This guest article written by Component Sense was originally published by Electronics Sourcing in June 2024.
Given its sudden and disruptive nature, it is clear why many electronic manufacturers see component obsolescence as a major production line risk.
When the end-of-life (EOL) of a component is announced and no longer available directly, it can force electronic manufacturers into costly redesigns and new product lifecycles. Research conducted by Z2Data on their customers found that roughly 30% of all EOL notices issued in 2023 were without a prior product change notification (PCN) [1].
Whilst there is no silver bullet for preventing obsolescence, the grey market — a secondary market for electronic components — enables manufacturers to stay agile and overcome production challenges. Not only can the secondary market provide companies with significant cost savings, but it also significantly reduces the production of electronic waste.
Find rare and obsolete parts
When an obsolete component is unavailable directly, your next port of call should be a trusted grey market supplier. Leveraging a broad global supplier network, companies like Component Sense provide procurement experts with access to hard-to-find parts.
The key to safely sourcing obsolete components on the grey market is vetting suppliers. The grey market sometimes has a negative reputation due to fly-by-night sellers and counterfeits. However, it certainly is not black and white.
When searching the secondary market for components that are unavailable directly, demand the following of potential suppliers:
- Ensure their components are fully traceable back to the original manufacturer
- Check that they conduct rigorous quality assurance inspection processes
- Insist on a 100% anti-counterfeit guarantee
- Check that they only source components directly from top-tier OEM (original electronics manufacturers) and EMS (electronics manufacturing services) companies
“Rather than buying directly from a franchise, electronic manufacturers can often find genuine, fully traceable stock with new date codes from the grey market, all while saving money," explained Component Sense Chief Technical Officer, Grant Rutherford.
The grey market is not just beneficial for sourcing hard-to-find components. Procurers of legacy components may also find what they seek in the secondary market. At times, the availability of a single, decade-old microchip can maintain crucial industrial machinery, saving replacement costs AND reducing waste.
As easy as B, O, M
Supply vs demand often dictates the asking price for hard-to-come-by and obsolete components on the grey market. However, if approached correctly, the pitfalls of price gouging, as seen during the chip shortages of the COVID-19 pandemic, can be sidestepped.
By providing clarity on your BOM (bill of materials) to Component Sense, the process of sourcing exactly what you need is simple and cost-effective. Our 22+ years of managing excess stock for the world’s largest OEMs and EMSs have given us unmatched insight into price variations, allowing us to extend economy-of-scale discounts to our buyers.
Looking forward
Obsolescence continues to be one of the most significant challenges for electronic manufacturers. While the grey market is not the only solution to the broader issue, it can help companies mitigate its impact.
If procurement professionals cannot find the obsolete components they require in Component Sense’s inventory of over 150,000 fully traceable parts, we will direct them to available, trusted sources.
References
[1] https://www.z2data.com/insights/four-takeaways-from-z2datas-obsolescence-trends-in-2024
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