Benefits of a risk management system include:
1. Cost reduction in all departments
2. Reduced lead-times, parts obsolescence, shortages
3. Reduced time to qualify suppliers and manufacturers
4. Reduced downtime in production
5. Selection of better quality components
6. Improved manufacturing systems design
7. Improved production output
8. Improved design for manufacturability
9. Improved supplier, vendor, manufacturer and customer relationships
10. Improved needs assessment
11. Increased product reliability, stability, life expectancy and improved test results
12. Reduced product failures and returns
13. Improved strategic decision-making processes
14. Safer products
15. Improved product cost
16. Improved delivery to customer base
17. Improved ability to forecast
18. Overall quality control improvements
Risk Areas and Scoring
Scoring:
1. Carte Blanche - will make all necessary changes to use the chosen part.
2. Open for options, but limited due to fit, form and function issues
3. Hard limits on budgets, change management, departmental strategies
The risk areas are:
1. Potential economic impact to the company where those products/programs the part will be used in represent a significant part of company revenue, affect purchasing strategy, quality controls, or customer base perceptions of the company or product applications.
2. Use of excess, overstock parts
3. Security of availability and delivery
4. Inventory strategy
5. Testing and costs
6. Usage rate, shrinkage, yields, production problem histories
7. Vendor reputations, relationship histories
8. Volume performance
9. Life cycle expectancy of Product Programs
10. Qualification, Reliability experiences
Consider the following sources to obtain information to determine risks:
1. Manufacturers, Sales, Reps, Apps Engineers, VPs, Directors of Marketing and Product Groups, Strategic Marketing Managers, Product Information Centers, Customer Service
2. Distributions Channels, Value Added Resellers, Sales Engineers, Product Marketing
3. Industry trade magazines, articles, product guides, buyer's guides, good source of manufacturer contacts, trending information, back issue archives
4. Purchasing departments of manufacturers
5. Internet sites of all of the above
6. Databooks
7. Employee review sites
8. Thomas Register
9. County Economic Development Councils
10. US Dept. of Commerce
11. International Trade Commission
12. Small Business Development programs
13. SRDS reference directory of trade magazines
14. Media kits
15. Trade shows
16. IC Master directory
17. Industry associations
18. Online forums
19. User, design and development groups
Risk Factors
Manufacturer Status
Scoring:
1. stable
2. shaky , low confidence
3. dying, bad feeling
Issues are:
1. History, owner history, management team, board issues, stockholder issues, public or private, age, financials, visions, primary growth areas, successes, venture capital funding
2. Corporate developments: alliances, mergers, joint efforts, subsidiaries, purchases
3. Security of present visions and directions for existing and emerging product lines
4. Distribution base, number of reps - local and international, growth, expansion and reduction
5. Parts obsolescence and last time buy policies, introduction and new release process, life cycle evaluation procedures
6. Production lines allocated or not
7. Customer support
8. IP protection, patent policies
9. Location of company, distance to airports, availability to ground, rail and ship for shipping
10. Organization structure, chart, turnover, layoffs, restructuring
11. Mission, ethics
12. Involvement with university, military or government projects
Availability Issues (obtained from distribution channels, manufacturers, reps)
Scoring:
1. Very good - A, B grades, distributor stock, low lead-time
2. Fair - factory stock only, made to order, c grade, mid to high lead-time
3. Bad - high lead-time, high minimum qty requirements, D or E grades
Issues are:
1. Pricing history, fluctuations, driving factors
2. Allocation history
3. Lead-times and causes
4. Sales performance, quarterly, annually, main applications, primary types of customers
5. Restrictions - special order, minimums, NCNR (non-cancelable non-returnable), factory stock, distributor stock, made to order
6. Vendor order frequency, inventory strategy, stock on hand, on order, on back order
7. Classification status - high to low, A through E grades, upgrade history
8. Requirements and approvals necessary to purchasing overstock, excess inventory, last time buys
9. Value Added Services availability and programs to secure delivery
10. Introduction date, expected life
11. Inventory, FIFO, LIFO, JIT, JIC - Just in case
Technology Issues
Scoring:
1. Highly recommended, ongoing improvements, valuable changes
2. Findings not quite inline with end-user needs or specific company needs - suggest alternatives to be considered (especially if sole source item)
3. Not recommended
Issues are:
1. R&D, innovations, possible directions
2. Changes in features, architectures, specifications, testing, temperature and packaging offerings, speeds, power levels, configurations, etc.
3. Changes in key parameters - military status, commercial and industrial differentiations
4. Part family similarities, substitutions, crosses
5. Issues to slow, speed availability, and/or raise or lower costs and quality
6. Reviews, verification reports, engineering issues, SI&T plans and directions
7. DFM, Optimization, manufacturing engineering, GMP
Environmental, Quality, Agency Standards Issues
Scoring:
1. Heavily monitored, ongoing, well-documented, representative sampling or every part, CAPAs (corrective action preventive action) are quickly resolved, established reliability, updated often, ISO controls, current registrations
2. Limited sampling, outsourced, slow CAPA resolve, modified ISO, selective parts and products, long lead times, disorganized management, questionable
3. Incomplete, no sampling, long periods of time between updates, relies on source documentation, unchecked, lack of verification, limited or old quality manuals, limited or no supportive data
Issues:
1. Environmental - EU Directives, China Directives, ROHS, REACH - SVHCs, exemptions, annexes, battery directive, WEEE, IPC-1752, material declarations, JEDEC JIG-101 A and B chemicals, Chemsec SIN List, Green compliance
2. CE, EN, UL, CSA, VDE, TUV, NEBS, other country standards, UL E-cards, FDA CDRH, CB Reports, Seismic testing, radiation safety testing, other agency standards
3. SAE, ANSI, ASQ, IFI, ASME, ASTM standards, mechanical design, performance, materials, design approaches
4. Quality controls, ISO registration - 9000, 9001, 900x, 2000, 2008, QS9000, TL9000, CAPA, ISO-14001, sampling, quality assurance, quality manuals, IPC 600/601, classification-labeling-packaging requirements, Six Sigma, TQC, MRP, ERP, PLM, collaborative ERP, Sarbanes-Oxley Act accounting audit process, Lean, Kanban, JIT
5. MIL-Std, DOD, QPL, QMS, IHS, TacTech, reliability specifications, Mil-Hdbk-103, GIDEP
6. Production travelers, sign-off, change management, prototype runs, production monitoring
7. MSDS, eSDS, IUCLID dossiers, Risk Assessment Reports
8. Test scheduling, committee participation, assessment process
Marketing Strategies
Scoring:
1. Aggressive, competitive, supportive
2. Fluctuates, questionable
3. Losing ground, outdated
Issues are:
1. Customer base, location, size
2. Specific applications targets
3. Industry group targets - industrial, commercial, military, consumer
4. Application group targets: medical, aerospace, defense, automotive, scientific, telecom, network, computer, sensor, monitoring, test, music industry, biotechnology
5. Business type targets - OEM, assembly/contract manufacturers, research and development centers
6. Primary drives - new applications, new product developments and introductions, new technologies, supply and demand, emerging markets, support of older technologies, certain trends
7. Vendor, distribution, VAR mix, product mixing, special programs, limited time offerings
8. Military strategies - QML, QPL, 103, petition, percentage increase, reduction
9. Reasons to continue to sell product, slow product sales, increase product sales, discontinuing products
10. Sole source, second source
11. Popular features, architectures, specifications, quality, testing, temperature and packaging offerings, speeds, power levels, configurations, etc.
12. Part intro by manufacturer, at request of industry segment or specific company product development
13. Plans vs distribution/partner channels marketing plans, issues, concerns
This risk assessment list is by no means complete. It should help you get started tho on what to consider in selecting parts for long term use.
Here are a ten examples suggestive of risks and what to look for in each:
1. A certain percentage of the Company A is owned by another Company B from another country.
- changes coming to product lines, specifications, markets served
- price changes
- Company A changes product lines to be made at Company B fab companies
- will Company B change part support
2. Company has had some hard times.
- what caused the hard times, strategies used to get over them
- did the company go through reorganization and leadership changes
- could those hard times happen again, examine structure of the organization
- did the company drop financially due to acquisitions
- did the company start up new production lines or change to new fab houses, how does that affect part specifications
- did they have a holding company help them, is an alliance or merger in negotiations
- will smaller micron process change part specifications, prices and delivery
- will their markets change causing problems for your company
- will specifications change on their parts
- is the company using different production houses
- will this new philosophy affect lead time
- does the DFM changes affect your purchasing cost reduction strategy plans
- will supply for your market change distribution channels
- could these new markets lock up availability, change lead time
- could part costs increase
- is the company moving your parts toward last time buy to obsolete the parts
- any change in specifications, lead times, prices
- will this cause a redesign of affected assemblies
- should you consider a last time buy
- consider a design review
- what caused the downgrade
- is a merger, alliance, buy-out, sale, moving, holding company, reorganization, restructuring in the works
- did leadership change and will that cause issues for your company
- will their distribution channels and application support change
- is a layoff coming up
- are customers dropping out
- will the company be changing their market focus
- is the company about to or has entered into a patent infringement issue, injunction that might stop production lines, failed a SOX audit
- what's driving the growth
- will there be a shift in distribution channels
- was there a change in leadership
- did the company go through reorg and restructuring
- does this mean part costs are going up
- did they sell off product lines that affect your company needs
- was there a buy-out
- did the company acquire a major partner, investor, tax advantage, customer
- is their growth going to affect lead time and other costs
- what drove this changeover, is it permanent
- can you still get your non-military parts, can you use the military parts
- what changes to costs
- will your products need to be redesigned
- will you have to find your parts elsewhere
- is a last time buy of commercial grade parts available, will it be enough for the life of your products
- what caused the change
- did another customer take up the supplier OEM production lines locking your company out
- was there an event at a company that the supplier OEM depends on that caused this increase in lead time
- was there a change in materials
- was there a corporate change causing this change
So you've made the 'red list' of parts you need to examine for any risk factors. Here are some comments you might make as you go through each part on your list. These are slightly modified from an actual risk factors check I did at a company that built power supplies for use in aerospace applications. I won't be mentioning the actual manufacturer part numbers....this is more the exercise to see what risk factor notes look like. These risk factor notes were related to semiconductors.
- Datasheets easy to acquire in pdf including engineering specifications
- They are listed in the latest QML, QPL and checked against Mil-STD-Hdbk103.
- OEM reports increase in company acquisitions through a holding company each running independently with their own P&L. OEM plans to combine all sales operations. There are no plans to dissolve the present OEM. Additional companies were acquired to increase product offerings and acquire expertise to improve their own product lines.
- It has been confirmed that two particular parts are big sellers, number per month steady at high volume with no plans to obsolete anytime soon. Both products will continue to be available for purchase. OEM reports the industrial-spec'd parts have been added to current datasheets.
- Part number will change when testing is done. New part number breakdown is available.
- New nomenclature added for new temperature rated part just released to product family.
- Part still active.
- OEM reports good part, steady stock availability, plenty of distributor stock, no plans or talks about obsoleting the part. Part is scheduled for long term. Part is considered very popular.
- OEM has added low customers code to part number suggestive last time buy is coming up. Lead time has increased to 6 weeks. Part specifications available only on request. Part is being removed from databooks and online. Factory shipments to distribution channels are limited to stock on hand at the factory.
- Year to date sales looks good, reports mid-volume stock in the warehouse ready to ship to distributors on demand.
- OEM technical support reports part is active, long term with well-stocked distributors.
- New part confirmed added to their product line was due to large single customer order. The part will be a standard....not just a special order. Availability estimate is 5 to 10 years.
- OEM reports part is slow mover, lower number on order, about a third on backorder and zero stock in distribution and warehouse.
- OEM reports local distribution cut due to low demand. Part is available. Only certain regions are supported. Part must be ordered as a special order, non-cancelable non-returnable.
- Confirmed....these two manufacturers do not make similar parts. Here's where they differ. OEM believes this other parts will work in our designs.
- OEM has obsoleted the part, but confirms they have a similar part for evaluation. Samples are available.
- OEM does not have a similar part.
- OEM will send letter of confirmation on availability of the part family along with statement of no plans to obsolete.
- Part has change classification, new specifications to be sent for evaluation.
- Found an acceptable part made by another company. Have ordered samples and datatsheet for evaluation.
- Mfr rep reports part is listed with Tactech as sole sourced item, life code added noting midpoint on maturity. Availability good, but dropping. OEM reports they will continue support. Our distributor an increased lead time and has applied a low order code suggesting part to be dropped. However, they plan to take up popular selling non-883 qualified part...showing steady sales in better sales performence in the -40C to +85C part. Will need to evaluate.
- Part is made to order only, but OEM will check stock in final inspection. 1-week lead time if available, otherwise 6 wk lead time. Part is long term however, popular, no min order requirement.
- Distributor reports deteriorating relationship with OEM and that parts do not steadily pass Group A, B, and 883 tests. They are dropping this OEM.
- Distributor reports three large OEMs have bought out the OEM production lines of the part and that lead times are approaching 36 weeks. Suggest alternative. Direct buys are not available. Suggest we evaluate new parts.
- Distribution has dropped out of selling military parts. Parts only available in high volume from the OEM. Small quantities not available as samples either.
- Need to update our component library. Mfr rep sending new datasheet showing this part is JAN (joint army navy) only. This part will work for our products. Have ordered samples for testing to confirm.
- DOD and associated data exchange groups are pushing to drop (not the OEMs) the JAN part in favor to QML, however, they are not giving out new part numbers. Tactech reports 883 life code is beyond maturity and on decline. JAN alternatives from two OEMs are available, will send datasheets and samples. Checking for long term plans. Suggest review to use non-JAN parts.
