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PSS-Cost Project
Researcher: Francisco Romero Rojo
Supervisors: Prof Rajkumar Roy SCAF WorkshopDr Essam Shehab 21st April 2010
Project Manager: Dr Kalyan Cheruvu
Estimating the Cost of Obsolescence
Introduction – PSS-Cost Project
Research Methodology
Framework Description
Concepts
Process
Obsolescence Resolution Profiles
Obsolescence Cost Metrics
Conclusions
Outline
Objectives:• Report on the current practice in WLCC estimation at the bidding stage• Prototype tools for WLCC prediction for In-service Uncertainties,
Obsolescence and Affordability Assessment for availability contracts• Validation of the tools developed using industrial case studies• Development of templates for contract clauses (i.e. terms and
conditions) applicable to availability contracts which protect risks against Uncertainty, Obsolescence and Affordability
• Dissemination of the knowledge through workshops, conferences and journal publications
PSS-Cost Project
Aim: To develop understanding of Whole Life Cycle Cost (WLCC) andaffordability management for Product Service Systems (PSS) in defenceindustry.
Introduction
Need to Estimate Obsolescence Cost at Bidding Stage
Availability Contracts / Product-Service Systems
(PSS)
Obsolescence is Unavoidable
Long-term Support Projects • Defence
• Aerospace• Oil and Gas• Nuclear
New ways of Contracting
Aim: To develop an obsolescence cost estimating framework to be usedat the bidding stage within a Product-Service Systems (PSS). Thisresearch is focused on the defence sector.
Introduction
EEE Components
Materials
Software
INDUSTRIAL COLLABORATORS:
Research Methodology
Understanding Context
Literature review
COG Meetings
Framework Development Quantitative Validation
Expert opinion Case studies
Conferences and workshops
Industrial Current Practice Capture
Data gathering Data analysis
Develop Research Protocol
Qualitative Validation
Enhancements
Development
Obsolescence Definitions
• Actions performed in order to reduce the risk or potential impact of obsolescence issues
Mitigation Strategies
• Actions carried out once an obsolescence issue arises and needs to be addressed
Resolution Approaches
Obsolescence Resolution Approaches
Existing Stock
Last Time Buy
Cannibalisation (Reclamation)
Authorised Aftermarket
Alternative
Equivalent
Emulation
Redesign
FFF Replacement
Same Component
Minor Redesign
Major Redesign
Obsolescence Resolution Definitions
Resolution Term Definition Existing Stock An item that is owned within the supply chain and that can be allocated to the project.
Last Time Buy As a result of a product discontinuance notice, the procurement of items sufficient to support the life cycle of the project or until the next planned technology upgrade.
Reclamation (Cannibalisation) The use of an item found in surplus equipment or equipment beyond economical repair.
Equivalent An item which is functionally, parametrically and technically interchangeable (form, fit and function).
Alternative An item whose performance may be different from that specified for one or more reasons (e.g., quality or reliability level, tolerance, parametric, temperature range).
Authorised Aftermarket An item is available on the market but not from the original manufacturer or supplier (typically finished goods provided by licensed sources).
Emulation A manufacturing process that produces a substitute form, fit and function, and interface (F3I) item for the unobtainable item. Microcircuit emulation can replicate with state-of-the art devices that emulate the original and can be manufactured and supplied on demand.
Redesign An item is designed out of the system. The cost for redesign can include engineering, programme management, integration, qualification and testing. Redesign can be further broken down into categories, e.g. minor (board re-layout) and major (board replacement).
OM Levels of Proactiveness
• Same as [3] plus:• Technology Roadmapping• Partnering agreements with suppliers• Consider obsolescence at the design stage
5
• Same as [3] plus:• Technology Roadmapping• Either “Partnering agreements with suppliers” or “Consider obsolescence at the design
stage”4
• Employ obsolescence managers• Use obsolescence monitoring tools • Notify obsolescence issues proactively• Decide the key parts that should be managed proactively
3
• Reactive but making LTB to avoid/solve obsolescence issues2
• Deal with any obsolescence issue reactively• Miss most of the LTB notifications1
•Modularity•Transparency•Use of technology/components/materials less likely to become obsolete•Use multi-sourced components
PR
OA
CT
IVE
RE
AC
TIV
E
Data Input Process
This flowchart represents the five steps followed on this tool and indicates the
data required for each step.
STEP 3A
STEP 3B
Go to STEP 3A if there is information available about the list of components + Obsolescence Monitoring tool + ERP system
OR if there is historical data from a similar product
Go to STEP 3B if there is no information available about the list of components + Monitoring tool + ERP systemNOR there is historical data from a similar product
so the information provided can be based on experience or information from the supplier
STEP4: Obsolescence Resolution Profiles
It represents the probability of using each obsolescence
resolution approach to solve an obsolescence issue
Obsolescence Resolution Profiles
(ORP) Study Methodology
• DELPHI METHOD
• DEFINITIONS REFINEMENT
• TRENDS REFINEMENT
OBSOLESCENCE RESOLUTIONS PROFILE (ORP) STUDY METHODOLOGY
SECO
ND
RO
UN
D
FI
RST
ROU
ND
DEL
PHI
MET
HO
D
First Questionnaire Development
Piloting with obsolescence expert (7 years)
Data Collection at COG Quarterly Meeting (38 experts in obsolescence participated)
Analysis of Responses
Results and Conclusions Second Questionnaire Development
Piloting with obsolescence expert (7 years)
Data Collection at COG Quarterly Meeting (33 experts in obsolescence participated)
Analysis of Responses
Refine Results
Obsolescence Definitions Workshop (38 experts in obsolescence participated) It is identified the need to
breakdown “FFF Replacement” into “Equivalent” and
“Alternative”
Second Questionnaire Development
D
EFIN
ITIO
NS
REFI
NEM
ENT
TREN
DS
REFI
NEM
ENT
(33 e pe ts obso esce ce pa t c pated)
a ys s o espo ses
e e esu ts
Obsolescence Definitions Workshop (38 experts in obsolescence participated) It is identified the need to
breakdown “FFF Replacement” into “Equivalent” and
“Alternative”
Piloting with obsolescence expert (7 years)
Second Questionnaire Development
Data Collection with 6 key experts in obsolescence from COG
Analysis of Responses
Refine Results
ORP Refinement Workshop (6 experts in obsolescence participated) Based on theoretical analysis of
trends with key COG experts
Analysis of Responses
Refine ORP Accordingly
Final ORP Develop alternative ORP
Obs. Mgmt.Level
PartComplexity
1(Reactive) 2 3 4 5
(Proactive)
Low
Medium
High
STEP4: Obsolescence Resolution Profiles
STEP 5: Obsolescence Cost Metrics
•Existing Stock•Last Time Buy •Reclamation (Cannibalisation)•Equivalent•Alternative•Authorised Aftermarket•Emulation•Minor Redesign•Major Redesign
Resolution Approach
•Small•Medium•Large•Very Large
Level of Integration
•Space•Air / Safety Critical•Sea/Submersible•Land-Mobile (military)•Land-Fixed (consumer) Office - Industrial
Type of Platform
•Yes•No
Requalification Required
Conclusions
• A systematic framework has been developed to estimate the cost of materials and EEE components obsolescence for availability contracts in the defence sector.
• Research carried out on software obsolescence has set the basis for further research on the cost estimation for this barely-explored area.
• The EEE-FORCE and M-FORCE tools are currently been validated with the industrial partners and they will be delivered at MACH 2010 in Birmingham on 7th June 2010.
Thank you!
Questions?
For further information please contact:
e-mail: [email protected]
Tel: +44 (0) 1234 750111 Ext:5656
Decision Engineering Centre
Cranfield University, UK
