Electronic Supply Chain industry research from the Z2Data Team

What to Know About Obsolescence

When a part becomes obsolete, companies are often left scrambling for replacements and alternatives. But planning for obsolescence is possible. Believe it or not, your team can effectively manage obsolescence, with these key steps.
by
Chase Correll
Published
January 19, 2022

The unavailability of previously accessible components or services is referred to as obsolescence. They might have been removed for a variety of reasons, including technical, financial, administrative, and legal considerations.

Often enough, obsolescence can mean that a part is no longer available, despite still being needed for a product. This serious issue affects every industry that relies on technology. Obsolescence will have a detrimental influence on your business if it is not controlled appropriately.

Managing Obsolescence

Obsolescence Management aims to understand why obsolescence has occurred and to plan for and mitigate such incidents in the future. Materials, components, methods, skills, and software are all subject to obsolescence.

Obsolescence can occur at any point in the equipment's lifecycle, including development, design, manufacturing, and servicing. It has an impact on components that must be kept in good working order for lengthy periods of time.

Obsolescence management must be planned for. It is not financially effective nor required to replace a whole machine just because one portion or piece of a product is no longer manufactured.

The last thing a company needs is for an end-of-life notice to be issued for a critical component, with no real alternatives or crosses available as drop-ins.

What Is an End-of-Life Notice (EOL)?

An EOL is issued for a product when it is nearing the end of its lifespan that precludes users from getting updates, signaling that the product has, from the supplier/vendors perspective, reached the end of its useful life.

At this point, the vendor no longer markets, sells or provides parts, services, or software upgrades for the product. A vendor may use the more precise word "end-of-sale" in the case of product sales ("EOS").

All users can continue to use discontinued products, but they will no longer get security updates or technical assistance. The time frame following the last manufacturing date varies by product and is related to the estimated product lifetime from the customer's perspective.

A timeline of a product’s lifecycle, starting with general availability, then an EOL announcement, the last order date (last-time buy), and ending with end-of-life.

What Is a Last-Time Buy?

The supplier's "last call" for a part or component is referred to as the Last Time Buy (LTB). The last opportunity for a company to purchase the part before the supplier discontinues production.

LTB orders often occur in the second part of a 10-year period. It is tough to forecast expected demand for the remaining service lifespan and make the proper selection on the number of components to acquire. The fact is that demand is nearly always volatile and difficult to predict.

5 Key Steps in Managing Obsolescence

1. Assess your system

Managing obsolescence comes down to an objective analysis of your own company, as well as your OEMs and suppliers. To properly prepare for the future, you must first understand the current state of your system by conducting a thorough system audit. How old is your equipment, and how long have its parts been on the market?

Compare your responses to the OEM's life expectancy statistics to establish the lifecycle of your machines and their components, giving you a better understanding of how long they will continue to serve you. Finally, establish a list of components that are already outdated or are going to become obsolete due to the OEM's actions. Of course, much of this work would be automated through the use of a parts database.

2. Plan for Upgrades and Last-Time Buys

Strategic obsolescence management necessitates the allocation of resources. Set out to create a budget set out for recurring improvements and last-time buys. Look to employ an obsolescence manager to assist you in keeping track of component lifecycles and planning repairs as needed, as well as setting aside a budget for a parts database specializing in managing obsolescence, crosses, and more.

It is also essential to know who to call when an obsolete component breaks. Having a reliable supplier for obsolete parts can be the difference between hours or weeks of suspended production.

3. Analyze Risk

When developing an obsolescence strategy, prioritize critical apps that are required to run the complete system. How much would downtime cost your company if one of these apps failed?

Create a risk assessment form to determine if you can afford to risk them breaking down or whether preventative maintenance is the most convenient alternative.

Examine the condition of their components and see whether they are still accessible from the OEM or if there are suitable products on the market. If they're already obsolete, seek a price from a specialized source. Because a failure of these components would have an impact on the whole system's performance, a timely replacement may be the best strategy to avoid unexpected downtime.

4. Keep Good Stock

Electronic and mechanical components must be classified according to their risk of becoming obsolete. When it comes to components that are already obsolete, consider collecting some spares while they are still reasonably plentiful on the market.

OEMs may issue an LTB notification and even give customized bids for EOL components. This might be the ideal moment to stock up on spares that you might not have another chance to stock up on.

5. Constantly Update and Review

Effective obsolescence management requires a full-time commitment. It needs careful supervision to keep automated systems running well, which is why bigger companies hire an obsolescence manager and, in certain cases, one or more last-time-buy professional buyers who are in charge of handling EOL items.

Smaller plants, on the other hand, may go a long way by just keeping their spreadsheets up to date and organized.   Plan frequent updates to your spreadsheets, especially for the areas of the datasheet that include visibly worn components.

Also, keep your finger on the pulse by subscribing to various newsletters from OEMs and other outlets that notify you when LTBs and EOL announcements are being made.

Obsolescence Made Easy

Companies without access to comprehensive parts databases run the risk of encountering unforeseen obsolescence events. They will find it more difficult to multi-source their parts, meet compliance regulations, and stay in touch with market availability. They will burn more man-hours analyzing the tech risks of potential products, and they will be unable to easily identify a manufacturer's stability.

The best practices for electronic part selection, in the end, rely on having a go-to platform where companies can instantly access data for relevant parts. If the electronic part search is as easy as you make it for yourself, then make it easy with a free trial at Z2Data.

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