Five lifecycle checks that protect your product
Not every contract manufacturer offers a BOM health check as part of their service; at ASL it is an essential part of how we operate.
When ASL receives an initial Request for Quote (RFQ), the Component Engineering team runs a BOM health check as part of the costing process to identify any issues, which are then fed back to the customer. This is especially important for new product introduction (NPI), but also for established products. We typically run in-production health checks every 6 months and are useful for reconfirming the BOM cost.
Whoever you are working with, make sure your contract manufacturer is checking your BOM on a regular basis as pricing and availability change regularly.
These five lifecycle checks are a practical starting point to help identify risk - before it affects your production, cost, or delivery.
1. Check lifecycle status before production decisions are locked in
The first check is to review the lifecycle status of each component in the BOM, identifying which parts are active, which are NRND, and which are EOL. This helps mitigate the risk of a product moving into production with hidden lifecycle problems already built in.
We recently received a Request for Quote (RFQ) from a company we had not worked with or quoted before. As part of the RFQ process a BOM health check was run which highlighted several components that were already marked as EOLor NRND which the company was unaware of. They were able to modify their design to mitigate the issue.
At ASL we recommend reviewing lifecycle status before production decisions are locked in, during the DFM and NPI stages. This allows engineering teams time to make controlled decisions, rather than reacting under pressure once a part becomes unavailable.
2. Confirm and approve alternatives before they are needed
As part of the design process identifying and approving second-source components is important. Having approved second-sources gives your manufacturer an option should the primary part be unavailable.
Second-source alternatives should be technically suitable, ideally with the same or a very similar footprint in order to minimise issues during manufacture.
It should be noted that often second-sources can incur additional cost, which can be managed by your contract manufacturer using PPV (Purchase Price Variation).
The risk of not having approved alternatives is that production may be delayed while engineering teams confirm whether another part can be used.
We advise building second-source component thinking into designs early so that when BOM health checks are carried out all options can be checked.
Some components, typically microprocessors, FPGAs and power supplies are often single source. For these single source parts, alternative strategies are required to minimise supply chain risk.
3. Identify single-source dependencies early
As mentioned above, single-source parts are often unavoidable, but the risk should be visible and understood and mitigated. No one wants one component to hold up an entire production build, even if all other components are available.
At ASL, we routinely flag single-source parts in the BOM and work with customers to manage the associated risk. Options may include holding strategic stock for single-source, long lead-time, or last-time-buy components. This can be managed through a Manufacturing Services Agreement (MSA), which defines the agreed process for managing the customer’s product builds, including how single-source and long lead-time components will be monitored and managed.
4. Monitor lead time and risk
Another useful check is to review lead times on components in a BOM and to highlight any risk to supply. An example is when a component is available, but has a lead-time which is outside the expected manufacturing window. This will add delay to NPI or production builds and may entail purchasing stock on the open market to meet demand which can be costly.
At ASL we work with customers to monitor lead times regularly, especially for critical components. This gives them time to adjust forecasts, place orders earlier, review alternatives or discuss stock-holding options before supply becomes a constraint.
5. Review cost movement before it becomes margin pressure
The final BOM health check is to look at cost movement across the BOM.
Over time component pricing can change due to several factors – including availability, demand, supplier price increases, and currency movements. The risk of these is margin erosion.
At ASL we manage the cost movement using two methods:
- Every six months the Component Engineering and Purchasing team at ASL undertake a requote of production BOMs to ensure all pricing remains accurate and up to date. If there is a discrepancy, the customer will be given a new quotation
- For BOM cost movements within the six month window, ASL use PPV (Purchase Price Variation) to manage any increases or decreases. This is rolled up at the end of a production build and the difference noted on the invoice.
At ASL, we aim to discuss significant price variations with customers prior to parts being purchased, so we avoid any unexpected surprises.
