What to know when sourcing components for your tech product
A good idea might be more than the sum of its parts — but the parts are pretty important, too. If you’re building a tech product, you’ll need to consider how you will source your components. And the sooner, the better, as it’s key to get started on component sourcing at an early stage of development.
A lot of things can get in your way when it comes to building a tech product. For example, it may take longer than you think to source needed parts, and you won’t be able to begin production until you have all of your components in hand.
Luckily, there are plenty of resources out there that can help you find the components you need. To help you navigate through the process of component procurement, here are some considerations to keep in mind:
Lead times for parts can take longer than you may think.
A lead time is the amount of time that elapses from the time you order a part to when it is delivered. And lead times can vary a lot: It can take anywhere from a couple weeks up to a year to have a part ordered and delivered if parts are not immediately available with a distributor. The majority of parts fall in the 12-20 week lead time if an order has to be placed with the manufacturer.
There are many reasons why different components can have such a wide variety of lead times. Global manufacturing changes, material supply chains, and the market demand for a given part can all impact lead times. Even the quantity of your order can have an impact: Sourcing 10,000 parts will be a lot different than sourcing 10. And don’t rely on past experience as a barometer: just because it only took a few months to get a part last time doesn’t mean it will be the same the second time around.
Purchasing last minute can end up costing you more.
Waiting too long to order parts can impact more than just your release date, it can also impact your wallet.
You’ll need to find a contract manufacturer (CM) to assemble your product, and getting a CM to change your production date to accommodate delays can be costly.
Consider the fact that a CM has other projects that are scheduled around yours. Let’s say that your production run would take one week, but you are missing components and aren’t ready to go when your date arrives. The manufacturer may bump you out of the queue. Perhaps the project following you will take three weeks to complete, and then there’s another project slated right behind that. Your component delay just got compounded while you wait for your CM to slot you in again.
What constitutes “last minute” when ordering components can be very subjective. If your production date is 26 weeks away, but one of your parts will take 32 weeks to arrive, then you are still ordering your components last minute. The best practice is to make sure you are incorporating component lead time into your production forecast.
If you think you are going to be delayed, tell your CM right away. This may help you avoid additional charges. For example, if they have to set up tooling to assemble your product and then must remove it while waiting for materials, you will likely be hit with fees for the extra effort on the production floor.
Global market conditions can be unpredictable.
It should go without saying that supply chains can be interrupted by forces outside of your control, and it doesn’t take something as massive as a global pandemic to disrupt your component sourcing.
Take, for example, a past shortage of ceramic capacitors. While they appear in nearly every small electronic device, and most cost less than a penny, in recent years the supply was not able to meet demand. More and more companies were building tablets, mobile phones, and other electronic devices, and factories couldn’t keep up with the increased demand, extending lead times.
If you’re planning to produce a small run of your product, it might be an option to store a part in your facility until production is ready to commence. But that becomes impractical if you’re doing a large run or if you’re dealing with larger components.
The best thing you can do is to stay aware of what’s happening in the market.
Products can go end-of-life.
Knowing when components go end-of-life is really important when it comes to sourcing your product. If a part is no longer being produced, then your supply is fixed. And if you’re unable to order more of a component, then you’ll have to find a new part to replace it.
A product going end-of-life forces you to think further into the future. Is this the one and only production run of your product? If not, do you have a plan and timing established for your next production run? Is the part essential to your design or can you find a similar product that will work?
You can do a redesign replacing most general types of components, but redesigns can be costly. If you’ve designed everything on your product around a single chip that goes obsolete with no close alternative, then you might have to redesign your product from scratch.
You will also want to be aware that oftentimes obsolete parts that you are able to source can have inflated prices since the supply is decreasing. Without a plan in place, you may be stuck paying higher rates and losing profits on your product sales.
In general, it is a good practice to ensure that none of your components will be going end-of-life anytime soon. Usually a manufacturer will give you a hard date to let you know when production will stop.
It can be difficult to vet distributors and manufacturers.
Where you buy your component matters. It might be tempting to get your component from a marketplace, like Amazon or Alibaba, but buying components from third-party sellers might mean risking price fluctuations, insufficient quantities, or discontinuation — all without any warning.
By not going through a trusted distributor or manufacturer, you also run the risk of getting counterfeit product. It might look like the real deal, but a lower-quality component is more likely to fail. While this percentage can vary, even a 1% fail rate could significantly impact your business. When one in 100 counterfeit components malfunction, it means that one in 100 of your shipped products won’t work properly. This can easily lead to a damaged brand reputation, a customer service nightmare, and a slew of unhappy backers.
Instead, you should purchase components from a trusted distributor or an authorized source.