The global semiconductor supply chain is evolving. Decades of traditional processes have helped this chain of suppliers and distributors grow into the complex ecosystem it is today. Now, it’s time to retire them. As the world embraces digitalization, opportunities once never imagined are now accessible for organizations big and small.
The global supply chain and its thousands of members have mostly relied on reactive methods. Reactive approaches are limited in success, as the time to accomplish a specific task is severely reduced. A reactive approach, regarding the global semiconductor supply chain, means acting once a specific event occurs, for example making a last-time-buy (LTB) upon the announcement of a component entering obsolescence. The results, if not successfully performed, are limited in their impact. The 2018 MLCC shortage is an excellent example of these shortcomings.
In 2017, a growing tidal wave of demand for multilayer ceramic capacitors (MLCCs) was on the horizon. Thanks to the increased use of MLCC in automotive applications, among other industries, demand was set to outpace the existing capacity’s supplies. While original chip manufacturers (OCMs) began to raise inventory for 2018, the supply built-up was hardly enough to cover what would eventually occur. It didn’t help that 60% of the total global market was held by three manufacturers, Samsung Electro-Mechanics, Murata, and Taiyo Yuden.
Beginning in 2016 and ending in 2018, Murata and TDK, two giants in MLCC manufacturing, were discontinuing several MLCC lines. Furthermore, Samsung, Taiyo Yuden, and Walsin pulled back from large case-size MLCC production in 2019, placing a tighter chokehold on the existing MLCC supply. Is it surprising that a massive MLCC shortage through 2018-2019 followed?
One of the many reasons the 2018-2019 shortage and the following 2020-2022 shortage were so intense can be attributed partly to the traditional method of reactive strategizing. While there had been warning signs for the 2018-2019 shortage by previous increasing demand, growing use of MLCCs in vehicles, and end-of-life (EOL) announcements by Murata and TDK, plans to solve it through LTBs became the only feasible option for many original equipment manufacturers (OEMs). While OCMs prepared as early as they could for changing market conditions, there had been no extensive strategizing for when the warning signs first began surfacing. Or for that matter, before they had the chance.
What OEMs and others could have done to better prepare for the oncoming increase in overall demand and discontinuation was to plan for adjustment the moment market experts warned of increasing demand and obsolescence. The 2020-2022 shortage made it abundantly clear that manufacturers that do not proactively plan might not be able to withstand the intensity of future component shortages. Component case management must be done as early as the design phase.
Otherwise, the resources devoted to damage control amid a chip shortage or other disruption might be too costly to survive.
What Case Management Accomplishes
An essential piece of proactive strategy in manufacturing is case management. Case management, in general, is the ability to organize and track cases which, in manufacturing, are the processes, transactions, or responses that define a complex activity to be tracked over time. Case management emphasizes collating the information related to a case rather than concentrating on specific processes. While case management is not an inherently new tool to chip manufacturing, the digitalization of it and tools that aid case management documentation are.
Electronic case management provides a centralized interface for managing cases. It is often paired with tools and digital features that eliminate previous difficulties with traditional, offline case management. These challenges, sharing sensitive information, internal/external team involvement, decision-making, and maintaining a trail of action can be more difficult with non-electronic case management. It is harder to switch from traditional processes if new ones are more difficult to adjust to. That’s why electronic case management tools have simplified existing issues, not exacerbated them.
So, what does component case management accomplish for manufacturers? Case management is actively pre-planning for future scenarios, the expected downtime, and the cost of the pre-planned response actions. Case management can be used to mitigate dozens of issues, with component obsolescence being the largest as case planning around it must have accurate documentation for a complete audit trail. The reason is, outside of planning potential future LTBs before official discontinuation, case management documents are required for certain OEMs in stringent industries, such as defense and medicine.
Medical OEMs must go through a premarket approval application (PMA) which is a four-step review process that consists of an administrative and scientific review by the FDA, in-depth scientific, regulatory, and quality system review, review and recommendation by an advisory committee, and final deliberations by the FDA for specific products. These processes take a long period for clinical trials, data collection, and reviews of quality systems. It is one of the most intensive approval processes, second to defense. If anything changes after approval, such as redesigning a new component, the process must be repeated. Utilizing alternates requires approval from these governing bodies before it can go to market once more.
That is one of the few reasons case management is necessary for component manufacturing. It aids OEMs in documenting plans that coordinate strategies to resolve issues through visibility between teams leading to time and cost efficiency. Furthermore, despite white goods and consumer electronics not having the exact stringent requirements, it doesn’t mean OEMs in those industries should ignore utilizing case management tools.
Strategic obsolescence management helps create a budget for future recurring improvements or LTBs. This allows managers to keep track of component lifecycles if a case is opened before EOL announcements, so planned repairs and form-fit-function (FFF) alternate purchases can be budgeted and approved ahead of time. This also helps in case of future upgrades should a product redesign be necessary before obsolescence occurs.
Some sole source components are more vulnerable to shortages, obsolescence, and price raises. By planning strategically, OEMs can lower the impact sole sources have on production by creating a timely replacement strategy to avoid unexpected downtime by finding a multi-source available part to replace it. If that is not applicable, detailed case management plans can help inform managers when to make future LTBs that circumvent the panicked rush to buy once an EOL announcement is made. Component risk can also be documented during this time, along with practical solutions.
Effective case management in the electronic component industry is flexible and digitalized, proactively helping OEMs prepare for future obsolescence and other risks. It can help determine the functionality of workflows and identify possible operational bottlenecks ahead of time rather than during. Key decision-makers can make effective decisions quickly with transparency into necessary actions without shortened timeframes affecting their choice.
Case management is an essential tool that is necessary in a post-pandemic world. Traditional processes must be improved to handle the complex global supply chain. A tool that can accomplish this feat and still offer more is Datalynq.
Datalynq’s Case Management
Staying ahead of the risk with Datalynq’s case management is simple. Aided by market intelligence and predictive analytics tools, users can create detailed risk assessments in one window. With the ability to generate custom resolution options that address challenges cost-effectively, each step can be meticulously documented for others to follow. Datalynq’s case management solution also allows OEMs and others to meet the guidelines laid out by the U.S. Department of Defense (DoD) in its DMSMS SD-26.
The DoD’s DMSMS SD-26 or DMSMS management process is a multidisciplinary process to identify issues resulting from obsolescence, loss of manufacturing sources, and material shortages. The DMSMS also requires documentation for the potential negative impacts on schedule and/or readiness by analyzing mitigation strategies and implementing the most cost-effective approach. Sound familiar? Datalynq’s case management tool aids OEMs in abiding by each of the DMSMS SD-26 required fields because every manufacturer can benefit by creating a strategic roadmap that prioritizes cost and time efficiency.
Datalynq’s case management fields allow OEMs to mitigate risks proactively through tracking cost avoidance, generating compliance reports, and creating and managing cases for issues. Aided by risk management tools that monitor BOM health through several scores highlighting obsolescence and shortage risks. Thereby prompting users to identify problems quickly to open a case and formulate an action plan to resolve them.
Once you’ve initiated a case within Datalynq, all your pertinent case information is documented in an audit trail. With Datalynq, users can include in the documentation the expected impact date, the case status, the government case number, if necessary, the number of days production will be impacted, the impact rate of logistics, repairs, and more. You can also add information for potential resolutions, their cost, the summary of the mitigation plan, and even the confidence of how this mitigation strategy is expected to work.
Case management helps OEMs take control of their supply chain more efficiently and doesn’t leave one at the mercy of unpredictable waves of demand, obsolescence, and sole source components. If you want to see how easily Datalynq’s case management system can improve your manufacturing processes, Datalynq’s 7-day free trial is the best way to start. If you want to learn more, you can contact our team of experts, who can demo all Datalynq offers.