I have a seemingly endless parade of clients who come to me with the first words out of their mouth being “I know this is obsolete, but…” Usually I stop them right there as they have been told that something is obsolete by a competitor trying to get them to buy something. Lying to a client is a particularly short term strategy, I have clients that have been such for 25 years, and they didn’t get that way by me being wrong all the time.

So lets define obsolescence. We can split this into three types, Functional, Economic, and Absolute. Functional obsolescence is what my plane is. It was built in 1979, and has not been built since then. There are parts available for it (a couple of years ago someone built a new one out of new surplus stock). The engine, propeller, wheels, instruments are all built by 3rd party companies and should be available for the foreseeable future. Until the life limited parts time out (which will be past my flying days at the current rate) the plane will be maintainable at a cost comparable to a new airplane of the same class (in some cases cheaper).  Functional obsolescence means that while you can’t get one new, it makes sense to continue to put parts into the existing one. A 2-3 year old car is another example.

Economic obsolescence means that while parts or repairs are still available, it doesn’t make economic sense to continue to keep pumping money into the equipment. The average light truck in the US reaches this point at about the 16 year mark. At that point, enough things start going wrong that pumping money into it no longer makes sense. Why then, are their older trucks on the road? Well, sometimes there isn’t enough time to go buy a new one when you are needing to get something done right then. This is why a number of my clients keep running older equipment, the higher cost of the repairs is nothing compared to the cost of being shut down while an upgrade is taking place. Sometimes the capital isn’t available, but repair money is (1M to upgrade vs 10k to repair). Sometimes there are other issues. This doesn’t meant that the clients are wrong to  repair vs upgrade either. A decision that looks uneconomic in a vacuum (ie, the cost of repair of this part is higher than the cost of upgrading to something else) looks quite reasonable in a production environment (ie the cost of repair of this will be 12k, which is the same as upgrading, but we will loose 12M in production while the upgrade takes place).

Absolute obsolescence is just that. You can’t buy new, you can’t get parts or repairs. Stick a fork in it, it’s done. It’s dead, Jim.

So, as the person responsible for getting product out the door, what do you do? Equipment in Functional obsolescence often times normal in a plant. You can get parts, or repairs, but buying new is no longer an option. This is not something to panic about, or even be worried about, just something to keep in the back of your mind.  Economic obsolescence also is a normal state, most OEMs raise the prices on equipment as it gets older. It reflects the higher cost of building equipment at non-production rates. People complain about not being able to buy a ’65 Mustang still. Leaving out the improvements in cars since then (airbags anyone?), can you imagine the cost of a Mustang if Ford agreed to build you just one? You’re gonna need a bigger check. So older replacement parts will cost more. That doesn’t mean it’s time to replace the machine unless that starts getting onerous. However, what you do have to watch out for is Economic obsolescence turning into Absolute obsolescence. That means you crash into a wall and are now scrambling to upgrade or replace while loosing 1M an hour. Or that your successor is doing the scrambling while you clean out your desk…