The economics of obsolescence

Even in this economic climate, Graeme Rumney, chairman, COG (UK) says it is vital that companies don't cut corners when it comes to obsolescence.


The Component Obsolescence Group International (COG) will be holding its seventh international conference at York's Royal York hotel in June this year.

The theme for the conference is the ‘Economics of Obsolescence'. COG intends to remind attendees that despite the present economic restraint, it's still necessary to manage the support of some assets for several decades after their design and commencement of use. Past conferences have concentrated on building best practice processes, using appropriate tools and skills, as well as integrating obsolescence management into through-life management planning.

Obsolescence management has become an accepted and valued part of planning for the support of long life assets. However, we still need to ensure that the financial pressures and budget cuts do not encourage some companies to use the opportunity to cut corners on the discipline, and investment needed to satisfy demanding customer requirements for an obsolescence free service life. In many contracts the responsibility for the management of a platform lies with the designer, and not the end user. It's therefore the designer that's at risk if decisions are made to cut corners on obsolescence management.

As the only one of its kind regularly held in Europe, the conference typically attracts over a hundred speakers, exhibitors, and attendees from around the world. Previous events have included speakers from the UK, the US, Germany and Italy.

Abstracts for papers have been submitted by experts from internationally recognised companies within the aerospace, defence, oil and gas, rail, and nuclear sectors. This mix of industry gives delegates a unique opportunity to benchmark themselves against other sectors and to share solutions, processes and practices which may have been hitherto unknown to those outside their industry.

The keynote presentation will be given by Dr Peter Sandborn, the well known US-based expert on lifecycle cost modelling. Peter is based at the Centre for Advanced Life Cycle Engineering (CALCE) at the University of Maryland.

The conference comprises two days of presented papers, an attached exhibition of obsolescence solution providers, and a one day workshop entitled ‘Developing a business case for obsolescence management' held on the day preceding the conference.

The agenda being developed for the conference covers a range of important topics, including cost avoidance techniques; planning for obsolescence; design issues; management issues: and counterfeit avoidance.

Cost avoidance techniques

Effective obsolescence management is about conducting activities in a way in which the cost of mitigating or resolving obsolescence issues is more than offset by the savings achieved in either contract penalties, the cost of redesign, verification, validation, or re-qualification activities. During these times of economic austerity, it's now more important than ever to think carefully about how we spend our customer's money, and avoid the costs incurred as a result of poor obsolescence management. Central to the overall economics theme for the conference will be the papers presented here, which will consider how we can quantify and communicate the cost benefits of obsolescence management to fund holders, and an examination of techniques for early identification of obsolescence issues through which the decisions can be made on the most cost effective means of resolution.

Planning for obsolescence

Throughout the product or equipment lifecycle, it's agreed good practice that obsolescence planning should be an integral aspect of the overall project management. At its most simplistic level, obsolescence planning is about understanding the probability, risk and impact of obsolescence, and then using this information to guide obsolescence management strategies throughout the product lifecycle. Unfortunately, obsolescence planning is often thought of during the early lifecycle phases as either an optional extra, or something that doesn't really warrant any investment in time and effort until the equipment or product is brought into service, by which time, some of the money-saving opportunities have been missed. This session will examine different approaches adopted and consider the comparative benefits which can be achieved through effective obsolescence planning.

Design issues

The role of the designer in the management of obsolescence cannot be underestimated. As technology moves towards faster, better, more efficient devices and products, designers are faced with the difficult choice of whether to use a component which is readily available and has been on the market, but runs the risk of becoming obsolete more quickly. Or, to use a cutting edge, brand-new design which is largely untried and has no established pedigree. Such devices may quickly become obsolete if take-up is insufficient. However, for devices which are successful, we can expect them to be supported for many years. The diminishing market share held by military and aerospace sectors in relation to the consumer electronics industry has had the effect of reducing the availability of high-reliability components. So, should designers resort to the use of COTS components? Are there instances where COTS can be effectively deployed in products with a long in-service life? Can reverse engineering and redesign be achieved at lower cost through the deployment of modern technologies? The answer to these questions and others will be explored during this session.

Management issues

There are a number of themes to be discussed within this session such as the emergence of incentivised availability contracts, which present the supply chain with an opportunity coupled with an element of risk, which, if understood and managed well could realise financial benefits for the supplier and the customer alike. Other management issues facing industry include the need to ensure the continued availability of suitable skilled engineers to support products and equipment through the life of the assets - there are challenges throughout industry in this area, and this will be explored in detail during the session.

Counterfeit avoidance

As components become unavailable through original equipment manufacturers, and their authorised distributors, the pressure on those supporting products with a long in-service life to source devices and equipment from unofficial sources inevitably creates a demand which can be filled by the counterfeit component industry. As organisations become more aware of the risk of counterfeit components entering their supply chain, and introduce enhanced systems and processes for their detection, so too the counterfeiters are becoming increasingly sophisticated, and cutting-edge methods for detection of these components are being deployed. The papers in this session will consider new methods being deployed to detect and avoid counterfeits, and will consider the cost to industry resulting from the threat of counterfeit components.

In summary, the conference offers a unique opportunity for professionals to further their understanding of obsolescence management within a financially constrained environment. The full agenda of 24 papers will ensure that this conference remains the most authoritative obsolescence event in the UK.

www.cog.org.uk

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