Is Your Obsolescence Management Program Meeting Expectations?
For consumer goods, obsolescence merely means products become vintage or outdated and can easily be replaced with a newer version. However, for organizations operating in the B2B arena building long-life products or systems, the availability of parts and components has a more strategic dimension.
These companies require an obsolescence management program that will minimize the risks associated with one or more forms of obsolescence as standardized by the International Electrotechnical Commission. The IEC offers clarification on the various stages of obsolescence that apply to any industry:
- Obsolescent: A component subject to be announced as unavailable by the original manufacturer.
- Obsolete: A part/component not available per original specifications.
- Unavailable: A component not available from any source.
To be efficient and cost-effective, your goals in an obsolescence management program should address at least three core questions: when, why, and how.
Managing The Obsolescence Timetable
Why will a part become obsolete?
Parts/components become obsolete due to various factors.
They may be traditionally sourced from areas where availability becomes a challenge: conflicts, political unrest, trade wars, regulations, etc.
They may contain raw material that is becoming scarce or hard to mine. As demand drives supply, especially in the electronics and renewable energies sector, resources such as lithium and cobalt are highly sought-after with little visibility to long-term availability. The challenge is that finding substitutes may take longer than exhausting supply.
Compliance programs are another factor affecting obsolescence. As national agencies aim to rid the world of harmful chemicals, production involving banned substances is coming to an end.
Advances in technology play a significant part as well. The race toward better-performing components gives parts a much shorter life expectancy than ever before. Even though raw materials could be the same, design evolves and may ultimately not meet manufacturing specs and constraints any longer.
Obsolescence is inevitable and presents more challenges than only forecasting when parts will no longer be available. Obsolescence also addresses what alternatives there are and limiting negative impacts to the cost.
Obsolescence managers first study replacement options before turning to costlier solutions. The most obvious decision is to diversify sources. When major suppliers decide to eliminate components from their portfolio because demand has faltered, the market is not as profitable or progress in technology and design takes over, smaller-scale manufacturers may still be willing and able to meet orders.
While small-scale manufacturers are a viable alternative, they come with risks. Companies must consider the following:
- How long can suppliers sustain production?
- How reliable are they?
- Are specs fully respected?
- Are parts genuine, or have counterfeiters penetrated the market?
As companies are increasingly reliant on global supply chains and subject to growing lists of regulations, parts obsolescence has become a recurring issue for supply chain professionals.
Why is an Obsolescence Management Program Essential?
Obsolescence is a significant cost driver that impacts not only products but also business sustainability and long-term growth. When no longer able to offer equipment or the components necessary to maintain it, companies are left with no choice but to start from scratch, i.e., redesign. The process is costly, as is the need to undergo recertification where applicable.
Obsolescence is a major hindrance for long-life systems, most of which have taken years to develop and considerable efforts to market. Therefore, the ability to plan is essential to avoid disruptions that occur when a part is no longer available: pulling the product off the market, not being able to honor support and maintenance, loss of credibility and competitive advantage.
An obsolescence management program empowers companies to overcome most obstacles at every stage of a system’s lifecycle, especially during maturity when it is the most vulnerable to shortages, price increases, and other disruptive factors.
Planning for and Managing Obsolescence
Obsolescence management is an opportunity to identify and proactively address issues by involving all departments. Design should work with obsolescence in mind and work toward less dependability on volatile material markets. Procurement should read flags and act upon news or suspicions of parts at risk of being discontinued or becoming hard to source by securing sufficient stock (lifetime buys are a popular strategy among obsolescence management specialists).
Core Elements of an Efficient Obsolescence Management Program
Parts obsolescence can be expensive and is impossible to avoid. What, then, can be done to lessen its impact? Put simply, investing in a system that allows you to identify the risks, provides actionable insights, and supplies enough knowledge to be proactive rather than reactive.
Source Intelligence has developed an automated obsolescence management solution that parses through you and your suppliers’ data, as well as regulatory programs that could affect your product's dependability.
Thanks to our AI-powered solution, you will:
- Gain proactive end of life risk management
- Be able to plan and support engineering changes
- Locate alternative sources of supply
- Be alerted of product changes in real-time
- Access suppliers’ datasheet
- Correct supplier information so your sources are always accurate
Let us show you how an efficient obsolescence management program works.