The chip shortage has changed the way products are designed

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Inventories of electronic components are loosening, but OEMs are still struggling to secure devices critical to their product designs. Additionally, engineering teams are encouraged to consider component sourcing when developing the next generation of their products.

To date, the prevalence of Design for Supply Chain (DfSC) has been largely anecdotal. But a recent survey by electronics retailer Avnet Inc. found that a majority – 74% – of global companies surveyed said access to electronic components was a very big challenge. Nearly half of respondents qualify devices early in the design process.

Manufacturers use their supply chain partners in their sourcing decisions. “Current challenges have underscored the importance of strategic design and supply chain services – and engineers and product designers are taking notice,” said Peggy Carrieres, vice president of sales enablement and supplier development for Avnet.

The inability to source components frustrated the design and procurement teams. Respondents pointed to higher component prices and delayed production schedules, with more than 8 in 10 respondents saying these issues have worsened. Additionally, most are preparing for prices to continue to rise (29%) and lead times to continue to lengthen (26%).

Chart: Shortage of chips has changed product design

Source: Avnet Insights

“We don’t see prices going down,” Carrieres said. “The indicator we get from suppliers is the COGS [cost of goods sold] does not decrease. Intel is one of many chip companies to announce price increases, and some factories have increased the cost of their services.

But pricing has become secondary to the issue of simply securing components. Production lines have been idle as manufacturers wait for devices that are essential to their products – the so-called ‘golden screw’.

Nearly a quarter (23%) of survey respondents have begun testing and qualifying multiple parts that meet requirements early in the design process for design flexibility. Additionally, organizations are adjusting their supply chain strategies to build buffer inventory (23%) and lengthen supply agreements (21%).

Buffer inventory is generally anathema to electronics customers, but many have measured the impact of not have a critical device on hand. The most notable figure comes from the automotive industry which lost over $200 billion due to the chip shortage. Most manufacturers limit their buffer stocks to critical and strategic components.

Flexibility is everything

For optimum design flexibility, consideration should be given to the availability of components early in the process. While some survey respondents choose to wait (23% of EMEA respondents said they were willing to delay product introductions to overcome shortage issues), the most popular tactics for engineers to work in the current environment are based on the design. These include using pin-to-pin replacements (25%), redesigning boards (25%), and using instant replacements (25%).

Designers adapt to chip shortage

Peggy Careers, Avnet

“Customers have the best chance of manufacturability and sourcing if you plan as early in the processes as possible,” Carrieres explained. “We recommend considering dual sourcing, using architectures that won’t require a board redesign and BOM risk analysis.”

When it comes to the design process itself, 25% of respondents design multi-manufacturer approved components, while 23% test and qualify parts early in the design process.

“We drive design for test, design for manufacturing, design for serviceability – all of these attributes,” said Mike Fitzgerald, vice president of operations at Pure Storage, a manufacturer of 100 storage systems. %flash. “What we’re trying to do is take the workflow further in terms of development and design. Your ability to influence [component selection] is definitely in the new products. Once the baby is born, it is much more difficult to influence it.

Other design strategies include finding alternate sources for parts (35%) and exceeding the currently approved manufacturing list for their organization (23%). Yet engineers remain aware of component risk: 13% are ready for companies to increase their due diligence in this regard.

The big picture

Supply chain visibility, transparency and agility have been key considerations for organizations throughout recent disruptions. Avnet found that many companies were building inventory, entering into long-term supply agreements, and improving relationships with their distributors (19%).

“Relationships between engineers and distributors are constantly changing and cyclical, and at this time we are seeing a greater understanding of the value that distribution and its associated services can add amid prolonged uncertainty,” Carrieres said. . “Engineers and product designers who rely on retail’s design and supply chain services will not only be prepared to succeed in today’s environment, but also well positioned to deal with any potential future disruptions. industry – and technology – could face.”

The Avnet Customer Survey was conducted among 1,605 global engineers in September. Arrow Electronics Inc. and Avnet in recent earnings calls noted that customer engagement had increased since the Covid-19 pandemic and the onset of the chip shortage.

“Our supply chain capabilities now help us serve our customers in different, value-added ways,” said Sean Kerins, CEO of Arrow. “For example, we now find ourselves with a viable role in the automotive industry in a more direct capacity than we ever imagined in the past.”

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