OBSOLESCENCE MANAGEMENT

AN INTRODUCTION

Yousuf Hasani
Introduction
Background

KP4 Program Recommendation; improve focus on the obsolescence

management.

BAE Systems; Obsolescence is a bigger issue

then reliability

Obsolescence is inevitable and it cannot be avoided,

but forethought and careful planning can minimize its
impact and its potential high costs..

The parts supply chain is a complex puzzle. New semiconductor designs, continued
calls for low-power consumption and shorter life cycles are making supply chain
management even more complicated…..obsolescence impact everyone in the
supply chain, from procurement manager, design engineer, compliance
manager, competent engineer…

December 11, 2024 Page 5

Introduction to Obsolescence

Obsolescence is defined as the process of becoming obsolete. Obsolescence is

the unavailability of parts, or services that were previously available.

Why Obsolescence Management is important?

Market Dynamics Consequences of Obsolescence

❑ More components are becoming obsolete at a ❑ Operational; HSE, asset uptime, efficiency,
faster rate availability, maintainability and reliability
❑ Mergers and acquisitions of OEMs (Original
Equipment Manufactures) so changing business ❑ Financial & Business consequences; such
models and priorities as non compliance (e.g. insurance spares,
❑ Demand in the shorter life span of components minimum inventories of spares at site),
❑ Changes in the regulations regulatory fines, contractual, reputational
❑ Changes in the standardization and revenue loss.

Source: IHSMarkit

December 11, 2024 Page 6

Obsolescence Types – driven by dominated factors;

Economic Functional Technological

Loss of the ability to Specific requirements for More technologically

procure the parts, Market, the product have advanced components
supply chain disruptions, changed; as a result the have become available.
Main Types

high risk of freight or product’s current This can be due to

transport costs, function, performance, or changes in the design
reliability become (improved) or other
Lack of materials, or obsolete (e.g. level of factors (regulatory
necessary skills, tools to qualification, excess cost requirements e.g. CE
manufacture and/or to to maintain or Poor etc.).
provide resources to design).
support (e.g. after sales) a
product (part, system or
component (s)

December 11, 2024 Page 8

Standards & Best Practices

❑ IAOGP – International Association of Oil and Gas Producers, Report 551, 2016
❑ EN 9278 General Principles of Obsolescence Management
❑ IEC-62402:2019 Guide to Obsolescence Management
❑ EN 16646 Maintenance within Physical Asset Management
❑ EN 62551 Analysis and techniques of dependability.
❑ EDSTAR – European Defense Standards Reference System – Expert Group 21
Report 2016
❑ SD-22 Diminishing Manufacturing Sources and Material Shortages – A guidebook
of best practices for implementing a Robust DMSM Management Program – Jan
2021.

December 11, 2024 Page 9

Management Strategies for Obsolescence
Often used terms..

BOM- Bill of Material, stating an equipment complete parts list

COTS – Commercial off the shelf
EOP – end of production
EOL – end of life
Emulation - process that produces a substitute item for the purpose of
replacing another item while maintaining the same form, fit and function, and
interface
SCM – Supply chain management
LNB – life of need buy ; procurement of sub items sufficient to support the
item throughout its life cycle, or until the next planned upgrade
PCN – product change note
PDN – Product discontinuous note
Obsolescence Risk (OR)– measure of uncertainty as to when an item will
become obsolete

December 11, 2024 Page 12

Component life Cycle & Obsolescence phases

❑ Obsolescence is the
transition of an item from
available phase to
unavailable (obsolete EOP
phase). EOL

❑ The transition happen

usually at the notification of
end of life (EOL)

December 11, 2024 Page 13

Obsolescence Management Approach

Purpose : Obsolescence management is coordinated activity taken by individuals or an

organization to manage the obsolescence of items which can vary due to the nature of
business activities

What items are covered in Obsolescence Plan for

Obsolescence

❑ Physical assets (Plant, property, equipment)

❑ Consumables (batteries, media, cartridges etc.)
❑ Materials (polymers, composites, metals, fluids etc.) Act as Planned for Design / Do for
❑ Software (middleware, firmware, operating environment, Obsolescence Obsolescence
purpose build applications etc.)
❑ Systems (information systems, HMI, PLCs other OT
systems)
❑ Services (communication, information management, Check for
Obsolescence
competence, skills etc.)

Approach - Process steps for

Managing Obsolescence – IEC 62402

December 11, 2024 Page 14

Management Strategies

Proactive Reactive
Obsolescence
Management

❑ assess & plan the obsolescence, e.g. design ❑ negotiating with the OEMs, to extend the EOL,
considerations, modularity, technology transparency searching for existing stock
❑ planned design changes/upgrades ; ❑ processing an LNB reacting to a notification
❑ extended production substituting items
❑ authorized continuing manufacturer; ❑ researching an aftermarket solution provider who
❑ proactive life of need buy (LNB) to avoid obsolescence and may perform
materiel shortages ❑ divestment – IPR transfer
❑ reclamation
❑ preservation – technology long term storage ❑ emulation/reverse engineering
❑ repair
❑ design changes/upgrades, introducing a new item
❑ no action – no impact

December 11, 2024 Page 15

Obsolescence Management Process

Monitoring & Surveillance Risk Assessment Obsolescence Management

Approach Selection

Obsolescence
Business Rating (Register)
Inputs, CMMS
Data
A Survey of
OEM/Vendor/
Suppliers/ Alternatives

Risk Risk
No Pro Active
Assessment Acceptable Approach

B C
Yes
Reactive
Approach

D
December 11, 2024 Page 16
Monitoring & Surveillance A

Availability from the OEMs

❑ A basis for the maintenance and reliability
engineers to manage variety of spares,
parts and other critical components End of Life or End of Production

Criteria for Obsolescence Rating

Obsolescence = Criteria Score Timeline to Deliver Components
Rating x Weighted Factor
System Condition (Remaining Life)
❑ An objective measure of Obsolescence
❑ The higher the index the more focus is needed
in proactive strategy and component tracking. Asset Criticality
❑ A maximum score depends on the criteria
❑ The weighted factor depends on the Redundancy
management policy
❑ Number of questions depends on the
Failure Rates
complexity and business requirements

Financial Impact (Production, Maintenance)

December 11, 2024 Page 17

Obsolescence Rating – Example 64A Relay for Switchgear (750V DC) A

Score Range (S) OI= Score (S) x Criteria 1 : Spare Availability Score
Weighted Factor No Spare Available, EOP confirms 5
# Criteria Description - 64A Relay Policy Weighted Factor
(WF) Policy Limited Spares Available (tight situation incase emergency) 4
(1 to 5) (WF)
Available but long lead time (> 2 year) 3
1 Availability of Spare / Component 4 2 8 Spare are Available Less Lead Time (<2 years) 2
Spares are Available (no EOL or EOP Notice) 1
2 Overall System Condition (RL) 3 1.5 4.5
Criteria 2 : Syetem Condition (RL or Asset Condition) Score
Remaining Life of Asset is low < 3 yrs. 5
3 System Criticality 4 1 4
Asset System RL > 3 yrs. but les then 7 yrs. 4
Asset System RL > 7 yrs. but les then 10 yrs. 3
4 System Failure Rate 3 1 3
Asset System Remaining Life is < 15 yrs. but >10 Yrs. 2
Asset System Remaining Life is > 15 yrs. 1
5 System Redundancy (if known) 1 1 1

Obsolescence Rating 21

Maximo Asset Data

Asset ID 1287613
Asset Class PWR
Sub System 750V DC
Component Switchgear Interface Cubicle
Sub Component 64A Relay
OEM SIEMENS
Date of Purchase 1999
PO XDS-0141712

December 11, 2024 Page 18

Obsolescence Risk Assessment B

Components / System risk assessment to cover following as a minimum:

❑ Stock Levels
❑ Stock Consumption Rate
❑ Number of Manufacturing Sources
❑ Years to End Of Life
❑ Operational Impact
❑ Known obsolescence over time
❑ Highlights key concerns by operator or maintainer

Identify Items
Establish Risk Risk
(priority to
Criteria Assess Review
High ratings)

Risk = Likelihood x Impact

December 11, 2024 Page 20

Obsolescence Risk Assessment (IEC-62402) B

IEC 62402 provides examples as how to establish criteria for the Risk Assessment :

❑ Likelihood
❑ Impact

Likelihood Assessment (IEC 62402) No of Suppliers/ Vendors Assessment Impact

None or One Likelihood X Impact
Low Medium High
at least tow or more
EOP Forcast - No of Suppliers/Vendors High Medium High High
Three or more
Likelihood >2 2 0 to 1
Medium Low Medium High
Less then 2 Years Medium High High Operational Impact Assessment Low Low Low Medium
Between 2 to 5 Years Low Medium High > 5 Years Low
Greater then 5 Years Low Low Medium 2 to 5 Years Medium
within 2 years High Obsolescence Risk Review Period of Review
High < 6 Months
Years to Item Become Years to End Stock impact on System Performance Assessment Medium Annual
Obsolete > 7 yrs 3 to 7 yrs < 3 Years Prevents being operated High
Low Every 2 years
< 3Yrs Medium High High operational but degraded Medium
3 to 7 yrs Low Medium High Other impact, non critical Low

> 7 yrs Low Low Medium

impact on Procurement Assessment
Prevents critical milestone being met High
Procurement shortfall requires
resolution by the first maintenance Medium
period
other impacts, non critical Low

December 11, 2024 Page 21

Proactive Management Strategies C

Proactive obsolescence management means that the availability of parts is being monitored and actions
to manage obsolescence are being taken prior to a part’s actual discontinuance.

Proactive Strategies

❑ Obsolescence Monitoring & Surveillance

❑ Change Management, use of COTS
❑ Tracking Parts Availability, suppliers and
vendors data update (PCN- product change
notice management)
❑ CMMS master data reviews (e.g. inventory
management in Maximo)

December 11, 2024 Page 22

Proactive Management Strategies C

Proactive obsolescence management means that the availability of parts is being monitored and actions to
manage obsolescence are being taken prior to a part’s actual discontinuance.

Monitoring & Surveillance Demand Assessment After Sales Support

BOM (Bill of Material) review ❑ Tracking suppliers and

❑ Monitoring can be done
❑ Manufacturer Part Number maintaining unto date
qualitatively ranking based on
❑ Manufactures information on PCN
predefined criteria or based on
❑ General Function ❑ Exploring potential suppliers
good practices
❑ Specific Function ❑ Negotiating and securing supply
❑ Periodic reviews
❑ Alternatives lines for the parts
❑ Criticality
❑ Remaining Life
❑ MOQ levels
❑ Supply Chain alternatives
❑ Lead Time to deliver

December 11, 2024 Page 23

Reactive Management Strategies D

The results of the risk assessment select a proactive or reactive obsolescence management approach or
more likely the combination of the two.

Reactive Strategies

❑ Replacement with same items

❑ Extending production this involves negotiating with the
manufacturer
❑ Design changes (system reviews)
❑ LNB, gives advantage when IPP issues are not
complicated
❑ Emulation and Reverse engineering (e.g. 3D/Additive
Manufacturing)
❑ Divestment, when OEM transforms IPP to new owner

December 11, 2024 Page 24

Reactive Management Strategies D

A summary of some Reactive Obsolescence Management

Reclamation Alternate Parts Parts Substitution

❑ The parts that are required for
❑ An alternate part is a part with
production but are not available ❑ A substitute part may or may
equivalent or greater
must be identified. not be physically different, but
performance than the part it
❑ Possible sources from which the often the substitute part’s
replaces
same or equivalent parts can be performance is less capable
❑ Equivalent parts can be
reclaimed must be identified than the part it replaces
provided by another
such as: ❑ Substitution includes form, fit,
manufacturer or supplier
1. Systems beyond and function replacement
“economic repair”
2. Spares stocked for
discontinued systems
3. Excess available stocks
4. Retired assets

December 11, 2024 Page 25

Strategic Obsolescence Management
Strategic Obsolescence Management

Leadership OMP Decision Making

Thinking beyond single parts and Strategic methods to define, design, Considering obsolescence
components and applying management acquire, and use (maintain) product in a management options during the part
above the piece-part level. Obsolescence Management Plan (OMP) selection process

Strategic Planning Coordinated Efforts Information Management

Planning the life cycle management of the Maximizing availability of components by Instituting proactive information sharing
systems, that is, determining the identifying, using, and supporting all and standardization systems for
optimum mix of proactive mitigation and available resources for procurement of improved predictive capability
design refreshes to manage obsolescence components that meet the application
requirements
December 11, 2024 Page 27
Obsolescence Management Plan

Strategic obsolescence management broadly covers life cycle phases;

❑ IEC 62402 provides outline on strategic

obsolescence management.

❑ Annex D provides contents of OMP (Obsolescence

Management Plan)

❑ The OMP describes the activities for prevention,

detection/identification and treatment of the
effects of obsolescence through all phases of the
item life cycle.

December 11, 2024 Page 28

Thank you..!