Obsolescence Mitigation For International Organizations: Recommendations For Managing Volatile Materials, Spare Parts, And Costly Equipment

Resource Planning and Management Aspects for Major Metro rail and other Infrastructure Projects

Every plant and facility has a design layout that frequently has to be improvised (Romero Rojo, 2010). Obsolescence mitigation is a pertinent role within international organizations as it encompasses various roles and equipment. Products manufactured in these plants due to their chemical component and features often reaches the end of their product life cycles. These products that have reached the end of their product life cycle has to be made obsolescence such that they do not harm other product or the organization’s brand name in the industry when supplied to end customers. In Defense products and equipment and commercial industries as airlines, obsolescence of parts of products, processes, hardware can greatly hamper the overall productivity and brand name, hence has to be replaced.

The scope of this report identifies obsolescence with respect to stock of volatile materials, equipment spare parts and costly equipment as below.  

• Obsolescence of volatile materials

In case of volatile materials, there is bound to be instances when the life of such materials is reduced or dampened (Feldman, 2007). These materials can no longer be deemed fit for the purpose of use of any consumer hence needs to be replaced immediately. For managing stock of such volatile materials customers’ needs to be send notification such that they are well aware before use. In case customers discovers later that the volatile materials was not fit for use then the company can lose that customer and their brand value. Hence, adequate measures needs to be taken to inform customers of all possible measures to be taken while declaring obsolescence of volatile materials. Once the materials obsolescence has been diagnosed then shifts and quantities of such materials has to be remade and supplied to fulfill demands (Kumar, 2010). An effective storage method has to be devised to make sure life of such materials. Temperature control, maintaining containers for storage and pest control are some ways that can ensure proper storage of volatile materials. All processes within the scope of the facility layout can also be redesigned such as to mitigate the possible risks from obsolescence and merge demands with current material availability.   

• Obsolescence in equipment spare parts

Obsolescence in equipment spare parts can be overcome by discontinuing the equipment and maintain business at current prevailing conditions. In order to obsolescence of spare parts bills needs to be analyzed, wherein status as well as use of such parts can be ascertained. the lifecycle of the spare parts can also be ascertained by means of production processes and integrating knowledge regarding the equipment. A forecast of the available spare parts has to be made in conjunction such that it can be replaced easily (Sandborn, 2007). The process of forecasting will allow to maintain adequate stock of materials and equipment’s along with creating a contingency funds for their replacements. Monitoring of these equipment spare parts will also allow to evaluate the situation when maintenance and replacement of the same should be necessitated.

Obsolescence of Costly Equipment requires long range planning along with comprehensive material management. Costly equipment are more difficult to replace and requires large amounts of funds hence needs to be periodically evaluated for their obsolescence. Enhanced component management of these equipment will allow creating provision for replacing them and take strategic decisions accordingly. These equipment requires strategic management such that they can be managed and handled exclusively prior to their replacement time arrives. A proper management plan is necessary to control productive and developmental initiatives. Every costly equipment needs to be audited once in a while during its life cycle to maintain its sustainability. Monitoring of these equipment along with maintenance will allow proper functioning and reduced redundancy of such equipment.             

Facility Layout Design for Precast Panel Manufacturing and Automobile Remanufacturing Units

Every organization requires an obsolescence planning that allows for creation of contingency plan and financial capability. Such planning prior to making materials and equipment obsolescence enables organization’s develop a financial costs which can be used for replacing of the material and equipment. The most important aspect in regards to obsolescence is to maintain all equipment and materials and employ a maintenance manager, who can schedule and keep updated track of every maintenance issue. A scheduled record keeping will enable not only keep track of all changes in delivery and deviation of performance but also to prepare for contingency. As maintenance manager will be keeping a schedule and track of all records of equipment as well as materials he will be in-charge of informing concerned departments against any changes noticed. The organization can also give out maintenance tenders to qualified deserving companies who can frequently keep checks and update the organization for any obsolescence required against verifying bills and status of material or equipment. For every type of obsolescence a budgetary requirement has to be established and fixed that allows keeping adequate funds for reinstating of the equipment and materials. While maintenance involves a fixed monthly payout, replacement involves a cost higher.

The best possible recommendation for managing any type of obsolescence within an organization is to keep a timely schedule of various activities. A scheduled activities and maintenance allows adherence to a management plan and upkeep of stocks as well and to avoid any potential losses or costs from such obsolescence. In every case the brand name of the organization will be involved hence an alternative material or substitute has to be developed and kept available. Such kinds of planning will help avoid any future losses and help to notify customers. Materials manger also needs to be kept informed such that he can take any step in providing long term storage of materials and restore equipment functioning to normal to avoid losses in productivity. for each type of material and equipment a plan of action has been provided which can be incorporated for a better functioning and enhanced work life.

The following formulas and table state the expected time, standard deviation and variance of each activity of this project. In the table we have:

T_e= Expected Time= (T_O+4T_M+T_P)/6

σ= Standard Deviation

σ²= Variance= (T_P-T_O)²/36 

Based on the activities and their immediate preceding list the PERT diagram can be drawn:

Forward and Backward pass calculations table:

(i) According to the forward pass and backward pass calculation and considering the total floats, the critical path comprises of A-C-E-F-G-H-I and the completion of the project takes 36.67 days.

The expected finishing time based on the expected time of each activity in the table is:

T_e= 10.17+8.33+6.17+3+4+2+3= 36.67 days

(ii) The probability that the project will finish at least 1 day late:

By using the Z table for obtaining the Z amount and considering the probability of finishing at least 1 day late, we have:

Z= (T_S-T_E)/σ_E 

σ_E=  √(0.25+1+0.69+0+0.11+0.11+0.11)= √2.27= 1.507 (standard deviation of critical path)

T_S=37.67 days (scheduled time)

T_E=36.67 days (from PERT analysis) (expected time)

Z= (37.67-36.67)/1.507= 0.66 (approx.)

Z (0.66) = 0.7454 (from the Z table)

Required probability: P (T_S ≥ 37.67) = P (T_S > 36.67) = 1- P (T_S < 36.67) =1- 0.7454= 0.2546

Hence the probability of finishing project at least 1 day late is 0.2546

Since the cost performance index is 1.295, which is greater than one, the project is under budget. Therefore, in this case we use the TCPI formula based on the BAC.

Hence TCPI = (BAC – EV)/ (BAC – AC)

Where Budget at Completion (BAC) = 8 billion dollars.

We know that: Cost Performance Index (CPI) = EV / AC

Hence actual cost (AC) after 78% completion is:  AC= EV/ CPI.

Here Earned Value (EV) = 78% of 8 billion dollars = 6.24 billion dollars

So Actual Cost (AC) = 6.24/1.295= 4.82 billion dollars (approx.)

We know TCPI [TCPI is the calculated cost performance index that is achieved on the remaining work to meet the specified management goal, such as the BAC or the EAC] can be calculated as follows:

TCPI = (BAC – EV)/ (BAC – AC)

TCPI = (8 – 6.24) / (8-4.82) = 0.55

This means that we can continue with a Cost Performance Index of 0.55 to complete the project

Reference Lists

Feldman, K. &. 2007. Integrating technology obsolescence considerations into product design planning. In ASME 2007 International Design Engineering Technical Conferences and Computers and Information in Engineering Conference (pp. 981-988). American Society of Mechanical Engineers. 

Kumar, U. D. 2010. Optimal selection of obsolescence mitigation strategies using a restless bandit model. European Journal of Operational Research, 170-180.

Romero Rojo, F. J. 2010. Obsolescence management for long-life contracts: state of the art and future trends. . The International Journal of Advanced Manufacturing Technology, 1235-1250.

Sandborn, P. 2007. Designing for technology obsolescence management. . In IIE Annual Conference. Proceedings (p. 1684). Institute of Industrial Engineers-Publisher. 

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