Obsolescence management in the industry

Obsolescence is a very present notion in our society where everything is in constant change. It is defined as the inability to obtain a certain product on the market, for whatever reason. Some of the reasons that make a product obsolete include technological progress, the depletion of a natural resource, the bankruptcy of a supplier, geopolitical conflicts and regulations.

OBSOLESCENCE, AN INTEGRAL PART OF THE CURRENT ECONOMIC MODEL

Obsolescence is part of the current economic model of the industry, constituting both a risk and an opportunity. Obsolescence is the fourth phase of a product’s life cycle. After the launch, growth and maturation phases come the decline phase, with the endpoint being the obsolescence of the product and its exit from the market. In the industrial sector, obsolescence refers to materials, chemicals, and equipment used in the production process. The two main risks associated with obsolescence are logistical disruption due to the obsolescence of a component in the production chain and increased prices and delivery times for end-of-life components.

OBSOLESCENCE MANAGEMENT RELATED TO ENTERPRISE RISK MANAGEMENT

The management of obsolescence is a strategic issue for industrial companies. This is an essential step in a preventive maintenance approach to ensure the logistical continuity of production. It also concerns the design issues that design offices deal with, such as anticipating solutions for replacing an obsolete product. Adopting a proactive policy towards obsolescence is a necessity within the overall enterprise risk management approach. In order to better manage the challenges related to obsolescence, a certain number of actions can be implemented. First, it is a question of preventing cases of obsolescence, identifying them, carrying out impact analyses and then building and managing action plans (preventive or curative).

PREVENT AND ALERT

In order to avoid the surprise effect, it is necessary to set up a preventive procedure for detecting the risks of obsolescence. This is a phase of anticipation and development of preventive action plans. To do this, the company’s experts must be aware of the processes of obsolescence and must be able to anticipate the risks of such a phenomenon. At this stage, the integration of software tools to monitor obsolescence is essential. The aim is to accurately determine the level of availability of products and their entry into the decline phase. In parallel, it is a question of monitoring changes in regulations concerning substances dangerous to the environment and human health (REACh, RoHS) or concerning materials from conflict zones (Conflict Minerals).

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ANALYZE AND ACT

The phase of analysis of the impacts of obsolescence is fundamental. It is very useful to have quantified information on the company’s state of health in the event of substance obsolescence, production stoppage, embargo… These potential risks can have a significant impact on production processes, suppliers, customers, turnover and finished products. When the extent of the risk of obsolescence is defined and impacts are identified, it is necessary to establish action plans (preventive or curative). All management data (planning, stakeholders, operations, step monitoring) are grouped into a single repository and structured using modular tools (GANTT diagram, decision trees, workflow…). When a project is completed, the results are analyzed using trend curves and statistics. In addition, it is important to consider the treatment of obsolete materials and equipment, particularly in terms of recycling, reuse, etc.

Having a complete database at your disposal that lists all the properties of materials and chemical substances, all changes in legislation and proposes alternatives to products used in the event of obsolescence is a strategic asset for centralizing tools and controlling risks.

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