In the ARC Strategy Report, “Electrical Power Systems Lifecycle Management Strategies,” 58% of users acknowledge having no formal plan for managing the lifecycle of their technology, yet more than $65 billion worth of legacy automation assets in operation today are reaching the end of their useful life.
Have a Obsolescence Plan
We can list the many benefits of planning, such as being able to budget, prioritize actions, set goals, etc. but most plant managers already understand the importance of planning. Planning is a primary job function for most managerial and executive level positions. Yet, when it comes to aging technologies and training, many manufacturers find themselves caught between competing interests. Planning for large capital investments can be seen as competing with other business operations and tying plans to performance goals can be complex.
Despite the challenges that manufacturers face in maintaining their aging technology, they will not upgrade to new components until the business benefits outweigh the costs. But, to understand when the business benefits outweigh the costs, there needs to be accurate accounting. Most manufacturers do not have a formal plan for managing the lifecycle of their technology. Without a plan for addressing and managing obsolete technology, manufacturers face a variety of risks that threaten to drastically increase downtime and decrease profitability.
To address product end-of-life without negatively impacting productivity, manufacturers need to rely on suppliers who can help them prepare without compromising short term goals.
The goal of obsolescence planning is to accurately quantify risks in order to determine if mitigation or elimination will make the most business sense. Manufacturers can rely on suppliers and integrators to help with the obsolescence process and provide the expertise necessary for next steps. The two options are risk mitigation which will result in maintenance and support planning or risk elimination which will result in migration planning.
Planning starts with identification and research. With the help of a third party, you will define the goals and scope of the obsolescence plan, and develop a strategy for safely collecting information from all legacy technology. Inventory gaps should be identified. Then, product lifecycle status information is collected by reviewing manufacturer websites and notifications, publications, and distributor and reseller information. When all of the relevant information is known, areas of the greatest obsolescence concern can be addressed through a plan that aims to mitigate or eliminate the risks. This process should be ongoing. As the lifecycle status for various technologies changes, so should your plans.
Mitigate or Eliminate
Anytime you use technology beyond its intended life, risks increase. But, by quantifying the risks, manufacturers can decide whether the risk needs to be eliminated or mitigated. A few questions that help determine the path forward are:
- What is the revenue loss from unscheduled downtime?
- How long does the current status quo need to last?
- How much will maintenance or migration cost?
- What would risk elimination cost?
- What funding is available?
Plant managers can increase control over future outcomes by taking corrective actions when business performance doesn’t align with the objectives in a plan. Poor planning has the opposite effect. By reacting to risks as they occur, facilities are much more likely to misallocate resources and effort.
- This probably doesn’t come as a surprise, but the ARC Advisory Group reported that 88% of process manufacturers acknowledged the use of automation beyond the manufacturer’s obsolescence date.
The reasons behind using automation beyond a manufacturer’s obsolescence date are many, but a big one is that people still feel like there is plenty of life left in their hardware components such as variable frequency drives (VFD) and controllers (PLC). The nudge to upgrade usually comes from a weakening supply chain, increasing support challenges and new safety regulations. Since these risks are somewhat predictable, manufacturers can plan ahead to decrease that chances of downtime until the next migration.
Would you like to Mitigate Your Risks or Eliminate Your Risks?
