The impact of current market conditions on the mil/aero supply chain
What are the long-term consequences and best practices to mitigate risk? The extent of the capacity issues in the semiconductor market first became clear as the world started to emerge from the worst effects of the pandemic 15 months ago. The Automotive market with its just-in-time, minimal stock, high volume demands were an early indication of the problems to come.
By Ken Greenwood, Product and Technology Solution Manager, Rochester Electronics
Since that point, the supply chain disruption ripples have spread to all markets including the Military and Defense sectors.
Categorized by smaller (stop-start) batch production runs, with extended temp and special testing needs, component supply for the Defense market was always at greater risk of being “squeezed”.
In its simplest terms, as fab capacity disappeared, lead times extended. But other factors have also become apparent. As demand boomed for newer technologies/geometries, third-party fabs made the decision to announce the closure of the older fabs. In many cases, this impacted product lines which had been regarded as ring-fenced “Long-Term Secure” technologies.
As OCMs (Original Component Manufacturers) re-structured their production priorities with the capacity constraints they had, many have chosen to prune older product families, process technologies, and package styles.
The increasing number of component discontinuations are a significant threat to the Aerospace and Defense markets as they have some of the longest production and service lives. It is not uncommon for the production runs and service lives to be extended multiple times beyond the original planned service withdrawal dates, making it virtually impossible to accurately predict future needs.
So, with both short and long-term component availability more uncertain than ever, how do companies minimize these risks without creating new ones?
In an uncertain world, best practices include:
- Dual Sourcing: While it is rarely possible to approve multiple manufacturers for the same device, dual sourcing of authorized supply chains is essential.
- Stock in the Market: Ensure up-to-date visibility of all instantly available stock if supplies fail.
- Advanced Warning System: Share critical parts lists with trusted Suppliers who can then advise you when: extended lead-times, natural disasters/Acts-of-God, or market trends threaten your supply chains. Example: A natural disaster affects production at a Semiconductor plant » Know within 48 hrs. which components are affected » See instantly available stock to prevent a line-stop » Allow Suppliers to provide pro-active rather than reactive support.
- Track Component Lifecycles: Do not solely rely on the lifecycle algorithms used by many of the online component tracking databases. Seek the support of an Authorized End-of-Life Supplier/Manufacturer to provide a second opinion. Many components correctly listed on these databases as “Discontinued” by the OCM are in fact still in production from the Authorized End-of-Life sources, 10-20 years after their formal EOL.
Companies not only need to establish a sourcing partner that can offer guarantees of availability over the long term but can also demonstrate a controlled transition process through end-of-life and into long-term fully authorized supply – or even long-term production.
About the author: Ken Greenwood is the Product and Technology Solution Manager at Rochester Electronics UK operations. Rochester Electronics as an AS6496-compliant distributor and licensed manufacturer. The company offers Military Grade semiconductors and packages long after the original OCMs discontinue them. Rochester also offers a wide range of commercial and industrial components.