Four obsolescence management myths that kill defense programs

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September 10, 2013

We all know critical programs aren’t abandoned because they’re mature. Even in the face of forced obsolescence, counterfeit components, and ongoing supply disruptions, embedded systems need to last longer than the standard life cycle of the parts that go into them.

Until now, obsolescence has only offered a world of headaches:

• End-of-Life (EOL) notices negatively impact program sustainability.
• Last Time Buy (LTB) notices trigger expensive and risky overstocking.
• Counterfeit components threaten the supply chain.
• Component sourcing and reverse engineering risk critical downtime and drain resources.
• Forced obsolescence and redesign are risky and cost millions of dollars.

Long-term products find themselves in a gap between life-cycle management and legacy support. Without a clear process for proactively managing that gap, once-effective applications run the risk of becoming little more than paperweights. While programs may institute complex Product Life-cycle Management (PLM) systems and engage large engineering teams, it is common practice for DMSMS and logistics teams to target obsolescence reactively, leaving critical systems vulnerable to Last Time Buys and End-Of-Life events.

Common assumptions made about obsolescence management and sustainment seriously tax efforts to sustain warfighter programs. The assumptions we make about obsolescence put the systems our warfighters rely on at as much risk as the counterfeit components encountered in our efforts to sustain them. Because these assumptions undermine efforts to be proactive, our understanding of obsolescence management needs a refresh just as much as many of our defense systems do.

To maintain system reliability and mitigate hundreds of supply challenges, we need to understand and challenge the myths and assumptions that guide the decisions we make in attempting to secure and safeguard our critical legacy applications and programs. Legacy management then includes a larger picture of total life-cycle sustainment planning, component qualification, and source qualification, and avoiding the need for unnecessary redesign and recertification of systems plagued by obsolescence.

MYTH #1

Obsolescence is a problem.

Obsolescence is a problem if you think of it as something that can be avoided. However, obsolescence is actually a reality for the embedded industry and the dark side of relentless innovation. But even in the face of obsolescence, mature, mission-critical programs need to continue. The problem is not obsolescence, but how we try to manage obsolescence through the reactive approach of EOL.

According to IHS, between 1997 and 2011, component EOL and Product Change Notices (PCNs) have seen a Compound Annual Growth Rate (CAGR) of 40 percent (Figure 1), and during this time, COTS embedded board manufacturers were hit with the same supply chain disruptions and EOL issues as defense customers who were buying components directly. As a result, products that had been scheduled for a longer life cycle were being cut and the defense industry was heavily impacted by the reactive push for Last Time Buy orders in the face of EOL.

 

Figure 1: According to IHS, the embedded industry saw a 40 percent Compound Annual Growth Rate (CAGR) of EOLs and PCNs between 1997 and 2011.

(Click graphic to zoom by 1.9x)

 

Effectively dealing with the reality of embedded obsolescence requires a paradigm shift from an industry “normal” of EOL cycles and forced technical upgrades – an approach that doesn’t take into account ongoing legacy need. Instead, a proactive legacy management approach can acknowledge the inevitability that systems will be needed much longer than their parts’ active life cycles. In practice, this means forecasting actual lifetime needs instead of constraining the forecast to available funding.

MYTH #2

If we have access to the components/IP, then every product could be supported indefinitely.

According to the DMEA, the B-2 Bomber encountered more than 140 obsolete components and submodules could not be acquired for the B-2 Radar Warning Receiver (RWR). In addition to system age issues, design IP and support documentation for critical parts had been lost. Because of these types of situations, it makes sense the IP myth often goes hand-in-hand with the components myth: If the program has the IP they know what goes into the system, and if they have the parts they can build it.

But considering the numbers of programs and versions of programs that exist in the field, even getting the IP/components is not enough to ensure legacy sustainment. In 1994, part of the DoD’s shift from custom to COTS was based on the rising costs and complications of organic (in-house) sustainment of all the custom IP in every single system. At the time, the hope was that if OEMs could be used to maintain the components and IP internally, that defense programs could leverage the inevitable upgrades, and the OEMs’ internal sustainment teams and brain trust would keep the boards going.

Unfortunately, just like depots and DMSMS teams, it isn’t realistic to believe that OEMs can support every version of a product that they have ever developed indefinitely. In the worst case scenario, sometimes the OEMs don’t even exist long into a program’s life cycle and the IP is then lost forever. Indeed, even in cases where OEMs are acquired by other companies, older and underperforming products often don’t make the cut – meaning the IP and know-how are effectively lost forever.

The proactive shift in these situations requires focusing on legacy sustainment – while the supply chain is secure, while managing the larger, strategic plan in parallel. This means working with extended support providers who specialize in assuming responsibility for OEMs’ “long-tails” of lower-performing (but still critical) parts or investing in the organic capability to perform these functions indefinitely.

MYTH #3

Old products have no demand.

What do the B-52, KC-130, the Phalanx, the USS Mount Whitney, and the THAAD Missile system all have in common? They are all tried-and-true defense programs that have had their life cycles extended far beyond their original anticipated need. They are also all mission-critical in the lives of soldiers and civilians, requiring they be functional and reliable each time they are in service.

It is the proven reliability of these programs that then increases the likelihood of life-cycle extensions, follow-on installations, or ongoing international sales – even in the face of short embedded COTS life cycles. While OEMs work hard with customers to provide drop-in replacements for mission-critical systems, things are rarely that straightforward, and there must be a solution for those programs that simply cannot afford the cost or risk of upgrading.

Even securing funding for an upgrade presents its own set of work and risk: Before deployment, each product still needs to be tested, certified, and verified to ensure that the product is not only going to work, but that it will mix in with the older versions of systems that are already in the field and continue to be compatible with the legacy software already being run by the program.

The fact is, older products have demand, and their demand is often robust and complicated to assess when coming from a place of obsolescence management through LTBs, redesign, and bridge buys. The proactive challenge is for everyone to acknowledge the value to everyone in creating a legacy sustainment plan for these products for as long as they are needed. In practice, this starts with insisting on knowing the answer to a single question: Are we confident in our approach to support our program until it is no longer needed?

MYTH #4

Repeated LTBs are a good solution for EOL

In the 1980s, before the uptake of COTS, defense programs caught criticism for maintaining large stocks of electronic components, even though these components were necessary to maintain the various custom embedded systems that these programs relied on. Today government contract cycles typically run anywhere from 2-5 years and face continuous scrutiny for unnecessary spending. Because of contract lengths, reduced funding, and defense-wide impacts like government sequestration, programs have become more cautious about how much stock they keep on hand, and money isn’t as available to support the costs of increasing program life cycles.

This historic background is completely at odds with an LTB sustainment solution and experienced program managers know it (Figure 2). LTB is really only a solution for programs that need a bridge to help them along toward an upgrade. The LTB brings with it a false sense of security. It doesn’t account for follow-on sales, loss of brain trust, and the logistics challenges of stocking and storing parts for the length of a program. Experienced program managers know they can’t really fund the entire supply of what they need, and they don’t have the freedom to hold large amounts of stock. The LTB solution then ends up being a situation of “buy what we have the money for, right now, and we will have to figure out the rest later.” Otherwise, as Dr. Peter Sandborn, University of Maryland professor, points out, “... It is like being told you have 6 months to plan, fund, and buy all the shoes you need for the rest of your life.”

 

Figure 2: A Last Time Buy (LTB) brings a false sense of security, and doesn’t account for follow-on sales or the logistics challenges of stocking and storing parts for the length of a program.

(Click graphic to zoom by 1.9x)

 

Without having a strategic total life-cycle solution in place, many defense customers and primes go back to the OEM to plead the case for second or even third LTB opportunities. Because the OEM sustainment teams aren’t set up specifically for legacy sustainment, they will often do everything they can to provide the additional builds. However, with decades left in the program, there is only so much an OEM can do before the costs are just too burdensome for both the customer and the OEM.

Supporting a program through its total life cycle then involves forecasting lifetime needs … instead of constraining the forecast to available funding. Developing a predictable plan (and a fact-based budget) for every year remaining in a system’s life is the only means program managers have to make a case for sensible program funding.

What does it all mean?

The defense industry has tried many tactics to address the challenges of supporting programs in the face of obsolescence. Whether the result of cultural issues of not being able to purchase “unnecessary stock,” shortened contract cycles where funding only lasts the length of the contract, shortened product life cycles driven by the commercial COTS industry, or the increased risk of counterfeits on obsolete components, it is easy to understand why so many program managers feel like their ability to effectively “be proactive” is severely constrained. This belief ties back to the myth that obsolescence is a problem: Obsolescence is a reality that will one day happen. The problem arises when there is no plan for the eventuality that one day components will (with valid reasons) be EOL’d by their OEMs.

It is a fact: All the technology we use today will one day be replaced; that’s innovation. Therefore, obsolescence is reality in the same way that gravity is a reality. And it makes about as much sense to blame obsolescence for causing support problems as blaming gravity when a plane falls out of the sky.

The supply chain is not set up to support legacy systems, but that doesn’t mean obsolescence needs to result in a migraine. It is possible to have the relationships, processes, plans, engineering, and energy to keep the plane in the air … whether or not the original parts are now EOL.

Ethan Plotkin, CEO at GDCA, is a business transformation veteran with a dozen years of international and cross-industry management consulting experience. Since coming from Accenture to take over as CEO of GDCA in 2007, his focus has been on collaborating with OEMs of embedded and capital equipment to identify, measure, and address embedded computing obsolescence issues. He can be contacted at [email protected].

Kaye Porter is Director of Marketing at GDCA. Her current focus is bringing collaboration and awareness to the embedded industry on the latest in anti-counterfeiting and long-term product support. She can be reached at [email protected].

GDCA 925-456-9900 www.gdca.com