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Advanced Engineering 2020

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04/11/2020 - 05/11/2020

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Obsolescence in a harsh economic environment

It's well known that in the manufacturing industry capital expenditure and investment decrease in times of recession. However, the requirement for improved processes and increased efficiency continues, irrespective of the state of the economy. Here Sven Bretschneider, business development manager at Deutsche Automation, a division of European Automation, explains how to achieve more with less.

Obtaining replacements and spare parts is becoming a significant issue in industry, with many automation companies adopting a product development lifecycle that sees new products introduced regularly. Often new versions of an inverter, for instance, are launched every twelve months, but new versions are not always backwards compatible with earlier models. If a customer wants to buy a model from three years ago, the vendor might not have stock any more.  

This model is reminiscent of the IT and electronics industries, where Moore's Law is king and entire system upgrades are often required to make a new launch work with an old product. However, in manufacturing it's not economically viable to rip out the entire motor system and upgrade it simply because the inverter manufacturer has launched a new filter combination.

So what happens when the model you want is now obsolete? This is where independent companies such as Deutsche Automation come in. Let's look at the Siemens S5 as an example, a range which has a nine year cycle between the announcement of its discontinuation and the product no longer being available, even as a spare part. Managing such product obsolescence in a harsh economic environment without having to continually replace usable equipment is a difficult process. This is exactly the point in the product lifecycle at which many companies turn to a product obsolescence specialist.  

Deutsche Automation is the principal European specialist for sourcing hard-to-find and obsolete motor and inverter spares. However, because of customer demand, the company also provides new equipment, particularly where it complements a used or obsolete sale. This applies not only to Siemens equipment but also to other manufacturers such as Rockwell Automation, Fanuc and Indramat.

Automation partnerships
From its six-strong team based in Frankfurt and as part of the international European Automation group, Deutsche Automation has a global network of partners and distributors, and even workshops, from which it sources 98 percent of its obsolete parts. It also has its own stockholding at its new European warehouse and international distribution centre.

European Automation is confident that it has more sources than any other supplier worldwide, and it has key partnerships with automation vendors. Deutsche Automation's partnership with Siemens, for example, extends beyond merely sourcing equipment, having even supplied obsolete Micromaster inverter equipment back to Siemens itself in Erlangen to enable the German giant to meet ongoing service and support commitments. Whenever European Automations finds Micromaster parts through its supplier and reseller network, it now contacts Siemens first, and the company is normally willing to buy back its own manufactured goods.

Interestingly, as Micromaster supplies have become more scarce, the value of the product has appreciated. This is not unique to the automation equipment market; it happens regularly with electronic components, which fetch a premium price when they are first launched and then drop in value when newer components are introduced. As stockholders gradually liquidate their inventories, these components become scarce again, to the point where the price may be as much as the original launch price, if not more.

Last year at the SPS Drives show in Nuremberg I encountered one exhibitor who always asks his customers how long they want to use their machines for; because he regards that as the key question. If the answer is two to three years, or until the production contract expires, as in the case of a bearing manufacturer supplying a car firm for a particular model for instance, then there is not much likelihood of the machine being upgraded beyond that time. In this case, the car manufacturer will continue using spares until production ceases but will not want to tie up working capital in spares stockholding.

This is where Deutsche Automation comes in - by holding their stock and supplying it when it is needed, often within nine hours of the order being placed. The company is able to help its customers free up their cash flow and also achieve their productivity targets. Moore's Law may be increasingly becoming applicable to engineering and mechanical applications, but that doesn't mean there aren't intelligent ways of continuing to achieve one's objectives despite the onslaught of obsolescence.
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