In 2008, one technology parts database listed 150 million electronic components. That same year, obsolescence product-discontinuation notices (PDNs) were issued for 1.4 million of those components by their manufacturers. Material and electronic device innovation has accelerated dramatically in the last decade, and the increase in parts obsolescence has kept pace.
While end-of-life and lifetime buy notices (LTBs), like death and taxes, are inevitable, an obsolescence strategy can help OEMs minimize downtime, avoid having to make costly LTBs, or source other products with similar form, fit, and function.
Manufacturers can adopt one of two basic obsolescence strategies, proactive or reactive. They can also combine elements of both approaches, or take a pre-emptive approach.
Regardless of which strategy you choose, the tactics you employ to cope with parts obsolescence include lifetime buys, finding an obsolete or aftermarket industrial equipment supplier, redesigning the product, or switching to a different component with similar form, fit, and function.
Proactive obsolescence strategies focus on ranking components in order of their importance, analyzing data available from parts manufacturers and independent databases, looking at both historical and algorithmic data to predict life cycle changes before they occur, and taking appropriate actions prior to receiving PDNs.
A reactive obsolescence strategy means waiting until an obsolete component breaks down or a PDN has been issued. The PDN signals the need to react to the component’s upcoming life cycle change.
Pros and cons
OEMs with short end product life cycles tend to adopt reactive strategies. Those with long end product life cycles—defense and aerospace OEMs in particular—favor proactive (or even pre-emptive) strategies.
While LTBs may seem like the best (or easiest) way to cope with parts obsolescence, there are a host of inherent risks and costs involved. Those include initial capital outlay, additional warehousing costs, potential degradation of components from exposure to dust, oxidation, or moisture, quantity miscalculation if system design doesn’t remain static, and the need to eventually discard excess inventory. Additional LTB risks when sourcing from aftermarket or unauthorized distributors include higher prices and possibly counterfeit or lower-quality components.
Redesigning an end product means incurring new design, manufacturing, and legal costs, and if the redesign is necessary because a single component isn’t available, the cost: benefit analysis may make a redesign impractical. In this situation, finding crosses via independent component databases is probably a better solution, since those databases compare, find, and grade crosses by looking at parametric, dimensional, and electronic characteristics.
While developing, adopting, and implementing a proactive obsolescence strategy may seem like the best way to avoid downtime, being proactive always involves additional and potentially unnecessary costs, including the hidden and often untracked cost of meetings, planning, and strategy sessions. Predictions are just that, no matter how soundly they’re based on experience and knowledge.
Garbage in, garbage out?
If your obsolescence strategy relies solely on reacting to PDNs, you may be in for some nasty surprises. A 2007 study of component manufacturers’ obsolescence predictions revealed they’re only accurate 55% of the time. The (sort of) good news: the same study showed it’s more likely (28%) that the component will actually become obsolescent after the estimated date than before (17%). And then there were the 1.5% of component manufacturers who said parts were still in production when they weren’t.
The good news: in the 12 years since 2007, web-enabled component databases have become more common and more sophisticated, enabling obsolescence forecasting and risk grading using market availability, technological improvement, and historic obsolescence behavior of specific manufacturers.
Particularly important for long end-product life cycles, a pre-emptive obsolescence strategy identifies risks in the early stages of project implementation and mitigates them. Using open architecture systems, modular design, commercial off-the-shelf rather than proprietary products, and establishing local repair capabilities are elements of pre-emptive strategies. Annual meetings with suppliers that help establish strategic relationships that are closer to strategic partnerships tend to lead to better after-sales support.
Participation in technical advisory groups and contracts with suppliers that require not only component obsolescence notification but also identify appropriate solutions are also key to pre-emptive obsolescence strategies.
Knowledge is power
Ultimately, the decision to adopt a proactive, reactive or even a pre-emptive obsolescence strategy has to be based on establishing and applying processes and reviews that address all the issues you can identify. Using the best data available and evaluating it while examining product design and life cycle length considerations is key. Supply chain and procurement managers are in a unique position to advocate for strategies that work for their company and their industry sector. While you may not always get credit for a win, you’re sure to take the blame for a loss.