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PLAN FOR THE END

A good obsolescence management plan needs a risk assessment register, says David Khanna.

Technology
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01 July 2019 | David Khanna


Rapid technological changes mean machinery and other assets often lose their desirability far quicker than they used to. If an item is no longer available from the manufacturer or unsuited to current demands, it causes obsolescence. 

Keeping a risk assessment register helps to determine equipment time frames and enables you to gather information when it is available, not when risk occurs.


The reality of the problem

Yet 50 per cent of equipment used in more than 65 per cent of factories is more than 10 years old and at least 45 per cent of these establishments have never undertaken an obsolescence audit; more than 70 per cent are using equipment for which they can no longer acquire spares.  

A lack of understanding of obsolescence can have a big impact on your business. Everything has a life cycle and obsolescence is inevitable, so planning effectively is essential for cost-effectiveness, time-sensitivity and competitive advantage. 

Why is having a register best practice?

A risk register offers full visibility into weak spots. It gives clear updates on the future of your legacy assets, which you can use as evidence to determine decisions. Ultimately, it gives you background information to prioritise obsolescence, plan and budget accordingly. 


How do I develop it?

First, assign responsibility to a key staff member. Fewer than 30 per cent of companies have someone responsible for obsolescence. The result, assuming that you don’t have outsourced support, is postponement and the likelihood of obsolescence management being neglected.


Establish time frames

Use the information you have to improve predictions of equipment’s lifespan. Industry and government announcements are a good place to start, as they tend to have specific dates that allow for a higher degree of certainty. 

Also consult: 

  • previous trends
  • manufacturers’ data
  • end of life announcements 

 


Throughout equipment life cycles, there will be planned upgrades and redesigns that should be accounted for. Having even a rough time frame will give you proof to show others in the business and to work with equipment suppliers, catering services and repairers to establish a plan. 


Example: F-GAS regulations

In the commercial kitchen industry, F-GAS regulations are in place to limit the damage harmful gases can cause to the Earth’s atmosphere. 

These rules have changed recently, forcing companies that use refrigerants with a global warming potential (GWP) above 2,500 to change their products by 1 January 2020, as this is when they must stop being sold. 
 

For those affected, a register will be their best way to minimise the risk of obsolescence by planning time in advance. 

Businesses can pinpoint dates, identify the highest risk assets, include time frames for replacements and provide a record of activity as well as a record of the obsolete equipment.

Fail to plan, plan to fail. 

It’s as simple as that.  


What the register should cover

  • regulatory compliance (REACH, WEEE, RoHS, EHS, etc) 
  • predicted end of life 
  • planned system upgrades 
  • discontinuance notices 
  • last time buy 
  • PESTLE technique (political, economic, social, technological, legal and environmental analysis)
  • new technology 

1 These factors should be referenced against each asset’s specific ID status. 

2 Use a ‘health chart’ to rank from one to five on how likely an asset is to become obsolete. 

3 Mark the assets according to highest priority. Probability of it being discontinued soon would make it high priority whereas a new generation of technology being introduced in the next few years would be lower on the register – but still planned for. 

4 Pinpoint potential problem areas and understand the risks you face.

5 Consult and revise the register regularly for the best chance of mitigating obsolescence challenges and allowing for implementation of the most cost-effective method of resolving the risk.


David Khanna is operations director at Arolite