Evolve with effective obsolescence management

Industrial automation spares supplier, European Automation, explores how the battle between innovation and obsolescence management affects short-term and long-term business planning.

Technology is advancing at such a rapid pace that it feels like more products are becoming obsolete every day. This is bad enough when it comes to replacing the battery in your smartphone, but when components in your industrial automation system fall victim to obsolescence, it can bring your whole operation grinding to a halt.

The threat of downtime, loss of revenue and the cost of finding replacements for obsolete kit certainly make investment in innovation-led initiatives attractive. Upgrading your entire system may seem like a good idea, but it isn't always the best choice. When you consider that the average lifespan for mechanical and electronic systems is between ten and 40 years, wouldn't it be more financially viable to make obsolescence work for you?

R&D can play a big part in keeping your company ahead of the crowd, but it's not without its pitfalls. Investing in R&D can generate unique products that, when brought to market, give the company a competitive edge, leading to further growth opportunities.

However, R&D is a massive drain on funds that rarely produces fast results. In addition, the achievements are uncertain at best, as there's no sure-fire way to predict the direction markets will move in. This means you could spend years working on a new product that could already be outdated by the time you're finished!

Managing expectancies

As manufacturers around the world grapple with austerity measures, it's becoming increasingly important to get the most out of legacy systems and keep them alive past their ‘sell-by date'. However, while industrial automation systems can sometimes celebrate their 40th birthday, the components within have considerably shorter life expectancies. So what do you do if the component has been branded obsolete?

This is where a choice has to be made as to where you place your investment. Do you bite the bullet and renew the whole system - bearing in mind the increasing speed of obsolescence could make the new system outdated within a couple of years - or do you establish an Obsolescence Management System (OMS)?

The Ministry of Defence commissioned a report from QinetiQ and ARINC as part of its Component Obsolescence Resolution Cost Metrics Study. The report analysed average engineering resolution costs across a range of solutions, from proactive obsolescence options through to major redesign. It found that the cost of a major redesign ran to an average of £416,910.

However, when proactive obsolescence management was involved, resolution costs were reduced by at least £317,418, with the most expensive approach costing £99,492 - dramatic savings. The study clearly outlined that, in the majority of cases, companies employing an OMS paid out, on average, less than £22,000 in non-recurring resolution costs. Some approaches to obsolescence management succeeded in bringing down these costs to just £136!

This is a situation often seen at European Automation, where its clients usually opt for replacing the obsolete part that has broken down instead of commissioning a brand new manufacturing unit or system. In fact, replacing the part is almost always the best short-term solution. It allows you to keep the manufacturing line up and running, not to mention meaning you don't have to rush into making a costly upgrade.

Not only are there savings to be made when it comes to one-off costs like this, there are also significant cost advantages and return on investment (ROI) to be gained by having a well-executed obsolescence strategy in place.

It pays to plan ahead

The biggest investment a company usually makes when exploring obsolescence management is time. An effective OMS needs to be well thought out and should cover how to manage, mitigate and resolve obsolescence at project, programme and corporate levels. Managing obsolescence is all about being proactive, so it's important to assess how best to approach the issue throughout the product development lifecycle.

When sketching out your OMS, the aim is to establish an obsolescence management plan that clearly defines roles, responsibilities, processes and review cycles. To do this, you need to have a forward-thinking attitude and anticipate the needs of your system to cover all eventualities.

An effective obsolescence management plan should set up an ongoing process that covers seven steps: System support assessment; Resource planning; Extracting and filtering bill(s) of materials; Risk analysis of constituent components; Component risk prioritisation and mitigation options; Risk register updates; Ongoing review.

By taking the time to assess your systems and predict which components may become obsolete and need replacing you can stay ahead of the game and have a solution ready. This will reduce downtime, save money and uphold your company's reputation.

Key benefits of using strategic obsolescence management include anticipating and mitigating the risk of costly redesign cycles, as well as rapid assessment of where and how component obsolescence impacts the system supportability. A good OMS also allows companies to minimise the risks of obsolescence by identifying second sources and alternate parts in advance. OMS establishes guidelines on how systems should be modified during design refreshes and allow better management of stock, inventory and spares.

Replacing obsolete parts

So how do you replace a component after the dreaded Product Change Notifications or End-of-Life notification? Options include using existing stock, Last Time Buy options, sourcing from aftermarket supply, finding alternate (fit, form and function) replacements from the same or a different manufacturer or finding the nearest equivalent substitute part.

Some of these options can be costly, but by taking the time to establish an OMS, companies can reduce these costs by reaping the benefits of a proactive approach. Early warning of component discontinuance allows maximum time to react and corrective action options at the component level can be taken while low cost opportunities still exist.

At this point, you might be thinking there just aren't enough hours in the day to implement an OMS. Luckily, there is a way of minimising both the cost and hassle of obsolescence management: working with an obsolete industrial part supplier that can source all the necessary components for you. This is perhaps the only solution that gives you complete peace of mind – no need to manage stocks, worry about downtime or rush into upgrades. You can be rest assured knowing that if something breaks down, you're working with a team of experts that can get you the part you need in record time.

Evolution doesn't happen overnight

No company wants to provide an outdated service or product any more than it wants to be working with obsolete technology itself. However, a balance has to be struck between advancement, innovation, obsolescence and durable systems. That's why it's important to realise that obsolescence management won't hold you back from innovation – the exact opposite in fact!

Innovation is seen as radical, fast-paced and fashionable whereas evolution takes time. To be truly innovative means more than being an early adopter of the newest technology; you need to be able to support your growth with strong foundations and functional legacy systems. Managing obsolescence effectively will allow you to evolve your business at a sustainable pace, enabling you to innovate whilst delivering a quality service.

https://www.euautomation.com/uk/knowledge-hub