How to Manage the Electronics Manufacturing NPI Supply Chain

New product introduction – NPI – is the ultimate team sport.

From the procurement agent’s position, NPI in the electronics industry covers everything from setting quality and budget goals to deciding component and cable suppliers. The goal is to seamlessly integrate product design, development, and manufacturing to meet regulatory standards and satisfy the end user. 

Your understanding of the sourcing side of electronics manufacturing NPI can impact the project’s development cost, quality, and time to market.

Checklist: 6 Process Questions for Smoother NPI in Electronics Manufacturing

There are six places your team may be able to improve new-product introduction processes for a faster, safer launch:

1. Quality
2. Product flow
3. Compatibility
4. The environment
5. Single-source vs. multisourcing
6. Domestic or overseas?
   
   

1. Quality

In the 2020s, a string of serious supply chain disruptions caused component purchasers to rethink the true cost of doing business.  Many buyers have found that risks are riskier now, especially when holding out for the lowest possible price.

If the project is all about price, then you’re basically telling the parties involved that you’re willing to sacrifice quality. And besides, there’s much more to electronic component costs than the sticker price.

As the company puts its reputation on the line with a new product, consider these cases where paying more for parts may be worth it:

• Component importance – Is the part key to the success of the overall assembly?
• Interchangeability – Sometimes you can swap the specified part for a near-identical, cheaper alternative, while other times this can cause performance issues.
• Avoiding shady sources – A well-known, top supplier is a safer investment than a newly established online vendor that may be selling bad or counterfeit parts.

Even if your parts are coming from the world’s most reliable distributors or manufacturers, you should verify that the maker has a strict inspection process.

To help production advance smoothly, you can be ready to hand over a thorough bill of materials (BOM). You should already have the product’s design files, material makeup, and testing validation in hand before attempting a BOM. The document should include:

• Name
• Part number
• Level
• Phase of production
• Quantity
• Measurement unit
• Procurement type

A wisely thought-out BOM can promote quality and reduce error risk throughout all production stages.

2. Product Flow

Seamless stocking and inventory is the backbone of any good product introduction procedure. The price might be great, but if you can’t get the new parts on time … what’s the point?

Every electronics procurement person wants to know how soon they can get the necessary parts and start production. There are more influences on product flow, however, than simple supply-and-demand:

• Raw material shortages – Supply stream volatility sometimes starts at the material level. (See: Copper pricing)
  
  
• Obsolescence – Part manufacturers “end-of-life” a component because there are no longer enough users to justify the cost of making the part. Your product life cycle management plan should account for the lifespan of key components and make the transition to new ones smoother.
  
  
• Supply network – Consider using a component distributor that can dual-source across a vast network of manufacturing partners. This will give you a more reliable stream than going solo – more on this later.

Inside your own building, design, engineering, manufacturing, and marketing team members can speed up go-to-market time by simply improving communication. Getting a feel for each department’s perspectives and underlying goals can result in less confusion, fewer redos, and a clearer path to launch.

3. Compatibility

Your choice of electronic components should align with the product’s past, present, and future.

Physical dimensions and mounting types need to match the product design specifications to prevent mechanical integration issues. If it doesn’t fit the footprint, the purchase you thought would save $250,000 might force the engineers to totally redesign the board.

Components also need to play well with each other. A component’s temperature rating and dissipation needs can affect performance in other areas of the assembly. All parts should also have the proper rating for electrical properties like:

• Voltage
• Current
• Power ratings
• Impedance

Futureproofing the design is another great way to boost cost-effectiveness in the long run. When possible, buy components that are compatible with emerging technologies. This will extend the product's market relevance and make it easier to update it. Sourcing modular components that are physically easy to replace or upgrade can add further value without requiring a full redesign.

4. The Environment

Sustainability has been a trendy design word for decades, but unlike other trends, it’s not going away.

Today there are more eyes than ever – both from the public and regulatory agencies – on the eco-friendliness of products and practices. In the electronics manufacturing world, you can foster a “green” brand in several ways:

• Dematerialization – Making the product smaller, reducing its component count, and reducing the amount of packaging
• Prioritizing service life – Use durable or easy-to-modify parts, keeping your product out of the trash longer
• Eco-friendly materials – Recycled, biodegradable, and nontoxic materials

Eco-consciousness goes from “nice to have” to “must-have” in the presence of hazardous materials. Noncompliance can lead to fines, recalls, or bans in certain markets, emphasizing the importance of sourcing components that meet these standards.

There are two sets of material regulations that dominate the conversation worldwide:

RoHS (Restriction of Hazardous Substances) limits dangerous substances in electronic and electrical equipment. When you see a CE mark on an electronic product, you know it meets RoHS standards. These mandates originated in the European Union, but also apply to U.S. (and any other) manufacturers selling to EU markets.

REACH (Registration, Evaluation, Authorization, and Restriction of Chemicals) addresses the chemicals in finished products and the processes used to make them. Like with RoHS, there’s little point in manufacturing a REACH-unfriendly product, no matter where you do business.

OEMs sourcing for a new product can stay out of trouble by:

• Finding replacements for legacy part solutions that are no longer compliant
• Using software tools to manage compliance easily
• Working with a distributor that can help with the first two points
  
  

5. Single-Source vs. Multisourcing

In the literal sense, “putting your eggs in one basket” has its perks. You’ll know exactly where all the eggs are, and you won’t have to pay for extra baskets. 

On the other hand, spreading those eggs out gives you a safety net. If one basket breaks or disappears, you’ve still got plenty of eggs safely nestled in other baskets.

Finding supply streams for a product design can feel like a highly competitive Easter egg hunt, with some of the same pros and cons:

When in doubt, think of the “soft costs” of leaning on a specific source. In this era of supply uncertainty, it’s almost always advantageous to bring multiple manufacturers into the mix. A distributor adds value here by making a broader span of options more accessible. Occasionally, a distributor will even recommend multisourcing at the distributor level.

6. Domestic or Overseas?

It’s no secret why manufacturers prefer sourcing from overseas: lower prices.

However, most aspects of offshore sourcing also come with greater risk:

• Distance – Deliveries from abroad come with longer shipping time and cost, and they’re more prone to delivery disruption (i.e. monsoons).
• Time zones – If you have a problem or question, you’d better hope that a 12-hour difference on the clock doesn’t impact the supplier’s responsiveness.
• Language barriers – When working with companies that aren’t English-first, interactions are slower and more prone to misunderstanding.
• IP theft risk – Non-U.S. companies often have a lower level of commitment to protecting your work. 

Offshoring used to be a no-brainer cost-saving strategy, and still can be if you use

it wisely. However, differences in business philosophies and practices may add risk to an already-risky product launch.

Sourcing With Agility

Give some real thought to what’s going into the next-gen version of your company’s prized product line.

Settling for aging, cheap products can create a chain reaction of costs. Remove end-of-life and “not recommended for new design life cycle” parts completely out of the design. A distributor with forecasting tools and strong market knowledge can help you identify and avoid these parts.

And if you make just one change from the above tips, consider at least dual-sourcing! Keeping your electronics supply options open and agile will benefit the entire new-product introduction process.