While it makes economic sense to End-of-Life devices it’s
not without direct and indirect cost to the semiconductor manufacturer or to
their customers. The solution to this is to end EOL and move to
a Mid-Life Transition.
Large semiconductor companies (semicos) are challenging
businesses in many dimensions. In many
ways they lead the global innovation engine.
To the marketing strategist the
cool part of the industry is understanding the market dynamics and trends to
determine what device will be needed in two years. (The median time to fully bake a complex
device). To others the cool part of the
industry in managing the entire complex supply chain. From
wafers, to packaging to test to warehousing to shipping and all the steps in
between is a daunting task. Multiply this by the number of devices a
manufacturer sells, perhaps many thousands, and it’s clear this is truly a
daunting endeavor, One I personally am glad there are armies of professionals
to deal with so I can focus on what device is needed in two years.
Given this daunting endeavor it must be challenging to determine when to end-of-life (EOL) a
specific part. Not everything has a life
cycle of less than a year like cell phones. The semico’s goal is to maximize the ROI of
each device. Yet will circuit designers
hesitate to specify a part if they think it’s been around for a while and may
be near its EOL? Redesigning a printed
circuit board is also a costly process.
Yet semicos’ have a finite capacity along the entire supply
chain. Given the nature of the
manufacturing process making small volumes is not an option. Publically traded companies also have to
concern themselves with the inventory line on their balance sheet. Historically, semico’s move parts to the EOL
phase of the life cycle. This “final”
phase of a device’s life may take years to achieve. The supply chain, as noted, is a well hone global
process. EOL devices create an
exception. No longer can they be part of
this traditional process. A special
supply chain process is created for them.
Exceptions to any process create cost.
Plus, catalogs and marketing materials, both paper and on-line, need to
be amended or removed, sales teams need to be trained, and most importantly
customers must be notified that the device is being phased out. What’s old to you may be new to them.
In the simplest case where there’s a pin-for-pin replacement
the customer is still impacted. Their
supply chain needs to be modified as well.
Engineering documents must be changed, bill-of materials updated, and
manufacturing schedules altered. It’s
more costly when the “new” device isn’t a pin-for-pin replacement.
The solution to this problem is to “End EOL” and to change
the paradigm to one of a Mid-Life Transition.
Companies such as Rochester Electronics (Newburyport, MA) can be
integrated early in the process to become strategic extensions of the supply
chain. These companies manage this
transition to provide this seamless transition.
Any transition will
be more successful if there is continuity during the process. To assure this during the Mid-Life Transition
semico’s should make Rochester, et al, an integral part of their supply
chain. No longer is EOL an abrupt event,
rather it become a seamless transitions.
No longer will EOL be a troublesome exception to the well-honed supply
chain. Rather, it will be another
well-hone path.
The End of EOL and the transition to Mid-Life Transition
benefits everyone involved in the industry.
No longer are disruptive and costly events incurred by the semico or by
their customer. No longer are your
devices and intellectual property being traded around the world in the
proverbial dark alleys like illicit substances. The end of EOL is a transformational event
for the industry.
