Mitigating the Inevitable Pain of Obsolescence

The Cost of Using Obsolete Equipment Must Be Balanced Against the Cost of Replacement

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Obsolescence occurs when a person, object or service is no longer wanted, even though it may still be in good working order, said Steve Murray, control systems supervisor at metals manufacturer Asarco, during his presentation at the 2009 Invensys North America Client Conference this week in Houston.

Murray further divided obsolescence into two types: technical and functional. "Technical obsolescence occurs when superior products become available, when incompatibility with newer products creates an island of technology, or when products become useless due to changes in other products," said Murray. "Functional obsolescence occurs when equipment no longer functions as it did when it was new, the failure rate increases, spare parts are unavailable or expensive, a manufacturer no longer supports it, or there's no longer internal support available."

Murray should know. Asarco had to replace some old equipment in the 1990s. The company's Fisher Provox DCS and Modicon PLC systems needed replacement because of a lack of formal support and increased difficulty obtaining spares and repairs. The company purchased used spare parts and incurred high-cost repairs from third parties, but refurbished "new" spare parts often would not work. Downtime due to PLC breakdowns increased dramatically. Asarco finally replaced the Provox DCS with a Foxboro I/A DCS, replacing every component from processors to field modules. The engineering and installation took nine months, and change-over occurred during a 30-day plant rebuild.

And while equipment age isn't a justification for replacement, it is a factor in failure rate and maintenance costs, Murray said. "Electrical components, like capacitors and semiconductor chips, have limited life. In aluminum electrolytic capacitors, capacitance decreases over time while resistance increases, and electrolyte degradation due to heat can significantly impact the lifetime." Capacitor life is cut in half every 10 °C rise in temperature, and the life can be as little as 2,000 hours at temperatures of 85 °C. Semiconductor chip life cycles have changed since their inception, said Murray. In the 1970s, chips were expected to last hundreds of years, whereas today's chip users expect merely a few years of life from them.

Each product life-cycle stage comes with its own cost and performance. "The product in the market introduction stage has high costs and high risk," explained Murray. "In the growth stage, costs are reduced as sales increase." The highest profits are realized in the mature stage as sales peak, and in the decline stage, sales decline and prices drop, leading to lower profits.

"Obsolescence is a perception of risk," he continued. "Equipment can easily outlast manufacturer's support, and the cost of using obsolete equipment must be balanced against the cost of replacement. All equipment either is obsolete or will become so." Because of the inevitable stages, obsolescence is now often planned into the product life cycle. Introduced by Brooks Stevens as a benign concept in the 1950s, planned obsolescence has become controversial, said Murray. "Maximizing profits, gaining market or technological superiority, minimizing costs through value engineering and anticipation of their own suppliers' planned obsolescence are some of the reasons for planned obsolescence," he said.

Murray advised listeners to choose products that are in the early stages of their life cycle, purchase spares as part of initial capital outlay, find out manufacturer's support options and track record and be aware of end-of-life dates when making new equipment purchases. "On existing equipment, stockpile spare parts, find alternate sources of parts and repair, upgrade portions of complex systems and use their parts as spares, and encourage manufacturers to develop replacement modules using new components," he recommended.

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