Electro Enterprises offers a cautious outlook on mil-spec connector market in part due to Defense Logistics Agency Land and Maritime stop shipments.
During the last 18-months the worldwide mil-spec connector market has been fraught with uncertainty over constant stop shipments imposed on the world’s largest connector manufacturers. Procurement professionals have been impacted directly and indirectly, scrambling to find alternative ways to source the required parts. The most recent stop shipments have also created supply chain issues for both value-added distributors who assemble the affected connectors, as well as their competitors.
Historically the results of these stop shipments have been far-reaching, but have resulted in extended lead times and an increase in prices, both from manufacturers and value-added distributors alike.
Buyers are faced with the daunting task of deciding whether to wait out the stop-shipment in hopes that the manufacturers can resolve the issue with the DLA in a timely manner, look for other sources, or restart the design-in process completely.
Recent trends in stop shipments have led some smaller connector manufacturers, that do not derive the bulk of their sales from mil-spec product, to the decision not to re-qualify the mil-specs on many of their products. This becomes problematic to end-users whose engineering drawings call out specific manufacturers.
Electro Enterprises’ director of operations, Andy Enright, said: “Many of our customers in the aerospace and defense industry recognize the significance of a stop shipment early on and quickly request crosses on all affected parts. Because this can seriously delay production times for our customers it is important that we as the distributor be prepared to provide the same mil-specs from alternative manufacturers.”
In March of 2017 one of the biggest connector manufacturers was issued a stop shipment on MIL-DTIL-38999, MIL-DTL-26482, MIL-DTL-83723, MIL-DTL-24308, MIL-DTL-83513, MIL-DTL-83733, FSC 5935, VQP-17-031226 and CN 055334. The DLA stated that they did not disclose field failures and failures during the re-qualification testing process as main reasons for the stop shipment. This stop shipment comes only a year after the same company was instructed that they can no longer ship certain MIL-DTL-38999 series I and 3 connectors due to a leak test failure (the stop shipment has since been lifted.) MIL-DTL-38999 connectors are among the most common connectors used in the aerospace and defense industry.
In 2016 the world’s second largest connector manufacturer was put on stop shipment from the DLA for numerous mil-spec connectors, including MIL-DTL-38999, MIL-DTL-83513, MIL-DTL-22992, MIL-DTL-26482, MIL-DTL-27599, MIL-DTL-55302, MIL-DTL-26500, and MIL-DTL-8372. This was the connector industry’s largest stop shipment to date.
Stop shipments can last longer than the manufacturer originally anticipates, so it is best to factor that in when deciding what course of action to take on the affected parts.
Systemic effects on purchasing
Unsurprisingly any time a stop shipment is issued it causes major disruptions within the market, most notably from a procurement standpoint. Manufacturers and their authorized distributors are prohibited from shipping any product under the mil-spec number. Although it is still permissible to ship under the commercial part number many aerospace and defense companies must adhere to their drawings, which primarily tend to lean towards mil-spec parts.
The supply chain disruption is not just limited to those who distribute for the companies on stop ship, but also their competitors. The gap is quickly filled by those who can supply alternates, but at a cost; lead times skyrocket and stock becomes extremely valuable. Last year during the height of the stop ship crisis Electro Enterprises’ build time for standard mil-spec value-added connectors was at a record-high 10 days. Typical build times range between two to three days. Even today companies that have been affected by the most recent round of stop shipments are at 10-day lead times on standard mil-spec products.
Ultimately connector buyers must have a contingency plan in case a stop shipment occurs on the products they are responsible for. If the choice is made to wait for the manufacturer to resolve the issue with the DLA it is important to note that price increases will be inevitable. In past instances where manufacturers were sourcing inexpensive foreign subcomponents from unapproved sources, the price increased due to an increase in the cost of materials.
Working with a distributor who can provide various sources and cross products quickly is highly recommended. Electro Enterprises also suggests that procurement and engineering work together on future projects to limit instances where drawings can accept only one manufacturer per mil-spec. Allowing any manufacturer who has passed the rigorous testing standards set forth by the DLA to supply mil-spec parts is a preventive measure that will make future stop shipments much less problematic.
Enright concluded: “The breadth and depth of our current stock levels have been an asset to us during these stop shipments: we want to be able to assist the customer when situations like this arise. By reaching out to us as the distributor, we can work with the manufacturers, cross the products in a timely manner, and mitigate any risk of disruption to the customer’s production schedule.”