEM doesn’t buy enough to cover their product life-cycle demands, and because the original product is already too far gone, they’re now faced with the possibility of last minute re-engineering, or reverse engineering, or risk of counterfeit parts and components if they source old components from non-franchised brokers.
All of these customers need an alternative obsolescence management solution, to keep their customers happy…or risk losing future sales to customer dissatisfaction. Problems like this is one reason why we now have an entire obsolescence management industry.
The GDCA Team