Long-Term Supply Programs Save Millions for Aeronautics Company

Tuesday, February 1st, 2011

Rochester Electronics’ customized, comprehensive, scheduled, and managed Special Product Agreements™ (SPAs™) provide a continuous, long-term source of critical semiconductor devices. Through these long-term supply programs, Rochester acquires devices from the original semiconductor manufacturer and places them into bonded inventory for distribution as defined by the SPA contract. The critical devices are stored in Rochester’s environmentally controlled, state-of-the-art storage facility to ensure uncompromised integrity.

Customized SPA programs significantly reduce a customer’s last-time buy investment during an end-of-life event, and eliminate extra costs associated with proper handling and secure storage. The last-time buy inventory eliminates the necessity for high-cost system re-design, an expensive and lengthy process that forces the reallocation of engineering resources to re-design, re-test, and re-qualify a system.

“The discontinuation of a semiconductor device is inevitable, and OEMs typically only have six to twelve months to make a last-time purchase or find an alternative source for the critical semiconductor device,” said Tom Skarbek, strategic customer programs manager at Rochester. “The customer is left with the option of either a costly end-of-life purchase, or a costly redesign. Our Special Product Agreement solves many of the problems associated with semiconductor end-of-life events during the course of a critical system’s lifespan.”

If last-time buy inventory is insufficient, Rochester can extend the life of the semiconductor device through continuing manufacturing with the authorization of the original manufacturer. Rochester can either manufacture parts using existing wafer stock or can re-create a device. Rochester’s Extension-of-Life™ solutions, including the customizable SPA programs, ensure that a semiconductor device never truly reaches end-of-life.

Companies in many industries have taken advantage of Rochester’s customizable programs to secure a continued supply of critical components for their systems with long production life spans. For example, recently, after receiving an EOL notice on a critical microprocessor, an aeronautics company found they had only six months to make a last-time buy or initiate a redesign effort. One of the systems that requires this part is scheduled to be in production for 20 years or more, and will require service and maintenance for another 10 years. The device is used on 7 additional platforms on 9 different aircraft. To obtain the projected long-term program requirement of 12,000 pieces, the company faced a traditional last-time buy at an up-front cost of $3.6 million. The alternative traditional solution was a redesign effort, which would cost more than $22 million, including the qualification processes for each of the end-use devices. The redesign would also cause unacceptable production delays.

The company decided to see if Rochester Electronics could help. Rochester’s Extension-of-Life experts were able to develop a customized SPA program that eliminated an immediate cash outlay, saved millions of dollars in redesign costs, and kept production going. Through a pre-existing relationship with the original manufacturer, Rochester procured the critical devices on behalf of the aeronautics company. The agreement protected the cash flow of the aeronautics company, and the immediate availability of the critical part eliminated the need for costly redesign and requalification.

The company’s last-time buy inventory is now securely stored at Rochester’s facilities. If the quantity turns out to be insufficient, the company has the option to commission Rochester to manufacture additional devices, as a product transfer had been made with the supplier as well.

With Rochester’s comprehensive SPA programs, OEMs are assured that there will be no interruption in their production flow.

News Archives