Arena Blog

3 Tips for Reducing Single Source Component Risk

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Designing with a single source part—meaning a part that is only available from a single vendor or distributor—is one of the riskiest moves an engineer can make. With all your eggs in one basket, what happens if the supplier raises prices, begins limiting component quantities or goes out of business all together?

However, that risk may also deliver rewards by enabling you to differentiate your product. And if you opt for the single source strategy, you’ll be in good company. Our 2011 manufacturing outsourcing survey found that about 62% of manufacturers rely on a single source for critical components in their designs.

Regardless of the prevalence of single sourcing, you’ll want to mitigate the risks associated with single sourcing a part or parts. Below are our top 3 tips for protecting your product from single source uncertainty.

Tip #1: Know how to handle worst-case scenarios

If you discover that your sole source for a critical component has dried up, can you avoid a production halt, lost revenue and lost time?

The best way to keep production moving is to take advantage of reliable component searching tools like Octopart. Octopart is a Google-like search website for electronic components that makes it easier to find alternate components or sources in a pinch.

Arena PartsList is a nifty tool that integrates with Octopart to organize and track your part information in one place. Because PartsList connects directly with Octopart, you can instantly pull the latest datasheets, compliance status, pricing and availability information for any component in your PartsList—saving you hours of copying / pasting this information from scattered websites into a spreadsheet.

Tip #2: Nurture your existing supply chain relationships

In the business world, relationships are everything. By building trust and loyalty with your existing supply chain, you’re opening up the opportunity to leverage your suppliers’ networks to help you out of a sourcing bind.

GSCS, LLC, an Arena partner, is a group that helps small to mid-size manufacturers manage their component supply chains. If you’re interested in tailored advice on making your component sources more efficient, check out what GSCS, LLC can offer.

Tip #3:  Keep track of the lifecycle of your critical components

You can get a good sense of how risky a component is by paying attention to its lifecycle. Is it still evolving? Reaching maturity? Close to being discontinued?

If you discover that your design stability is lower than you realized or are comfortable with, adjust your design decisions accordingly.

When the risk is too high

If creating a dependency on a single source component is too risky for your situation, consider using parts that have multiple distributors.

An easy way to do this is with ‘Distributor Selection’—the newest feature of PartsList that lets you compare cost and availability of parts across multiple distributors. For any component in PartsList, you can select a price from the associated price break chart and instantly collect distributor information such as description, distributor name and part number and unit cost. You can also view a list of several potential datasheets before you select the datasheet you want.

What have you learned about the risks and rewards of single source components?