Q3 2024 Market Insights
The Rebound Q3/2024 Market Insights has been published. Download it now and get up to date on commodity and market…
There are many reasons a product can become obsolete. A shortage of natural resources, technological advancements and the changing interest of consumers mean that almost any electronic component has the potential to become obsolete.
Component obsolescence poses many potential problems for OEMs and CEMs. There’s often nothing that can be done to prevent component obsolescence but, as with many supply chain activities, proactivity is key when it comes to your obsolescence management strategy.
While you can’t prevent component obsolescence, the sooner you know it is happening, the better, as it allows you more time to make the necessary changes. If the component is critical to your product, you may have to redesign it so that it no longer uses the obsolete part or find an alternative component that is available to replace it in the current design. You will also need to make sure you have enough of the component to complete any orders you have already taken if a redesign is not possible.
Maintaining good relationships and open lines of communication are important aspects of any successful business, but even more so when it comes to component obsolescence. If you have cultivated a good relationship with the component manufacturers you use, then they should alert you to Product Change Notifications (PCN), End of Life announcements (EOL)/ Product Discontinuation Notifications (PDN), and Last Time Buy (LTB) as soon as they become aware of them, giving you more time to prepare, such as by placing larger orders while you can.
Once you have ensured a reliable source for the stock of the obsolete component needed to complete your current orders, you need to look to the future of your products; either redesigning them so that they no longer use the obsolete component or finding a replacement component that you can source easily.
The final part of your obsolescence management strategy should be to ensure that you fully understand the time scale for a certain component becoming obsolete, as this will help you make the transition smoothly. Forward thinking and flexibility are key, as this will give you the freedom to make the choices that are most advantageous for your business, not the choices you have to make because they are the only remaining options.
While the above point still stands, if you partner with an experienced distributor, they can manage all these communications on your behalf, and will also be proactive in finding any updates, leaving you to focus on the manufacture and distribution of your products.
A reliable distributor will also be able to source the very best component alternatives for you, including hard to find components, meaning you will be in a good position when obsolescence happens.
While you may not be able to prevent component obsolescence, you can prepare for it by being proactive and aligning yourself with an experienced supply chain partner, like Rebound Electronics.
In today’s fast-paced industrial landscape, obsolescence is not a matter of ‘if’ but ‘when.’ It is, therefore, paramount for businesses to anticipate and plan for the inevitable decline or discontinuation of critical components. An obsolescence management plan isn’t merely a contingency strategy; it’s a proactive approach to safeguarding business interests. Here are the reasons emphasising its importance:
The absence of a well-thought-out obsolescence management plan can lead to unexpected disruptions in business operations. Imagine if a crucial component of a product line becomes obsolete and there’s no alternative readily available. The repercussions could range from halted production lines to delayed order fulfilment. By planning, businesses can ensure they have the necessary strategies to navigate challenges and maintain uninterrupted operations.
In our globally interconnected world, supply chains are intricate and multifaceted. A minor hiccup in one area can reverberate throughout the entire system. When a component becomes obsolete, it affects the production process and strains relationships with suppliers, partners, and customers. An effective obsolescence plan, therefore, acts as a risk management tool. It helps businesses identify potential vulnerabilities in their supply chains and develop mitigation strategies, ensuring they remain resilient in the face of challenges.
For many businesses, their products are the backbone of their operations. The obsolescence of a key component can undermine the functionality and reliability of these products. To prevent this, it’s essential to monitor the life cycles of all components and have strategies in place for their replacement or upgrade. This ensures that the products remain functional and maintains the trust and satisfaction of customers, who rely on the consistent quality and performance of these products.
The debate between a proactive and reactive approach, particularly in the context of obsolescence planning, is a hot topic in business strategy. Each methodology carries its own merits and challenges. Whilst a proactive stance favours anticipation and preparation, a reactive approach is about responding to issues as and when they arise. Here’s a closer look at both strategies in the context of obsolescence:
Adopting a proactive approach to obsolescence planning involves foreseeing potential component discontinuations and preparing for them in advance. This approach offers several advantages:
Whilst being reactive can sometimes offer flexibility, this approach has its downsides when dealing with obsolescence:
Crafting an effective obsolescence management plan requires a multifaceted approach. Addressing component obsolescence isn’t just about replacements; it’s about understanding the broader ecosystem of your business and its dependencies. Here are some pivotal elements to consider:
When faced with component obsolescence, it’s crucial to have strategies to navigate the situation effectively. Here are some tactics businesses employ:
In our era of rapid technological advancement, businesses have many tools to combat the challenges posed by component obsolescence. By harnessing the power of modern technology, they can predict obsolescence and adapt to it seamlessly.
Even with the best tools and intentions, implementing an obsolescence management plan is no walk in the park. Businesses often grapple with many challenges when devising and executing their strategies.
Planned obsolescence refers to the deliberate decision by manufacturers to design and distribute products with a limited useful life so that they will become obsolete or non-functional after a certain period. This strategy encourages consumers to purchase replacements or newer models, ensuring continued demand for the company’s products.
The legality of planned obsolescence varies by jurisdiction and the nature of the practice:
The frequency of updating an obsolescence plan largely depends on the industry and the rate of technological advancement. For sectors with rapid innovation, such as electronics, reviewing and updating the plan annually or bi-annually might be prudent. A biennial or triennial review might suffice for industries with longer product lifecycles. Regardless of the industry, it’s essential to remain alert to significant supply chain or technological changes, which may necessitate unscheduled updates.
In a constantly evolving market, it’s nearly impossible to avoid obsolescence entirely. However, its impacts can be mitigated with diligent planning. Proactive measures like lifecycle forecasting and regular component monitoring can help companies anticipate and prepare for obsolescence challenges, though complete avoidance is improbable.
Smaller companies, while perhaps lacking the resources of their larger counterparts, can still effectively manage component obsolescence. Prioritising critical components, building close relationships with key suppliers, and leveraging shared industry resources or consortiums can be beneficial. Adopting a lean approach, focusing on timely, data-driven decisions rather than extensive stockpiling, can also serve smaller businesses well.
Suppliers play a pivotal role in an obsolescence plan. They often possess first-hand knowledge about component lifecycles, potential discontinuations, and alternative solutions. Building a collaborative relationship with suppliers ensures timely communication of potential obsolescence issues. Additionally, trusted suppliers can aid in finding alternative components, offer solutions for last-time buys, or even collaborate on redesigning products to use more current components.
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