Insider tips for successful sourcing

linear-1Sourcing is easy, isn’t it? Products are always available, deliveries never slip and models are available for years — unfortunately not. Linear Technology offers some golden rules to help purchasers survive.

In this age of instant access, purchasers could be under the illusion that product availability is a constant. Unfortunately, in the semiconductor world, this simply isn’t true. There are many things to bear in mind if you don’t want manufacturing colleagues shouting at you when production lines shut down.

Rule 1: Not all manufacturers are the same
Semiconductor manufacturers focus on different market segments. Some concentrate on high volume consumer products, while others, such as Linear Technology, focus on markets that need decades of product availability, like industrial, transportation, military and even telecoms.

With this in mind, it is essential to understand the life expectation of a part before it is incorporated into a design. Purchasers need to research the market focus of a manufacturer, looking behind the distributor if necessary, and advise design engineers accordingly.

Rule 2: Industry is cyclical
Semiconductor boom-bust cycles are the result of a combination of events encompassing capital spending changes, process migration issues and demand slowdowns. It is impossible to predict when they will occur, their impact and the speed of recovery. For the purchaser, it comes as a shock when lead-times suddenly go from six to 36 weeks. All you can do is be aware of what’s going on in the industry and build in buffer stocks.

Rule 3: Price is not the only cost
If a price sounds too good to be true, it probably is. Many purchasers are wary of counterfeit products and have procedures in place to catch obviously fake devices before they make it to manufacturing. Unfortunately, it’s not so obvious when products are salvaged or reclaimed from PCB assemblies and refurbished. Solvents used to extract the IC can eat into the plastic package months later when product is in the field, leading to product recalls and damage to your company reputation, which is hugely expensive.
For standard products, purchasing outside the franchised or direct from manufacturer route exposes buyers to unnecessary risks.

Rule 4: Fab or fabless?
This is one aspect of the supply chain that perhaps only the most experienced purchaser understands. Many semiconductor manufacturers are vertically integrated, operating their own wafer fabs, test and assembly operations. As a general rule, this gives the manufacturer good control over the whole manufacturing cycle and is good for low to medium volume, high mix customers. It means short, and more importantly, stable lead times.

Going to outside fabs, which might process up to 12 inch wafers, is generally good for high volume products, where economies of scale come into play. If your product is not high volume, however, choosing a manufacturer that has full control of its own manufacturing will help purchasers sleep better at night.

Rule 5: Ethical supply
It’s important that purchasers know whether their suppliers have procedures to support compliant use of ‘conflict minerals,’ potentially even knowing which mine the minerals were extracted from. Ask your supplier whether it has appropriate systems in place.