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A proactive component sourcing strategy is critical to a company’s long-term success

All it takes is one missing component to put the brakes on manufacturing. Whether a company is heading to market with their first electronic device or is a well-established brand with multiple products, not being able to ship on time can hurt the bottom line.

A roadblock to getting a product out the door is shortages. In the last year, it’s been driven by new markets for off-the-shelf components, particularly automotive. With electronic content in cars skyrocketing thanks to advanced driver-assistance system (ADAS) and infotainment systems, as well as ongoing advances in autonomous vehicles, companies that make consumer products are competing with automakers for components. The rapidly growing Internet of Things (IoT) market is adding to supply chain pressures too.

The environment poses supply challenges in several ways as well. A major hurricane or a tsunami can radically disrupt a supply chain, even wiping out a source of common electronics components. Regulatory compliance to encourage mining that’s less damaging to the environment can increase costs as companies are compelled to institute systems to support compliance within their organization and within their supply chain.

Geopolitics can affect your ability to source components, including trade disputes and tariffs. For example, tariffs on goods produced in China introduced by the United States last summer increased the costs of components, and thereby finished goods. Regional conflicts can also affect the mining of raw materials, either leading to price increases or shortages.

New trade agreements could mean more countries are competing for components or manufacturing services. Even amicable updates to existing free trade agreements can influence supply and demand on electronics components.

All these forces create risk for your business and affect your ability to manufacture your product on time and on budget.

To manage risk, you must measure it

The many factors that can potentially affect components sourcing and a supply chain bring with them several risks to your business, both directly and indirectly.

A suppliers’ risks are their customers’ risks. Whether it’s bad weather, a change in government leadership or policy, or a shortage of raw material, whatever is negatively affecting their manufacturing facilities or logistics hubs could impact their customers’ operations too.

Just as companies put a plan in place if there was a disruption at within the organization, they also need to understand how the risks to their suppliers—and even their suppliers—could disrupt operations. Beyond accounting for any potential problems, it’s important know suppliers can ramp up production when there’s an uptick in demand.

To best understand risk, companies need to get know their suppliers. Where are their factories located? Where are their logistics hubs situated? If they are based in geographic regions fraught with political turmoil or more prone to natural disaster, it’s more likely a disruption to their operations that could affect their customers’. This holds true for secondary suppliers as well.

Generally speaking, it’s not a matter of whether or not a disaster will strike, it’s when. Are these suppliers ready if a natural disaster occurs? Do they rely on a single supplier that could be at risk? What about a major disruption to their infrastructure due to unforeseen equipment failure or massive data loss? Not only do these threats affect their ability to provide components and services, but their financial stability. And even when everything is running smoothly, how well funded are these suppliers before a disruption occurs? Are they well managed? Do they have money in the bank for unforeseen contingencies?

The risk management efforts of any supplier will determine the level of impact on their customers and how they mitigate those risks.

Always plan for the worst

To mitigate risk, it needs to be understood. That means knowing suppliers intimately and being prepared for something to go wrong.

Preparation starts with managing supplier relationships from the day components are initially sourced. It’s not enough to have documentation—establish close relationships with supplier representatives It never hurts to diversify supply sources to ensure a steady flow of components, as well as accommodate sudden production ramp ups.

If something does go wrong, keeping customers happy requires proactive planning and keeping tabs on any issues suppliers are facing and monitoring their operations, as well as auditing their track records.

It’s important to understand lead times even during the best of times. Strong forecasting capabilities must be in place so components can be ordered as far in advance as suppliers require so production schedules can be met. This is especially critical during shortages, regardless of the cause.

Proactive planning can mitigate a great deal of risk, but you can’t account for every variable. An effective response strategy can help with handling any curve balls. It should include concrete steps to maintain adequate inventory, as well as a team that can handle any disruptions to the supply chain. If a business can’t weather those disruptions without discernible impact to their customers, they must have a damage control plan.

Be vigilant and diligent

It’s impossible to completely eliminate risk to any supply chain but being proactive will increase the likelihood of being able to source the components when and where they are needed, and in adequate volumes. Keeping tabs on the challenges and crises suppliers face and taking stock of how well the company responded after rebounding from a disruption, can prepare companies for any unforeseen component supply crisis.

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Matching with the right manufacturer makes for better products

Many companies are confident in the design and market potential for their products but would prefer not to manufacture it themselves. Instead, they want the guidance of an experienced partner and so focus their efforts on selecting the right one.

The manufacturing partner a company chooses will significantly influence the success of their product and greatly affect the long-term health of their business, especially if they opt for a partner who acts as one-stop shop.

If there’s one reason for finding someone else to do manufacturing it is that it requires a lot of investment to do it in-house. It doesn’t make sense to invest in the equipment and retain the necessary expertise on staff unless you have enough volume to keep them working full time.

Due to the rising demand for electronic devices and components, today’s environment has led to an uptick in manufacturing companies that offer a broad array of services across the product lifecycle, including design services for sub-assemblies and complete products, as well the necessary testing at all points of the product development and manufacturing chain.

Manufacturing companies on the leading edge are embracing technologies to offer cost-effective services as well as partnering to deliver new expertise that customers require, especially around connectivity. Further, companies whose sole focus is electronics manufacturing are not only better suited to keep on top of technology trends, but other business and regulatory pressures too.

One pressure is the demand for energy-efficient electronics, which requires new methods from manufacturers. Reducing energy consumption in finished devices and during the manufacturing process is better for the environment and reduces costs. But the challenge for manufacturers is how to balance sustainability while keeping the cost of the product down.

All these variables and challenges demonstrate that in most cases, it’s better to have a manufacturing partner that can invest in the technologies and processes that improve logistics, agility and delivery, while you focus on designing a great product for them to make.

Understand what you need from a manufacturer

Today’s electronics manufacturers offer a wide spectrum of services, but it’s imperative to clearly outline requirements and expectations, particularly in relation to any unique product or business characteristics.

Selecting a manufacturing partner should be guided by well-thought out requirements around design, material selection and purchasing, prototyping, manufacturing, process validation, test, shipping and logistics. Other requirements that are more specific to a business or product include certifications or locations.

While it might be enticing to offshore manufacturing to reduce costs, having a local partner can be beneficial. Although most will offer a similar set of standard services it’s important to physically tour their facilities, see their equipment and engage with the staff who will be making the product throughout the entire manufacturing lifecycle. However, there is also logic in aligning manufacturing activities with where the product will be sold.

A manufacturing partner should be able to grow as their customer grows. A customer may be starting small but if the goal is to go global, the manufacturer must keep up.  Avoid situations where it becomes necessary to migrate from one partner to another or manage multiple manufacturers as it undermines the advantages of outsourcing manufacturing in the first place.

Look for a manufacturing partner with a global presence with comprehensive supply chain services and purchasing power, even if initial product volumes aren’t that large. They should be able to adjust to the ebb and flow of their customers’ business. A sudden surge in product orders should be easily accommodated with the necessary equipment, people and processes.

Location also impacts the supply chain, and not just forward logistics. In addition to being able to source components and efficiently keep production moving, a manufacturer should be strong in reverse logistics. Today’s consumers expect their satisfaction be guaranteed. When they’re not happy, product gets returned, and it means both retailers and manufacturers are seeing more returned merchandise.

A company building product needs to understand why their devices are being returned and how they can improve the production process, either through better components or the manufacturing of the item itself. Look for a manufacturing partner that’s embracing the latest technology and best practices to troubleshoot or repair products. This will reduce the number of returns.

Testing, of course, can also minimize how often a customer might return a device. Quality is driven in part by a manufacturer’s test procedures. What tests are they conducting and what are their inspection procedures to capture defects and prevent them in the future? Are inspections done at every station? What equipment do they use? How can they help validate a product?

Not only is testing necessary for quality control, it needs to be aligned with industry standards and any certifications a product may require, including safety and environmental ratings.

Why you should partner for manufacturing

Meeting industry standards is one of several benefits of outsourcing your manufacturing. Given the complexity and specialization necessary in electronics manufacturing, facilities must now meet a wide array of international standards. It takes a lot of time and money to qualify for these standards the first time, and operations must be maintained to adhere to standards over the long term. A company that’s focused on manufacturing can make those investments and by meeting these high industry standards will in turn produce better end products.

Their investments in forward and reverse logistics, and supply chain management, helps their customer get better pricing on components because of their buying power, and their customers can confidently expect in a high level of authenticity and quality.

Manufacturers are able to invest in innovative processes that save time and money for their entire customer base, who can focus on being creative in the design process because they have peace of mind their product can be easily and cost-effectively made.

There are many choices available when looking for a manufacturing partner, but it ultimately comes down to aligning needs with capabilities and a joint commitment to quality and innovation. Finding a company that can effectively manufacture an electronics product will reduce time to market with lean manufacturing and simplified supply chain management while producing better products that are of the utmost quality.

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Why component testing pays off in the long run

All it takes is one component to fail to make an electronic device unusable. It’s critical to test each one individually and once it’s part of an end product. The challenge is how to balance the necessity of effective component testing with healthy profit margins.

Testing detects problems and defects before the product hits the market. Its failure creates a loss of revenue that would far outstrip the cost of testing. For a consumer electronics product, the consequences can be a devastating loss of sales, a poor perception of the brand and even shuttering of the company. For devices in sectors such as medical or aerospace, the consequences could be as extreme as injury or even death, followed by legal action, both criminal and civil.

Testing electronic components and the devices they go into can be complex, which often translates into increased cost.  However, testing costs are ultimately cheaper than those of a failed product line, and these costs and quality can be balanced by selecting the right testing methods and combining them with the right expertise.

The eyes have it

Although electronic components are found in a variety of products, how they are manufactured doesn’t differ as widely. Regardless of the industry being served, the same testing best practices apply.

Visual inspection is always necessary and has long been the standard best practice as electronics products have become increasingly miniaturized and dense. It’s more than just people inspecting a component or device. It also includes the use of amplification devices to look at components to compensate for the inadequacy of the naked eye. Typical devices for visual inspection include microscopes, video magnifiers, solder paste inspection equipment and automated optical instruments.

While a visual inspection verifies that a cable is properly connected or insulation is properly in place, it’s not enough to guarantee that a component or a group of components is working as it should, even with assistance of tools. It’s also critical to electrically test. Typically, basic values such as current and voltage are interconnected to measure and validate cable connectivity or component functions.

Take a deeper look

There are many other individual electrical tests to verify that components, sub-assemblies or the entire product is working. An open test, otherwise known as a connection test or continuity test, verifies the conductivity of a single wire between two points, while a short test looks for unwanted connections. Other common electrical tests include checking to make sure that the insulation meets requirements and that switches route current flow to the right destination.

Different levels of testing take place on the product throughout its creation. Reliability testing must be done during the product development process to identify weaknesses or faults in the manufacturing processes and process controls that could lead to a random failure. It’s also necessary for determining the natural lifecycle of the product through a determination of the life expectancy of the components, boards and other pieces. They can be affected over time as corrosion, moisture, stress and fatigue affect the materials. Simply put, all electronics naturally wear out. Knowing when can help mathematically inform the warranty period for the product.

This is where durability testing comes in. It should take place after the first build and be conducted in an environment where it will be used. Obviously, it’s not cost-effective to wait for the product to wear out. Highly accelerated life testing (HALT) can help you quickly find design weaknesses early in the product development cycle and the manufacturing process, thereby reducing costs and speeding up time to market. It can also be done later in the lifecycle of the product if components, manufacturing processes or suppliers change.

Environmental stress screening (ESS) looks at how products or electronic components react to stresses related to temperature and vibration. These external forces may reveal a defect that causes one aspect or the entire product to fail. This type of reliability testing further informs product warranties.

The minimum amount of testing that should be conducted on components individually and on products requires financial investment. Thinking about testing at the beginning of the product design process saves money in the long run. Testing requires accessibility—it won’t be possible to get adequate testing coverage if a component can’t be accessed, for example. Easy access speeds up testing time, thereby reducing costs.

Most of the testing should be done during the design phase. At this point, the goal is to get complete coverage because it’s more cost-effective. Conversely, electrical testing should be done on a small sampling of your actual product.

Measure twice, cut once to reduce costs

Companies doing their own manufacturing should do production testing in-house because not only does it help catch problems with the device, it also monitors yield. The “first-pass yield” is an essential metric for understanding true costs and measures manufacturing quality and production performance. It provides feedback to help improve processes and eliminate waste while reducing the possibility of needing to do a costly rework for final production.

There is an argument to be made for outsourcing your testing, especially if production has been outsourced. Doing in-house testing requires an investment in expertise and equipment which may not be cost-effective if it’s going to sit idly most of the time. A third party can help with test design and development and brings knowledge and best practices accumulated from previous engagements to the table.

Just as a product is likely aimed at making customers’ lives easier, tests should be designed to make life easier. Look to automate testing where possible and incorporate self-diagnostics. Not only should it reveal if something isn’t working, but also why, which means that it can be fixed quickly.

A well-defined test strategy reduces risk because it increases the likelihood that the finished product will work properly. Doing the bulk of your testing upfront during the development process avoids costly rework later, and it’s simply not feasible to test every finished product.

Test smarter, not harder

Testing components and products may look expensive, but the price tag for not testing is higher if the product fails. By thinking about testing early in the design phase as part of the overall product lifecycle,  issues can be caught earlier before they become an expensive surprise, and improve processes overall.

A smart test strategy for components ultimately delivers a clear return on investment by eliminating the lost time, added expense and negative brand perception that comes with a failed product.

Interested in learning more?

For more information on this topic, or to get in touch with engineering specialist who can help answer any questions you might have, head to

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