This article is part of TechXchange: Chip Shortages and Counterfeits
An out-of-stock component can be the bane of even the best electronic design. As the chip shortage drags on into its second full year, access to electronic components has become a top challenge for engineers, and more challenges are likely ahead as everyone competes over a finite supply of chips.
But engineering teams can take steps before and during the development process to make sure they are in the best position possible to navigate this new era of supply-chain issues, industry experts said.
They said the path to solving component sourcing issues means working closely with both internal and external sourcing and manufacturing teams. When engineers select components and suppliers without input from procurement and sourcing departments, they can overlook more realistic options or end up scrambling for parts or rushing to onboard suppliers, which can add to costs or lead to product delays.
“Uncertainty and complexity are constants in business today. But global manufacturers have more control of managing their electronics sourcing risk than they may realize,” said Steve Flagg, CEO of Supplyframe, in a 2020 report. “Eighty percent of the lifetime risk and cost of a typical hardware product is decided during that product’s initial design. Companies need to examine what’s happening in the design phase because that’s where the disconnect often exists.”
Engineering teams also need to build more flexibility into their designs, industry experts said, making it easy to swap out scarce components with replacement parts without sacrificing product quality.
Pain Points
Supply chain issues are already heaping more pressure on engineers, as companies rely on them to review bills of materials (BOM) for availability as well as to validate, specify, and qualify replacement parts. Electronics makers are working with a wider range of vendors, including spot brokers, to try to respond more quickly to supply issues, with engineers being enlisted to help vet secondary suppliers.
But the chip shortage influences more than just where engineers seek parts for their designs. It also impacts how they design products, according to a report by U.S.-based electronics distributor Avnet, citing a survey of over 500 engineers. As lead times worsen and prices rise, more than 60% of engineers said that they are building products based more on the availability of components than their preference.
Most engineers faced with out-of-stock components or those with long lead times are swapping them out with pin-to-pin replacements with different specs (53%) or, if possible, drop-in replacements (49%).
Other engineers (55%) have been forced to redesign products around new sets of components.
Co-op Mode
For years, engineers have been encouraged to build products using a “design for manufacturing” (DFM) strategy, designing a product specifically for ease of manufacturing, with the goal of keeping costs low.
But design for manufacturing depends on being able to procure all the necessary components. In an age of widespread chip shortages, industry experts say engineering teams need to take things to the next level. Ted Pawela, chief ecosystem officer at Altium, a leading vendor of electronic design software for circuit boards (PCBs), urged engineers to use more of a “design with manufacturing” approach.
“What it means is that rather than completing a design and only then receiving manufacturing feedback, you get that feedback as your design progresses,” he said, reducing the risk of re-designs.
Altium last month rolled out a software tool called Altimade to assist companies trying to take the next step. Available on its Altium 365 cloud platform and connected to MacroFab’s manufacturing platform, Altimade promises to speed up the prototyping process by uniting design, manufacturing, and sourcing data and experts all on the same platform. That opens the door for them to work together on designs.
Using Altimade, customers get access to continuously updated component and manufacturing prices and lead times. The insights help them understand the implications of design decisions and react to unpredictable events such as natural disasters. Altium said Altimade also allows its customers to order a PCB without leaving the design environment. Orders are filled by MacroFab’s network of manufacturers.
“Companies that figure out how to leverage design with manufacturing will have a competitive advantage relative to companies designing and manufacturing via status quo methods,” Joey Rodrigues, MacroFab VP of Product, said. “Issues like where and how to secure scare components [are] a distraction from what they do best."
Design Flexibility
But collaboration alone is not going to cut it.
The electronics industry uses a sprawling global supply chain. The components in a semiconductor can travel over 25,000 miles and crisscross 70 international borders before a customer gets the final chip, per a report released by the Global Semiconductor Alliance in 2020. That leaves the supply chain with many potential choke points and vulnerable to unplanned events, such as a fire or power outage at a fab.
The chip shortage has been complicated by outbreaks of the coronavirus and more contagious variants. Logistics challenges have also added to the uncertainty, leading to logjams of container ships at ports.
“Engineers are going in and having to retrofit designs for customers because they’re stuck,” said Peggy Carrieres, Avnet's global VP of sales enablement and supplier development. “They’re asking us how to get their products unstuck.”
“The next question is what can be done to design something that's more flexible from the get-go," she said in an interview last year.
Carrieres urged engineers to seek additional sources for components such as microcontrollers that can be a challenge to retrofit from another supplier. That way, if one supplier is out of stock of a component, you can pivot to another vendor without having to repeat the full qualification process. This also lessens the risk of encountering counterfeits, which can compound design and quality issues over the long term.
Carrieres said engineers need to take responsibility for building flexibility into new designs. That means designing a product in such a way that they can quickly swap out components that were available at the start of their design cycle but are unavailable or on allocation when they take it to be manufactured. She said companies want to have backup designs ready in case supply chain issues derail their first choice.
Uncertainty Ahead
Ultimately, engineers need to prepare for more uncertainty in the years ahead if they are going to remain in front of the chip shortage. Most industry executives see the path out of the crunch stretching into 2023.
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