Understanding the True Definition of Obsolescence Management

It is widely understood that “obsolescence” as it relates to the manufacturing industry is defined as the transition of electronic components toward end-of-life. There are many reasons this could occur – some as the result of a component’s natural life cycle, others as the result of unforeseeable circumstances – but regardless of precisely why it happens, such a transition is inevitable. As the old saying goes, nothing lasts forever.

Nothing, that is, except an equipment manufacturer’s desire to try.

No matter the circumstance, the goal of all OEMs is to keep innovating, growing, and moving forward despite the hurdles placed in front of them. The obsolescence of the critical electronic components they require in their product designs is but one of these hurdles – and a rather significant one, at that. After all, without the critical inventory to assemble their products, they must then turn to other, more costly measures including product redesigns, third-party vendors, or – should the situation warrant the OEM taking measures to minimize losses – the discontinuation of the product. None of these options are ideal, and all of them come with financial repercussions.

The goal, of course, is for the OEM to have procedures in place that would allow them to avoid making such a decision. This is essentially the crux of the term “obsolescence management strategy,” and supply chain companies far and wide have turned this phrase into a buzzword to reflect the services they offer customers. All of them are different, and most do offer some degree of obsolescence relief.

However, this trend has created a disturbing misrepresentation of what a true obsolescence management strategy entails.

A true obsolescence management strategy is not a single product or service. It’s also not a “quick fix” that instantly solves your company’s issues relating to end-of-life components.

Instead, I challenge OEMs to view their obsolescence management strategy as a process that relates to the entire life cycle of their inventory, from beginning to end. In fact, one could even go as far to say that a sound obsolescence management strategy isn’t necessarily a strategy at all; it’s a philosophy, a foundational pillar your entire company should proudly stand on.

An obsolescence management strategy does not mean having the ability to quickly negotiate a last time buy, nor does it mean having long-term contracts with preferred OCM partners to fulfill inventory over a long-term period. It also doesn’t mean having the infrastructure to know when a component has been obsoleted the moment a PCN is issued.

An obsolescence management strategy is a combination of all of these things — and much, much more.

The electronic components you deem necessary in initial product designs, the companies you choose to involve in your supply chain at any capacity, the factors you consider when forecasting the life cycle of your product, the infrastructure you have available to store critical inventory once acquired, the options you have available to increase or decrease on-hand inventory if needed — they all play a role, but none of them eliminate the obsolescence problem on their own. To turn obsolescence into a deflationary issue, obsolescence management must be accepted as a greater whole comprised of many moving parts. Should one of these parts not do their job, everything around it will feel the effects.

This is what makes Partstat so special. By offering solutions for obsolescence as it relates to all phases of your product life cycle, we give OEM customers the tools – and the experience of our team – to mitigate the effects of obsolescence regardless of what forms they may take.

We have designed our solutions based on feedback heard from OEMs around the world, in every industry, for over 26 years. There are hundreds of supply chain partners that offer a solution for a single element of an obsolescence management strategy, but there is only one who can lay claim to covering any and all obsolescence issues an OEM may face.

We are one-of-a-kind. And we wouldn’t have it any other way.

For details on what each of our supply chain solutions offer, click on the links below:

• Partstat’s BOM Monitoring Solutions use over 9 billion rows of current and historical data from over 2,000 suppliers to keep OEMs ahead of obsolescence and allocation.

• Partstat Last Time Buy Solutions allow OEMs to secure up to 10 years of LTB Inventory without the loss of precious working capital.

• Partstat Critical Inventory Storage Solutions guarantee long-term business continuity, all while saving OEMs up to 42 percent in annual carrying costs.

• Partstat Excess Inventory Solutions function as full turn-key marketing strategy designed to maximize inventory returns, minimize the loss of working capital, and improve customer supply chain inefficiencies.