Component obsolescence is an issue faced by most suppliers of electronic components at some point in their operations. It is typically caused when existing components are superseded in popularity by newer parts for one of a number of reasons, including short consumer product lifecycles, rapid developments in technologies and changes in levels of customer demand. If not addressed correctly and in good time, obsolescence can increase downtime and costs for original equipment manufacturers (OEMs), their suppliers and customers.
Alexander Battery Technologies is a UK-based supplier of custom battery power solutions for a range of sectors, including medical devices. The company’s products and services include Li-ion and NiMh battery packs and chargers, battery management system components, integrated power and charger solutions, and custom printed circuit board assembly (PCBA) solutions. As with any other company in its sector, Alexander has had to pre-empt and plan for potential obsolescences as part of its operations.
Alex Stapleton, the company’s sales director, states that the vibrant, fast-moving nature of the electronics and cell markets makes them prone to component obsolescence. “The electronics market is potentially a little bit faster-moving than the cell market, but they are technology markets, and that means that manufacturers have roadmaps and they’re always working to improve the products that they have on the market,” he says. “Component end of life and those things going obsolete is something that (every company) faces as a challenge. It’s not always driven in the sense that they stop making something and then nothing else is available; it’s usually that there’s a model that supersedes what they used to make.”
When it comes to redesigning products in the event of obsolescence, Alex says that there is a balance to be met. “Sometimes the actual effort of selecting an alternative component could be very straightforward – if you have an end-of-life on electronic components and it’s a common, popular component, there’s a good chance that it’s actually just been superseded,” he says. “The effort and the challenge with the electronics is probably the verification and validation that the pack is still safe and still works, so the design is very quick but the recertification is potentially much harder.
“With the cells, it could be a little bit more complicated because the cells are really driving the battery performance, so there’s a lot more factors that could be potentially a risk to the customer. Cells will perform differently in terms of how they can deliver and the lifetime they can deliver, and they’ll perform differently in different temperature situations, so a new cell might actually be a bigger compromise than maybe an electronics change.”
Forward planning is key to tackling obsolescence
Alexander has integrated several initiatives into its operations that aim to manage obsolescence and the risks associated with it. One key element, Alex says, is forecasting, design and planning on Alexander’s own part. “We have a number of target markets and batteries that we typically produce – those are in a range of voltages and with a range of features such as fuel gauging and communications of different types,” he explains. “We can’t always predict everything precisely, but there are things that we can predict the market’s going to want with a certain amount of reliability, and we do that on the sales side with our operations team.
“What we then do is take that information and commit to a certain number of product lines in advance – we have more than £2m worth of free component stock on our shelves so that we can ramp customers up quickly ‒ so it starts very much at the beginning with that planning. It does potentially require customers to have some flexibility – you will get scenarios where customers will ask you for a specific chip and we might have an equivalent and not necessarily that exact model, so it might require a little bit of flexibility there – but it does give them that option to get their product ramped up and get the revenue more quickly.”
In addition to front-end planning, Alexander works with a number of partners in its distribution channel, securing additional quantities in order to manage the component pipeline far in advance if need be. “Depending on the length of the project or the battery, there’s obviously a certain amount of work you do looking at roadmaps from suppliers, and beyond that if it’s going to be a particularly long-life design,” Alex says. “It’s not so unusual, for example, in the medical market for people to want to have designs that run for ten or 15 years.”
For battery products with longer intended lifespans, Alexander also offers parallel design services. “What we will do sometimes is, you can do a little bit of extra certification work at the front end, which does increase the cost of entry for customised products sometimes, but customised products are typically high-value, long-life product lines anyway, so it’s a good option to avoid that problem down the road,” Alex says. “So then you have two battery partners that perform in the same way but actually have slightly different components inside, so you have a little bit of redundancy in your supply chain. If you have something like that, it’s very unlikely that you’re going to be in a situation where you need a part that can be delivered during the lifecycle of your product.”
Supply chains and customer relationships are vital in addressing obsolescence
Strong supply chains are vital for protecting against obsolescence – and for Alexander, there are a number of factors that go into bolstering the company’s supply chains. “Obviously there’s a relationship element with our suppliers; we have to manage demands strongly and in advance, we of course offer our customers flexibility,” Alex explains. “When you’re developing a sort of high-value, long-life product line, it’s usually going to be underpinned by a contract that enables all the parties.
“For example, we would hold spare stock on the shelf – this could potentially be finished goods or batteries that are ready to go ‒ and maintain that above and beyond what the customer is actually shipping on an active basis. So if they have a peak or spike in demand, that can either be totally absorbed or partially absorbed, depending of course on the size of the spike, and that would actually go further down into the chain in terms of the components we would have on the shelves.”
The exact price of co-ordinating the supply of components often varies depending on their application. “For unfinished goods, there’s obviously a lower cost commitment at that point,” Alex says. “Then beyond that, robust forecasting, again with some flexibility that allows us to shift things around with our suppliers of those key components to keep the material flow going. It’s something that probably requires a monthly review.”
Pre-empting component obsolescence in the long term
Although recent events such as the Covid-19 pandemic, Brexit and the Russian invasion of Ukraine have caused disruption to the medical device and broader electronics markets, Alex isn’t confident that they have increased component obsolescence in themselves. “I think where (those events) have had an impact is seeing that availability gets so challenging that some products are, for all intents and purposes, treated as not available,” he says. “We’ve had supply chain issues in the wider electronics market where products are not available for 100+ weeks; for some projects, that can be planned, but for other projects, that goes beyond what is even considerable. So we have customers who are coming to us now who want to produce batteries before the end of the year – talking about products for 2024 is out of the question.”
Nonetheless, Alexander aims to remain prepared for any potential obsolescences in both the short and long term. “We do face big chances in demand sometimes – usually thankfully in the upward direction, which is a nicer problem to manage – but we do have issues in obsolescence from time to time,” Alex says. “I think it’s equally painful for us as it is for our customer.”