Obsolescence

Obsolescence is a state where an asset becomes difficult or impossible to support, not due to physical failure, but because its constituent components, software, or required skills are no longer available from original sources. The international standard IEC 62402:2019 provides a framework for its management. Within enterprise risk management and the ISO 55001 asset management system, obsolescence is a critical operational and supply chain risk. It differs from depreciation (an accounting term) and wear-and-tear (physical degradation). The core issue is the loss of supportability, which can lead to unplanned downtime, excessive costs for emergency solutions, and compromised system availability.

Practical application of obsolescence management follows standards like IEC 62402 and involves several key steps. First, establish an Obsolescence Management Plan (OMP) with a cross-functional team defining roles, processes, and risk appetite. Second, conduct risk identification and assessment by proactively monitoring the lifecycle status of all components in a Bill of Materials (BOM), often using specialized software. This includes tracking Product Discontinuance Notices (PDNs) from suppliers. Third, develop and execute mitigation strategies based on risk levels, such as making a Last-Time Buy (LTB), qualifying alternative parts, or redesigning the affected subsystem. Measurable outcomes include a reduction in production stoppages, lower total cost of ownership, and an increase in system availability rates.

Taiwanese enterprises often face three primary challenges. First, a lack of supply chain visibility, as many SMEs procure through distributors, causing delays in receiving critical end-of-life notices. Second, a predominant business culture shaped by the fast-paced consumer electronics industry, which undervalues the long-term support required in industrial or defense sectors. Third, a deficiency in integrated data management tools, with many firms still relying on manual spreadsheets. To overcome these, companies should build direct relationships with key suppliers, secure top-management buy-in to treat obsolescence management as a strategic investment, and adopt specialized BOM management software, starting with a pilot project on a critical product line.

Winners Consulting specializes in Obsolescence for Taiwan enterprises, delivering compliant management systems within 90 days. Free consultation: https://winners.com.tw/contact