Micro-electronic Chips shortages and obsolescence: an empirical study

Abstract

Obsolescence and shortages affect almost all value chains. The electronics industry, in particular the manufacturers of electronic and IT devices, are well aware of them. They have been organizing themselves since the 1980s. However, repeated crises are generating unprecedented waiting and stock-out phenomena. SNCF Réseau sets up and maintains signaling installations for railway tracks. The equipment used is long-lived, ageing and exposed to environmental aggression. Customers (i.e. freight or passenger transporters) must be offered a very high level of operational availability of track. However, in-service support becomes extremely challenging as soon as the equipment contains obsolete or obsolescent components, leading to possible downtime. To improve the efficiency of obsolescence and shortages management, SNCF Réseau wishes to reinforce its internal processes. A partnership through an empirical research project was then carried out in order to (1) Discover the main causes of obsolescence cases and shortages allowing to develop proactive management processes, (2) Find out the duration of the commercial life of the main target components, and (3) Find out the time between the announcement of the manufacturing discontinuance and the date of the last buy order; i.e. LBO for some classes of electronic components. The paper presents the results of this research made for 3 global suppliers. The project group, made up of ISAE-Supméca engineering students and their industrial and academic tutors, studied about 3000 components. The study shows, among other issues, that: (i) obsolescence and shortage information is often incompletely explicit, (ii) obsolescence cases are due to a small number of main causes, (iii) data processing does not always enable statistical models to be obtained, and (iv) customers have to use huge efforts to find out the right data about the obsolescence cases. The proactive management should be therefore agile to deal with these uncertainties. The paper ends by exposing some conclusions and describing the future research works the authors follow.

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