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How to optimize the procurement of electronic components

Sourcing and optimizing the procurement of electronic components, particularly in an industrial setting, is a complex process during which multiple constraints must be taken into account.

Indeed, a manufacturer sourcing semiconductors or components for the production of electronic boards must take into account several potentially contradictory criteria:

-Optimizing Components unit cost

The first aspect that comes to mind when selecting electronic components is naturally that of unit cost, insofar as the component in question meets the required functional specifications.

The unit cost of a component will of course depend on the quantities ordered. Costs usually decrease sharply with volume.

ents can also vary considerably over time, depending on economic cycles and the balance between supply and demand.

optimization of the procurement of electronic components

As design-in decisions are taken by board manufacturers for several years (typically the lifetime of the product in which the component is integrated), the price elasticity of demand may be low, implying high potential price volatility.

-Taking into account the minimum purchase quantities for each component

Component unit costs are not the only cost criterion relevant to the purchasing decision. In fact, manufacturers generally have to produce a specific number of electronic boards. Unfortunately, component suppliers (distributors or manufacturers) often supply them in batches, each comprising a precise quantity of parts. In this case, the industrial customer may have to order more parts than he actually needs, which means potentially unsold parts.

Here's an example:

Let's imagine that a car manufacturer wants to produce 2735 electronic boards for a certain vehicle model. If one of the components is bought in batches of 5000 parts, the automaker will have an unused stock of 5000 - 2735 = 2265 parts.

If each part is sold for €1, the total cost of supply will be €5000, instead of the theoretical €2735. The effective total cost per part will therefore be 5000/2735 = €1.82 instead of €1.

When deciding to order batches of parts, this factor must be taken into account.

A good knowledge of production schedules and detailed anticipation of future production are therefore essential to optimize the total effective unit cost.

-Delivery times and lead times

Of course, cost factors are not the only ones to be taken into account when making purchasing decisions. Inventory levels, availability and lead times are also essential.

Very often, a buyer has to make a compromise between the unit costs of purchasing components and delivery times. Some distributors may offer attractive prices, but long lead times, not necessarily compatible with manufacturers' production targets. Other players, such as stock holders, can offer very short lead times, in return for higher prices for critical components.

Electronic Components Inventory and Lead Times

Managing the trade-off between unit costs and delivery times is therefore an essential aspect of optimizing electronic component purchasing.

-Electronic component packaging

Component packaging is another criterion to be taken into account. In fact, components can be delivered in several types of packaging: in bulk, on reels, in trays or in tubes, for example.

Packaging plays a major role in the production process, as it must be compatible with the manufacturer's production equipment, and in particular with the layout machines (surface-mounted components or SMC).

Appropriate packaging can lower the cost of component implementation, and thus optimize the total cost of the final product.

Good packaging also enables components to be stored in good conditions, preventing them from deteriorating too quickly.

-Identifying End-of-life of electronic components

The end-of-life and potential obsolescence of certain components is also a major factor to consider. Indeed, certain components may no longer be manufactured by historical suppliers. If a manufacturer is dependent on such components, it finds itself in a potentially difficult situation.

There are two alternatives:

-Buy the last stocks of components, hoping that this will cover his needs for the entire life of his product.

-Replace obsolete and end-of-life components with equivalent ones.

To avoid having to deal with this type of case in a hurry, a wise industrialist can anticipate possible supply shortages by accessing databases of end-of-life components announced by their manufacturers.

-Finding Equivalent electronic components

When a component has to be replaced, it is necessary to identify an alternative component whose characteristics are identical, or compatible, with the component to be replaced.

In this case, one solution may be to search component suppliers' databases for components that meet these criteria. One of the main difficulties is to find, among the large number of references, those whose specifications are the right ones. This implies being able to search for components by their characteristics, and having high-performance search tools.

Optimizing component purchasing is a complex subject. Using Big Data and AI can improve the process

Purchasing decisions and component selection during the design phase of an electronic board are therefore fundamentally a compromise between these multiple criteria. It's up to buyers, production managers and general management to make a lasting trade-off between these different constraints. This arbitration is a matter of short-term operations management, but can also have a significant strategic aspect for the manufacturer in question.

This is why the use of optimization software, such as Basedig, can have essential advantages for the manufacturers concerned.

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