Buyers for major OEMs often hesitate to accept or even consider alternative items simply because of the red tape involved in getting the items approved. In many cases, engineers must review specification sheets, obtain samples, and test items before approving the alternative. These precautions are usually for good reason. For some applications, failure of a single component could mean thousands of dollars in damage or, at worst, injury or death.
Despite the need for strict protocol when accepting alternative items, the benefits of streamlining the approval process are significant. First, alternative products can provide cost savings. This is because most design engineers focus on finding the optimal part for the application rather than the most cost effective supplier of the part. Second, approving equivalent items reduces the risk of shortages by broadening the supplier base. For example, if the supplier for a primary part has a five-week lead-time, the supplier of an alternative item may only have a two-week lead time. In this way, production delays are minimized.
1. Approve alternative products in the design stage.
Creating a list of alternative parts in the design stage will allow purchasing teams to quickly procure items in the event of product end of life (EOL) or a product shortage. In addition, buyers can use the list of approved alternatives to negotiate cost savings by creating competition between manufacturers.
2. Use online tools to find alternative products.
Manufacturers and distributors often provide online tools to help buyers find alternatives. For instance, distributor, bisco industries', provides a "Similar Items" display on their product pages One example is bisco's Hoffman A20H2008SS6LP enclosure product page. Another example is manufacturer, Thomas & Betts, who offers a competitor cross reference search. Such tools provide easy access to alternative product information reducing the time spent researching alternative products.
3. Obtain quotes on alternative items before requesting approval.
Before going through the hassle of submitting a potential alternative for approval, buyers should obtain quotes. Buyers can use quotes to determine if the alternative is viable based on the cost and availability. In addition, having a quote in hand will streamline the procurement process if the item is in fact approved.
4. Educate buyers on products.
Educating purchasing agents on the products they buy is an important step to avoid unnecessary approval requests. Buyers who understand how components function are able to spot potential problems and decide whether alternative items should be passed on to engineering. This results in a reduced engineering workload and faster overall approval times.
5. Prioritize approval requests based on alternative type.
Alternative items typically fall into three categories. One, the alternative item is an exact equivalent and can be used interchangeably. Two, the alternative item has the same fit, form, and function but may differ slightly. Three, the alternative item is suggested as a replacement or alternative by the manufacturer but may differ in size, appearance, and functionality. In most cases manufacturers and distributors can provide this information up front.
Procurement agents should use this category information to prioritize approval requests. Exact equivalent items will likely take less time to approve, while suggested alternatives will require more testing and research. Based on the assigned priority level engineers can expedite alternative items through the approval process.
6. Maintain records on alternative items.
Although seemingly obvious, collecting and updating data is key to the efficiency of the approval process. The collected data should include both approved alternatives as well rejected or obsolete alternative products. By storing this information and making it accessible to engineers and buyers companies can increase the speed of alternative product approval.
The process of approving alternative items must walk the line between ensuring quality and providing cost savings. The approval process is necessary but it should be as efficient as possible. When the approval process is streamlined manufacturers can leverage competition in the marketplace to reduce lead times and product costs.