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Obsolescence Management: Plan Now or Pay Later

While product obsolescence is inevitable, medical device companies can manage it cost-effectively when they have a plan in place.

By John Carey

Rapid technological advances, along with requirements for interoperability and connectivity, are adding to the cost and complexity of developing medical devices and systems. These advances, in turn, are affecting how manufacturers are compelled to deal with component obsolescence. While component obsolescence has always been inevitable, its impact on today’s complex medical devices is dramatically different from what it was a mere three to five years ago. Because of the ‘systems’ nature of medical devices today, replacing a part or two is no longer a viable option. The entire system must be considered and evaluated in order to determine a cost-effective approach to supporting and sustaining products over their lifetime.

Although obsolescence is expected to afflict custom electronics, obsolescence management is too often done in a reactive or catch-up fashion rather than as a planned process. Thus, existing methods are inadequate for ensuring cost-effective support for highly complex devices and systems.

Nevertheless, today’s rapidly evolving healthcare landscape—with its inherent demands for more complex devices and systems that must communicate with one another—is ratcheting up the pressure on medtech companies to approach obsolescence management differently, leading to new approaches to maximize the value of medical devices throughout their lifecycle. Proposing a proactive, systematic approach to obsolescence management, this article argues in short: Plan now or pay later.

To Plan or Not to Plan?

Because obsolescence management can have a significant impact on development teams and future revenues, the question as to whether a medical device manufacturer should plan for it or not plan is hard to ask and even harder to answer. Many medtech companies’ natural reaction to this issue is to pull a few engineers from new development initiatives and assign them to obsolescence projects. But is that the best way to use the time and talents of highly skilled resources? Probably not.

When a medical device company shifts the focus of its engineering staff from new development efforts to obsolescence projects, it can jeopardize new development programs, encourage schedule slippage, missing market windows, and unwanted confrontations with management executives. Without a proactive plan for managing obsolescence, the company also runs the risk of misapplying skill sets, lowering efficiency, missing shipments, creating field support challenges, and making purchasing decisions under pressure.

Misapplying Skill Sets. Most obsolescence projects do not require attention by the most highly skilled engineers. In fact, assigning tasks to engineers that they deem unchallenging can often affect their overall job satisfaction.

Lowering Efficiency. Engineers that multitask between design activities and sustaining projects cannot work efficiently at either project. Each time they switch, they have to ramp back up to speed on the respective project. Also, design engineers are generally not familiar with the most recent techniques and tools for addressing obsolescence issues, thereby impairing their ability to address such issues efficiently.

Missing Shipments. The worst consequence of obsolescence mismanagement is missing product shipments. For example, when a medical device company factors in the long lead times often required to redesign boards, allowing even one component to become obsolete can interrupt shipments and impact revenues.

Creating Field Support Challenges. The more revisions to a product in the field, the more challenging maintenance becomes. Planning for obsolescence can consolidate needed changes and thereby reduce the burden on field service operations to keep up with component change notifications.

Making Purchasing Decisions Under Pressure. Any decision made under pressure rarely ends well. Last-time buys are rarely accurate. Buy too little and you find yourself short on inventory; buy too much and you have a boatload of excess inventory. And maintaining excess inventories involves carrying costs that hurt the company’s bottom line and can create cash flow issues.

Obsolescence management places significant pressure on internal development teams that should be focused on developing new products and building a future pipeline. Nevertheless, if a medical device company approaches obsolescence management differently, it can avoid the bad rap of high costs and avoid the need to invest significant resources in such efforts.

Systematic Approach

To address the potential challenges and pitfalls of obsolescence management, medical device companies should apply a rigorous, phased approach that both looks at the company’s immediate remediation needs and allows for the reevaluation of the system for possible long-term ramifications and potential system upgrades.

The first task of any obsolescence program is to clearly identify the goals of the project beyond the need to replace obsolete components. Additional goals may include feature or performance enhancements, RoHs compliance, and possible cost reductions. Once the overall goals of the project have been defined, a phased approach can be used to achieve the best results and minimize the risk of unintended consequences from having to redesign the product.

Phase 1: Current Assembly Status. During the first phase, project component criteria are established, inputs are reviewed, and the current components on the bill of materials (BOM) are checked for compliance. Any components that do not meet all component criteria will then be split into the component categories according to risk and criticality. This phase is also dedicated to selecting an obsolescence management tool that will help the team manage the effort.

Phase 2: Proposed Alternates and Redesign Concept. During the second phase, alternate parts are researched according to the component criteria established in the first phase. The project leader typically reviews the work on a daily basis as it progresses during this phase. Problem components are the focus, and those that prove problematic will receive attention from senior members of the engineering team. Once all categories of parts have been reviewed and approved, the obsolescence management tool is used to produce the final consolidated BOM, along with the RoHS certifications in IPC-1752 format, if required. In addition, the output of this phase is used to assess whether the boards should undergo needed design updates.

Once the second phase has been completed, it is fair to say that a clear obsolescence management plan is emerging. Now, it is time to address the most critical obsolete components on the boards that do not require redesign. However, if the review has determined that any of the boards will require redesign, the team should proceed with phases 3 through 6.

Phase 3: Hardware Design Reviews. If a redesign is required, the hardware documentation may need to be updated and reviewed in the context of the released version of the product requirements. Based on updated design documents, schematic and board layout changes are made.

Phase 4: Prototypes, Bench Tests, and Debugging. Based on outputs of the reviews, the team should decide to fabricate a certain number of prototypes. When this phase is complete, design documents will be updated, if necessary, and software or complex hardware code will be further developed.

Phase 5: PLD, FPGA, and Firmware Design Review. During this phase, if required, programmable logic devices (PLDs), field programmable gate arrays (FPGAs), or firmware modifications are implemented.

Phase 6: Prototype Design Protocols. Once the board bring-up and firmware modifications of the functional prototypes has been completed, the team reviews the existing test and verification protocols and delivers updates where needed to ensure full test coverage and traceability of the new designs.

The Benefits of Planning for Obsolescence

A phased approach to obsolescence management is not only crucial but also a distinguishing characteristic of successful and proactive obsolescence management programs. Taking a proactive approach to obsolescence allows a medical device manufacturer to minimize the costs of obsolescence while maximizing the gain each time it revisits a design. However, planned obsolescence management is beneficial for other reasons as well.

  • Because products are often released without being totally functional and capabilities are usually phased in, companies can meet their obsolescence needs and roll out improvements simultaneously, saving time and money.
  • With enough warning, companies can replace obsolete parts while implementing product enhancements that were not foreseen in the original design.
  • While better-performing parts may be compatible with the existing design and may be form fitted without undertaking such system changes as incorporating new firmware or FPGA code, their full benefits may not be realized in the context of the old design. A planned approach to obsolescence management can enable companies to implement design changes based on return on investment, not whether they will impact immediate production schedules.

Conclusion

Many companies in many industries—including in the medical device sector—view the need to sustain their systems and products as challenging. But it doesn’t have to be. Obsolescence affects system support, product safety, performance, reliability, and the bottom line. There’s too much at stake not to have a strategy in place for proactively managing obsolescence throughout a system’s lifecycle. A plan that addresses system architecture, communication interfaces, software framework, redesign, sourcing strategy, tools, and more reduces the total cost of ownership and improves the bottom line.

Companies can realize significant benefits by implementing a proactive, systematic approach that reduces lifecycle sustainment costs while acknowledging and addressing inevitable obsolescence problems throughout the product lifecycle. They can gain the ability to identify such system parts as subsystems, modules, or software that may become obsolescent, enabling them to minimize the impact and, in some cases, use it as an opportunity to upgrade the system with higher-performance parts.

While obsolescence is inevitable, it can be managed cost-effectively when a plan is in place. Think of it as a preventive maintenance program for the product: Either invest the time and money in an obsolescence management plan now or be forced to deal with the more expensive consequences later.

John Carey is senior vice president, business development, at Burlington, MA–based Foliage. He leads the company’s business development team in creating new business opportunities and ensuring the growth of established client accounts. With more than 15 years of experience in the medical device industry, he has been integral in implementing the company’s business processes to support growth, while providing corporate guidance to the medical and life sciences practice. Before joining the company, Carey held direct sales and sales management positions at several companies that offer hospital and clinical information software to the healthcare industry. He received a bachelor’s degree in business administration from Northeastern University. Reach him at [email protected]
 

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