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No one likes logging on to Digi-Key to re-order some components, only to find that all available inventory for your desired parts suddenly dropped to zero. The electronics supply chain moves quickly, and no one should be surprised if suddenly a single buyer comes in and purchases all available components of a certain part number. As someone who must procure components to sustain production over reasonable time frames, it’s your job to identify components that carry excessive risk.
In this article, we’ll look at some of the characteristics of risky components, and what you can do to reduce risk in your bill of materials (BOM). If you cannot get consistent allocation directly from component manufacturers and you’re stuck buying from distributors, then risk management will become an important factor in your design approach and buying decisions.
What is Risk in a BOM?
The term “risk” as applied to electronic components refers to any cost or procurement risk associated with each line in a BOM. Risk could include the possibility of obtaining counterfeit components, being unable to purchase due to lack of inventory, or sudden cost changes due to the popularity of a component.
The risk hierarchy for components can be generally ranked as follows:
- Whatever happens to be in short supply at the moment (e.g., capacitors in 2018)
- Parts that are consistently very popular (many MCUs fit in this category)
- Parts with unique packaging, function, and pinouts with no drop-in replacements
- Parts that do not have a higher-capability or lower-capability variant part number
- Parts with common packaging, but unique pinouts
- Parts with common packaging, pinout, and function across multiple vendors
- SMD/through-hole passives
Package and pinout are important in electronics assemblies because they will dictate whether a part can be easily swapped post-fabrication. Once bare boards are fabbed, they quickly become unusable if a specific component can’t be assembled on the board. Taking an approach based on functional equivalents and common packaging can help prevent situations where parts cannot be procured during a production run.
Unique Package and Pinout
Components with a unique package and pinout always carry some level of unacceptable risk. The reason is very simple: they do not have suitable drop-in replacements. Should one of these components go out of stock, it could be impossible to find any suitable alternate part number. In that case, you might have to place an alternate component using a chip interposer board, or the design will need to be modified.
Some components that may not have common pinouts and/or packaging include:
- SoC modules on organic substrates
- Microcontrollers, FPGAs, and application processors
- Electromechanical components (e.g., relays)
- Highly specialized PMICs, DSPs, or other ASICs
If you’re worried about capabilities when swapping to an alternate part, just note that some components are available both in proprietary and common packages. This is certainly the case with SoCs that are available as SMD modules or in standard packages (e.g., QFN or LQFP). You won’t always lose device capability just by swapping away from a module/SoC form factor, so make sure to check your data sheets to see what packages are available for your components.
Out-of-Stock Everywhere… Except With Brokers
One telltale sign that your chosen component may be at-risk is its inventory levels with brokers compared to authorized distributors. Many brokers will target popular parts as they come in stock with authorized distributors. As soon as the broker sees inventories replenish, they will buy up all of those parts and hold them for resale. The parts will then be re-sold at huge markups, sometimes reaching 20x the authorized distributor’s price.
If you see inventory for a particular component is very low with authorized distributors, but inventories are very high with brokers, then brokers might be targeting that component for resale. If you’re planning multiple production runs over an extended time period, then it might make more sense to swap to a component with a common package and pinout. This way, you can at least find alternates should stock of your desired part get bought out.
The frustrating part about this kind of targeting is that brokers will sometimes target an entire part family, not just a single part number. For example, in the Texas Instruments TPS6xxxx series of application-specific power regulation products, brokers will often target a popular component and all of its possible capability variants. In such cases, it might be best to just avoid that component and look elsewhere for a more sustainable source.
Too Popular For Its Own Good
Last but not least, it’s important to realize that some components are just extremely popular, and will continue to remain popular throughout their lifecycle. The PIC series of MCUs, STM32, ESP32, nRF52, and MSP430 are all great examples of popular microcontrollers. Because these parts are all highly unique, they don’t always have enough perfect replacements to significantly reduce risk in a BOM.
Therefore, during times when the economy is booming and component demand is high, it might make sense to take a contrarian approach to purchasing decisions. Avoid those components in favor of functionally suitable alternates if possible, especially if you need to sustain production runs over long periods.
Simple Risk Management Strategies
In summary, procurement teams and individual designers should implement some form of risk management for their components. This can be as simple as ordering early or avoiding ultra-popular parts. Some strategies to help you reduce risk include:
- Opt for components with common packaging and pinouts where possible
- Purchase the most important parts early, including any parts identified as swaps
- Plan to create variants if swaps are being used
- Find a platform like Cofactr that gives you cost and inventory visibility