Sourcing Strategies Supply Chain Management

Strengthening OEM supply chains: role of second sourcing strategies

Author: Axel Klein, Senior Manager, Semiconductor Product Marketing, Toshiba Electronics Europe 

In the fast-paced field of electronic component procurement, supply chain disruptions such as natural disasters disrupting production and unexpected product discontinuations represent a major threat to OEMs. This article explores the advantages of implementing a second-sourcing procurement strategy to mitigate these risks. It offers insights and practical strategies for procurement professionals to protect the supply chain and improve product performance. 

Rapid advances in technology, driven by process improvements, are resulting in smaller, faster, and more cost-effective device designs. This forces component manufacturers to launch new products with improved features, often at a lower price point, leading to the abandonment of older products due to supply chain constraints or environmental regulations.  

These dynamics shorten product lifecycles, challenging procurement professionals to find alternative suppliers and requiring OEMs to prepare to reconfigure production lines. Despite the benefits of technological advances, it forces customers to keep up with the times, similar to upgrading hardware to optimise the use of software. 

Approaches to mitigating supply chain risks

To counter component shortages, OEMs employ various strategies. One approach involves redesigning the end product, but this entails significant costs related to design, manufacturing, and product qualification. Moreover, redesigning the entire product each time a single component becomes unavailable is operationally impractical, given that different components will inevitably become obsolete at various stages throughout the product’s life cycle. Therefore, proactive planning for product design updates becomes essential. 

Another option is to procure components through a ‘lifetime buy’ before the supplier discontinues production. However, this obliges the OEM to purchase and store the component for the remaining life cycle of the end product, which poses challenges in predicting future usage accurately. Overestimation leads to excess stock, while underestimation prolongs the issue. In addition, lifetime buys increase warehousing costs and expose components to environmental risks like moisture, oxidation, and dirt, potentially raising failure rates when installed in end products. 

Alternatively, OEMs can turn to aftermarket distributors to source obsolete components, albeit at a premium over the original cost. If an unauthorised broker supplies the component, the OEM risks exposure to the uncertainties of the ‘grey market’, where counterfeit and inferior quality components are common. The performance of such components, sometimes recycled from old equipment, cannot be guaranteed, potentially exposing the manufacturer to litigation if the failure of their end equipment causes material loss or injury to a customer. 

Benefits of second sourcing as procurement strategy

When there is a component shortage, the optimal approach is to identify an alternative part with the same form factor (pin compatibility) and nearly identical electrical specifications (drop-in compatibility). Known as ‘second-sourcing’, this method enables OEMs to maintain end-product manufacturing with minimal design alterations, serving as both a reactive measure and offering proactive advantages.  

To mitigate potential supply chain disruptions, production managers often identify alternative suppliers during the design phase or initial production planning. This pre-emptive action ensures that in the event of order fulfilment challenges or unexpected Product Discontinuation Notices (PDNs) from the preferred supplier due to disruptions in their own supply chain, there are alternative sources available. Furthermore, having competing second sources empowers OEMs to negotiate more favourable pricing terms with their preferred supplier. Rather than resorting to a secondary supplier only in exceptional circumstances, procurement professionals find it beneficial to place small, regular orders with these suppliers to cultivate an ongoing supplier-customer relationship and maintain reliability. 

While some OEMs may initially select a preferred supplier based on being first to market (technology leader) or offering the lowest price, it might not always represent the best technological solution. Companies positioning themselves as ‘technology followers’ analyse competitors’ products to offer similar functionality with enhanced performance. They also continue to offer components even after the incumbent exits the market, establishing a mutually beneficial strategy. 

Therefore, a second-source component supplier should not be perceived merely as a secondary option but rather as a complementary one, offering additional benefits and strategic advantages. 

What to look out for when considering a drop-in replacement

The benefits of identifying and using second-source suppliers are evident. However, a drawback of this approach lies in its ease of application primarily to standard digital (logic), analogue (amplifiers), and simple mixed-signal (data converters) components, for which second sources are readily accessible. Conversely, OEMs may encounter challenges in identifying second sources for products such as drivers for brushed DC and stepper motors. 

For procurement professionals and designers of motorised equipment, Toshiba’s recently introduced range of motor driver ICs offers added reassurance regarding the supply of these products. 

Second-sourcing not only mitigates risks but also offers strategic advantages, including pricing leverage and technological innovation. Recognising the importance of this approach, Toshiba has unveiled a suite of motor driver ICs with drop-in compatibility that ensure supply chain stability.  

The TB67H451AFNG is a pulse-width-modulated (PWM) brushed DC motor H-bridge driver specifically designed for diverse applications, including battery powered devices or those operating from a 5V USB power supply. This IC is suitable for use in a wide range of devices, spanning from industrial equipment operating on 12-36V to home appliances like coffee machines and robotic vacuum cleaners. Capable of providing a current drive of up to 3.5A, it operates efficiently across a broad input voltage range of 4.5 to 44V, with a maximum motor drive output current of 3A at 44V.  

Toshiba’s TB67H450AFNG offers similar functionalities to the TB67H451AFNG but includes a latching overcurrent shutdown (ISD) feature, where the output remains deactivated indefinitely until a power cycle is initiated or the device transitions in and out of standby mode.  

Offering constant-current dual H-bridge functionality, the TB67H481FNG and TB67H480FNG support brushed DC motors and bipolar stepper motors. They are capable of handling motor output voltages up to 50V and output currents up to 2.5A. Input interface options include PWM for TB67H481FNG and PHASE/ENABLE for TB67H480FNG. 

The TB67S581FNG and TB67S580FNG two-phase bipolar stepper motor drivers have high output voltage ratings of up to 50V. The TB67S581FNG supports output currents up to 2.5A, while the TB67S580FNG supports output currents up to 1.6A. 

All four devices offer drop-in compatibility while featuring built-in charge pump capacitors, saving board space, and reducing system costs.  


By eliminating the need for external components and ensuring compatibility with existing systems, Toshiba empowers OEMs to navigate supply chain challenges with confidence. 

While supply chain risks may be an inevitable reality, Toshiba’s motor control driver ICs represent stability in an uncertain landscape. With their drop-in compatibility and advanced features, these ICs not only mitigate risks but also pave the way for a more resilient and innovative future in electronic component procurement. 

This article originally appeared in the May issue of Procurement Pro.