In May last year, one of just 200 Apple I computers ever made sold at auction in Germany for more than £400,000. Apple co-founder Steve Wozniak designed and hand-built the first machine immediately after going to a meeting of the Homebrew Computer Club in a Menlo Park, California garage.
Author: Steve Vecchialrelli, Vice President Supply Chain Solutions, Digi-Key
Two years later, Apple launched its first volume-sales machine, the Apple II, which was a more advanced and carefully cost-optimised design. To help with customer support, as Wozniak was the only person with first-hand knowledge of the inner workings of the original, the company offered trade-in deals to encourage customers to move to the more advanced machine. It was a recognition of the many factors at play in the construction of an electronic system – the importance of ongoing support in a product’s lifecycle.
To ensure that the launch and ongoing support of a product is as smooth and successful as possible, many functions – and often a variety of people – will be involved throughout the lifecycle. As well as design engineering, marketing, product planning, purchasing and supply management, field support, reliability engineering, production engineering, quality and even key customers will play roles in the development lifecycle. Historically, many of these functions would have been performed serially.
The lifecycle might start with the familiar “back of an envelope” sketch, quickly moving on to a proof-of-concept design. This version would not be expected to go into production. Instead, it would go through a series of revisions that focus on improving production cost, reliability and usability. Purchasing and supply-chain management plays a key role in this process by focusing not just on component pricing but continuity of supply.
In recent years, many electronics OEMs have embarked on a programme of supplier consolidation, in which they favour a small number of larger suppliers with which they can negotiate better pricing and ensure that all the components they require are available even in times of shortage. This can involve significant redesign to a proof-of-concept version to ensure that components selected by the engineering team fit the purchasing policy or that a waiver has been organised for key parts. Similarly, marketing and sales play key roles in product planning as they have the information available to them on how much they can charge and make reasonable predictions on sales levels assuming the system meets its objectives. If a product is too expensive, it will need to be redesigned to reduce its cost or have its functionality expanded to fit into a higher price bracket.
With information on expected sales, marketing can help purchasing negotiate volume discounts.
Although the various product planning and re-engineering functions can be performed serially, in today’s fast-moving marketplace, it is unlikely to be successful. The entire lifecycle of a product can be just two or three years, from idea to end-of-life. Decisions taken early will have a dramatic effect on the product’s success.
OEMs have to be able to move from design to full production extremely quickly to beat their competition. The time from prototype to production needs to be extremely short and rules out the process of serial redesigns. As a result, design engineering as a function is being tightly integrated with purchasing, marketing and other engineering roles.
Engineers now start out with approved lists of suppliers and perform cost analyses to provide marketing with early guidance on likely end-user pricing levels. This is a laborious process without tools. To support the engineer in making decisions guided by supply-chain issues we have seen the introduction of tools that help build up the bill of materials (BOM).
A BOM management tool, such as the BOM Manager software from Digi-Key, provides instant feedback on component-selection decisions and collates much of the information needed to keep other parts of the team in the loop. The software on its own is not enough. A direct link from BOM management to distribution is vital, because this provides all-important feedback on how easy it will be to source components from prototype to production.
Stocked product at a major catalogue distributor is an important indicator of the ease with which product can be sourced throughout its lifecycle. These are generally products with a large customer base or the prospect of one, which in itself provides high assurance of supply needs being met later on. By selecting stocked product, design engineers can also be sure of receiving parts for the prototype as quickly as possible – within 48 hours with a major distributor. By selecting the distributor with the greatest breadth of BOM, the design engineering team can more easily meet deadlines while selecting components from the supplier list approved by purchasing.
As well as providing feedback on stocking and pricing levels, a sophisticated BOM management tool can inform component selection over the entire lifecycle of a product idea. Because it is tied into the distribution network, it can determine whether a given component is coming to the end of its own lifecycle. If a component is not recommended for new designs, that will be shown in the tool.
The BOM management tool can provide vital information to the marketing team by allowing what-if analyses of volume purchases. For example, the engineers can quickly determine how per-part component prices will shift as the end product moves into higher volume. At the same time, the BOM management tool will determine the most effective means of packaging for each product. For prototype and early production runs, it will, for example, select cut-tape packaging for components in favour of full reels. The result of these features is a highly effective tool that minimises the amount of rework needed to get from the initial concept and prototype to production.
BOM management in partnership with the supply information that only a leading distributor can provide are becoming essential tools not only in shortening the time from prototype to production but in supporting the entire lifecycle of an idea.