Obsolescence management: strategies for a long product life

An increasing number of electronic components are discontinued after just a short time and thus become obsolete. Non-availability of spare parts is a challenge facing many industries. Strategic obsolescence management helps ensure that components are available for the entire life cycle of a product.

A component becomes obsolete when it is discontinued or is no longer available for other reasons. According to the German industrial association COG (Component Obsolescence Group) Deutschland e.V., about 140,000 electronic components were discontinued last year alone—and this number is likely to rise.

The association estimates that, with long-life appliances and systems with a service life of 30 years and more, half the running costs over the entire product life cycle are caused by obsolete hardware and software. In the worst-case scenario, delivery bottlenecks, such as for chip capacitors, diodes, and resistors can result in production outages that cost millions of dollars.

graphic about obsolescence

High rate of obsolescence as a result of megatrends such as IoT

Short innovation cycles and statutory regulations, global politics, or natural disasters can be the reason why many industrial components are available for just a short time. The situation is exacerbated through environmental restraints, such as RoHS (Restriction of Hazardous Substances) or the EU chemicals regulation REACH. Installed electronics are often obsolete after just one or two years—sometimes even sooner—and are replaced by the next product generation. Processors, for example, are usually already obsolete when they are delivered. Apart from electronic components, the obsolescence problem is increasingly also affecting mechanical components, software, and services.

Component shortages are also caused by megatrends, such as the Internet of Things, electric mobility, and robotics, which escalate demand for electronic components. An increasing number of industries have to deal with the topic of obsolescence. These especially include producing companies in the areas of automotive, space exploration, military, railroad technology, energy supply, medicine, and automation engineering, which have to keep spare parts for their systems and products for twenty years and more.

Ensuring long-term availability

Strategic obsolescence management is one way of solving the problem. The aim is to ensure continuous supplies of high-quality components for the entire life cycle of products and systems. Ideally, availability of components and systems is included as a key topic in all considerations throughout the entire supply chain.

As early as the procurement phase, manufacturers, suppliers, and service providers must consider how a system can remain operational and have access to spare parts throughout its complete life cycle. The management process can begin in various phases of the product life cycle—during development and later when the product is in use—and can include all development, production, and service activities. In this way, suppliers are already involved in the product development phase. Supply agreements usually include a clause stating that suppliers must announce if a product is to be discontinued well in advance.

From Last Time Buy to redesign

So that discontinuations do not affect companies too severely and systems have a long service life, it is important to monitor and analyze the life cycles of the process-critical components that are used. To do this, the degree of aging of assemblies or complete systems is investigated and their obsolescence risks are determined. On this basis, decisions can be made and the corresponding procedures can be defined.

There are many preventive, proactive, and reactive measures available for dealing with obsolescence. These include component databases with integrated discontinuation assessments, spare part demand forecasts via field data analysis, demand simulations, replenishment of stocks, consignment warehouses, salvaging returns, changing service strategies, methods to recognize fake or manipulated components, and international procurement strategies. Another common strategy is to look for substitutes and alternative solutions, such as post-serial production or the complete redesign of the modules that are affected. However, the use of alternative components in a redesign can be expensive as the end product has to be re-qualified.

Long-term storage: avoid oxidation, corrosion, and diffusion

There are several risks associated with the long-term storage of spare parts, as age-related changes in material can have a negative effect on the functionality and workability of components. Storing components in a nitrogen cabinet, for example, can largely protect components and assemblies against oxidation for 20 years or longer. But diffusion or corrosion processes caused by outgassing contaminants are not reduced with this storage method.

HTV Halbleiter-Test & Vertriebs-GmbH (electronica, Hall C5, Booth 315) specializes in the long-term preservation and storage of electronic components and has developed a method that ensures the availability of electronic components, such as assemblies, displays, wafers, and DIEs for up to 50 years with no loss in workability or functionality. The procedure uses special functional films and absorption processes against moisture, oxygen, and material-related contaminants. Aging processes inside the components – such as diffusion on a chip level—and material migration with chips and pin connectors are reduced and whisker formation and tin pest are counteracted.

SmartPCN 3.0 for automatic processing of PCNs

Component manufacturers notify their customers about relevant changes and discontinuation of a product with a Product Change Notification (PCN). Whether and the extent to which customers must be notified are generally defined in an agreement. Large companies that install tens of thousands of different components receive hundreds of these notifications every month. Most notifications are sent by e-mail with or without a PDF attachment. But sometimes they are sent by fax or regular mail. Recipients have to painstakingly evaluate every notification and determine whether assemblies or end products from their company are at all affected by the change. Currently, there is no widespread standard format or standardized terminology for PCNs.

COG (Component Obsolescence Group) Deutschland e. V. (electronica, Hall B5, Booth 106) wants to change this. The industry association believes that the supply situation for components could become worse in the coming years—especially in Europe. To minimize the oncosts caused by discontinuations, the COG wants to establish obsolescence management throughout the entire life cycle of products as a standard process.

Strategies for dealing with obsolete components include the XML-based smartPCN 3.0 Standard, which was developed by the COG working group. It largely automates processing of PCNs and supports comprehensive availability monitoring and digital obsolescence management throughout the complete supply chain. Among other things, it defines standardized terms, deadlines that must be met, minimum requirements for the information content and requirements for system interfaces.

In addition to digital recording of the data from electronic, electrical, mechanical, hydraulic, and pneumatic components, in principle, the smartPCN standard also takes account of changes to and discontinuations of software and services as well as materials and auxiliary materials, such as hydraulic oil, paints, and lubricants. The industry association hopes that the new standard will quickly become accepted.

Obsolescence Forum at electronica 2018

The Obsolescence Forum, initiated by the non-profit industry association COG (Component Obsolescence Group Deutschland) e.V. as part of Obsolescence Day, used many practical examples to provide information about the strategies and methods that can be used to reduce or minimize the undesirable effects of obsolescence.