Obsolescence has always been a threat to manufacturers and OEMs. Developing a successful product lifecycle requires constant updating of management and technical processes.
FREMONT, CA: Various factors present manufacturers with risks of product obsolescence. Existing products are pushed to the next level by constantly improving technologies, but they are also susceptible to losing their utility in the long run.
The pandemic has recently impacted the supply chains of various economic sectors. For instance, the semiconductor supply bottleneck is causing challenges for OEMs globally. In addition, the rapid speed of technical innovation has prompted manufacturers to upgrade their products. Plans, strategies, and procedures for inventory management must intelligently account for crises resulting from unanticipated occurrences brought on by varying economic or market situations.
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THE THREAT OF OBSOLESCENCE TO MANUFACTURERS
These are the most dreaded obsolescence threats OEMs face:
Market share: The two most prominent concerns of obsolescence for original equipment manufacturers (OEMs) are the loss of market share and the inability of suppliers to assist in overcoming imminent dangers. While an organization's market share is influenced mainly by its internal strategies, the dependence on suppliers to reciprocate their risk mitigation plans with equal commitment remains a practical barrier for even the most successful businesses.
Non-recurring engineering (NRE): The typical one-time approach to NRE is a subtle and undetected issue many organizations fail to recognize. Economic considerations of components based solely on NRE may result in erroneous cost management due to unanticipated obsolescence concerns. Adopting the Obsolescence Management System (OMS) in the early stages of design and planning is an ideal method for mitigating future hazards; nevertheless, it may impose an immediate financial burden on the product, reducing its profitability. OEMs must conduct extensive studies before selecting a certain OMS implementation style, tools, or techniques to combat this vicious cycle.
Inventory management: Monitoring and managing inventory of product components throughout the product lifecycle is a perpetual issue for manufacturers. It affects not only a company's profitability but also the strategy for managing obsolescence in the first place. Incorrect or erroneous obsolescence management can lead to the permanent abandonment of huge, non-recyclable inventory, creating a significant financial hole for the OEM.
Compliance concerns: Recertification, required requirements, and ever-changing legal duties can induce terrifying nightmares in industrial OEMs. In addition, many environmental rules, process compliances, and risk assessment methodologies are difficult but necessary compliance procedures for the worldwide industrial market.
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