Obsolescence is coming: Will you stand or fall?

A recent global study – After The Fall: Cost, Causes and Consequences of Unplanned Downtime* – showed the majority of companies have experienced at least one unplanned downtime outage over the past three years, costing an average $260,000 an hour across all businesses.

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Advocates of Industry 4.0 and the Industrial Internet of Things promise a future of self-analysing, hyper-connected machines aimed at minimising breakdown risks.

As well as estimating downtime losses to average $2m a year for 82% of businesses, it also concluded that around 70% of companies lack full awareness of when their equipment is due for maintenance, upgrade or replacement.

Advocates of Industry 4.0 and the Industrial Internet of Things promise a future of self-analysing, hyper-connected machines aimed at minimising breakdown risks. That may well be the future, but it doesn’t really help with the vast majority of machinery bought and installed before the revolution.

For any forward-thinking manufacturer with any kind of machinery, a good obsolescence strategy will ensure the maximum value from previous or new capital investments in terms of ongoing performance, performance improvement and energy efficiency.

Lifecycle

Step one is to understand that parts and spares prices have a lifecycle. They start at a fair price, then as machinery starts to reach obsolescence, they rise dramatically as parts become hard to find but then later drop even more dramatically as original equipment starts to be replaced.

With smart planning though, it’s possible to make use of falling prices and avoid disruption and downtime if legacy equipment is well maintained. The internet has opened up the spares market so companies can have a spares strategy that does not necessarily rely on the OEM.

Having an obsolescence strategy at the outset can help companies avoid buying spare parts at peak prices and avoid the costs of disruption from stress purchasing – e.g. when equipment has already broken down.

To learn more about how to develop your obsolescence strategy, contact Northern Industrial

Risk Analysis

Carrying out an Obsolescence Report and a Risk Analysis is a good first step toward developing a full strategy.

Risk planning is best carried out on a rolling timeline using an inclusive framework taking into account any factors that can contribute to the likelihood and potential impact of obsolescence.

Obsolescence strategy - Manufacturers are urged to consider the ways in which data can help them remain innovative and ahead of a challenging marketplace. This could include predictive maintenance.
A usual starting point is simply to identify critical assets and then assess the risk of obsolescence in both qualitative and quantitative terms.

A usual starting point is simply to identify critical assets and then assess the risk of obsolescence in both qualitative and quantitative terms. Once the risks have been identified in relation to each asset, the next step is an assessment of obsolescence likelihood.

Data for this can be gathered from everything from the maintenance logs and internal systems to the reliability of the supplier in terms of SLAs, service and support. By looking into suppliers’ end-of-line (EOL) plans, manufacturers can mitigate the risk of discontinued support or technology upgrades.

Strategy

Once you are aware of the risks, a strategy can be developed to minimise the overall obsolescence risk, divided into three parts: Repairs, Upgrade and Spare Parts.

Repairs

Make an assessment of what can be repaired in the event of a breakdown. Can you wait for a repair?  For items that cannot have any downtime whatsoever, a repair may not be an option as this is going to take a minimum of 24 – 48 hours, and that’s if the repair supplier has the components in stock needed to complete it.

Who will carry out the repairs? What resources do they have? Do they have a good track record? Is the company you’re looking at hiring actually going to do the work, or outsourcing it? A quick company check will help narrow down the list of suppliers.

Upgrade

Upgrading in the middle of unplanned downtime is never recommended, so it’s worth considering if the equipment can be upgraded.

What equipment can be upgraded? What equipment should be upgraded? When should it be upgraded? Simply having a plan answering these questions will help keep you ahead of the curve.

Due to their rarity, the cost of some obsolete parts can actually be more than double the cost of a modern equivalent. New equipment comes with warranty and is more readily available so you can be confident that you will receive ongoing support for a number of years.

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Due to their rarity, the cost of some obsolete parts can actually be more than double the cost of a modern equivalent.

Aside from these benefits, you can also get other benefits such as better efficiency and reduced energy costs. You should always consider these benefits as they can make the payback period on improvements seem really quick.

A good supplier should have the necessary skills to assist or even set up the replacement before shipping.  Planning the upgrade in advance is always the best solution.

Spare Parts

What spare parts will be needed? Do we have them in stock? Keeping a good stock of the right spare parts can help mitigate the risk of breakdown disasters and expensive downtime.

For items where you have ascertained that repair or upgrade is not an option, but the part is critical to your production, a spare should be kept in your stock so that in the event of a breakdown you can switch out the faulty unit in a matter of minutes.

This mitigates downtime and gives you the option to repair the faulty unit and put it back into your stores, reducing future costs on spares management.

Buying spares at the right time can save you a lot of money compared to purchasing when you are already on breakdown and are factoring in express shipments from wherever the part is in the world, as well as the unit itself possibly being a lot more expensive due to its rarity now that it is obsolete.


David Lenehan, Managing Director, Northern Industrial, a family-owned and run business established in 1978 that provides new, reconditioned and obsolete parts and repair services to customers in 132 countries. The Lancashire-based company sources from more than 1,350 manufacturers and covers more than 200,000 part numbers.

*https://lp.servicemax.com/Vanson-Bourne-Whitepaper-Unplanned-Downtime-LP.html