The Consequences of a Product Redesign
There is an infinite number of reasons why a manufacturer in any industry would choose to redesign, or remanufacture, a product. For some OEMs, such as Apple and their annual iPhone announcements, redesigns are expected, even championed, as reflections on how rapidly technology is evolving. It could also be an OEM’s attempt to rectify design flaws within the original project or tap into a wider consumer base.
More commonly in today’s marketplace, however, the redesign of an OEM product stems from a reaction to the life cycle mismatch between the product and the electronic components that are used to create it. The discrepancy is so wide, in fact, that today the life cycle of an electronic component or semiconductor is equivalent to roughly half that of the product it supports. While a single generic component transitioning toward obsolescence may not necessarily be cause for a complete redesign, a highly-specialized critical component with a limited customer base limits the options an OEM has to complete the life cycle of its product.
To put another way, when the supply of a critical component suddenly decreases against consistent or increasing demand, OEMs without a sound obsolescence management strategy are put in a difficult position that can’t be easily solved. In such cases, a redesign of the product without the need for the end-of-life component may seem like a simple solution on the surface – but before acting on this plan, it’s important for OEMs impacted by obsolescence to consider the drawbacks such a decision may have.
It’s About More than Money
The financial strain of a product redesign, even a small modification, could be far greater than the OEM realizes. In electronic-based industries, it’s not uncommon for a redesign – including conceptualization, manufacturing, warehousing, and labor — to require up to four times the original monetary investment.
But that’s just talking dollars and cents. In the eyes of many OEMs, no expense is too great if it means providing a quality product consumers can be proud to own. The irony of this, however, is that an unexpected product redesign has the potential to do anything but.
In the healthcare and aerospace industries, for example, where product life cycles can be twenty years or more, consumers expect their purchase to be supported for that entire stretch of time. If an OEM announces a premature product redesign as a reaction to obsolescence, some consumers may interpret that decision as a retraction of the OEM’s commitment to them. Such perceived breaches of trust can be difficult, if not impossible, to fully overcome, and ultimately the damaged goodwill can limit the consumer base willing to purchase future products from that OEM for years to come. Brand loyalty can be an incredibly powerful motivator – but it must never be taken for granted.
What’s Your Role in the Customer’s Eyes?
Before pushing forward with a redesign, it’s important to consider if one is needed at all. Obsolescence isn’t the only trigger for an unexpected change of plans. It could even be something as simple as the introduction of a competing OEM product threatening to take your market share. “Game changers” are introduced all the time, and the kneejerk reaction from competitors is usually adapt or die. After all, competition is what drives innovation forward in a capitalist economy.
Such responses, however, while they may be warranted, may just as easily be a costly overreaction. What makes a product successful is not the number of features or bells and whistles a manufacturer can throw into a single design; what makes a product resonate in the market is its ability to solve a problem. If you are not solving a problem as intuitively and efficiently as possible, then it may even be beneficial to remove features.
Sometimes a product includes features that were once used, but have been deemed obsolete not by technology, but by a shift in cultural norms. CM East West Manufacturing provides a good example as it relates to the auto industry. “In the past,” they write, “every automobile had a cigarette lighter and ashtray. It was standard equipment. You paid for the technology (such as it was) whether you were going to use it or not. Eventually, those items became optional. Today what used to power the cigarette lighter is merely the 12-volt auxiliary power outlet — a place to plug in chargers for electronics from cellphones and tablets to portable refrigeration units or tire compressors.”
Not only could a decision such as removing unnecessary and unwanted features such as cigarette lighters pay dividends in customer satisfaction, but a condensed, streamlined Bill of Material minimizes the possibility of obsolescence inhibiting your supply chain. Is the aquisition of cigarette lighters really worth potentially hindering your production schedule?
Look Before You Leap
When considering a redesign, obsolescence should always be at the forefront of the discussion.
The obvious alternative to an unexpected product redesign due to obsolescence is to negotiate a last time buy with the OCM upon receipt of a product change notification. The window to commit to a last time buy, however, is narrowing by the year; as recently as 2015, over 40 percent of end-of-life components were accompanied by an immediate last time buy date, and only four percent of these were given a last time buy window longer than a year. If your company wishes to avoid a scenario where a product redesign must be considered, you are going to need an obsolescence management strategy that is ready to act at a moment’s notice.
Partstat’s Last Time Buy Solution provides OEMs exactly that. Upon confirmation of obsolescence, we will purchase all necessary LTB inventory on the customer’s behalf — sometimes even on that same day. Then, on a schedule determined by the customer, we will distribute it anywhere in the world as needed. If the LTB inventory needs to be stored and carefully distributed over a 10-year period, then that equates to 10 years’ worth of usable capital the customer can keep on their books to hire new employees, design new products, and even expand into new markets.
There are situations where a product redesign might be necessary despite the drawbacks, but before making such a decision, take the time to weigh your options, as well as seek out new ones. You never know what you might find.