Is your product line full of products that take an inordinate amount of sustaining engineering effort to keep alive and have low run rates? Do you have lots of parts that are obsolete (or rapidly approaching obsolescence) and more options than the factories like to see? Has the finance department been knocking on your door to cut aging product lines loose? Is Purchasing sending you threatening emails about obsolete components on a regular basis?
If any of this sounds familiar, then you might be a hoarder. Your part number list has grown to an unmanageable size, and your older products demand too much engineering and manufacturing attention. It means it might be time to consider doing some serious house cleaning and streamline your product portfolio. But where do you start without upsetting your customer base?
Fortunately there are several options available to you as a product manager. The first option, and most difficult, is to do nothing. The stress of dodging your counterparts in engineering and manufacturing will wear you down while upper management frowns on your product line performance.
The next option is to kill off the product line, either in its entirety or with some selective pruning. Pruning can work if current customers can be moved to suitable replacements. However, killing off a product line might upset critical customers and drive them to your competition, especially if there is no place to take them.
The third option is to clean house and find a new home for the troublesome, older products. By partnering with a company who can support your legacy product lines and continue to make them available to existing customers, you avoid the headaches of dealing with so-called “obsolete” products yourself. Done right, this can be a very attractive solution. You get to move out older products while continuing to migrate customers to newer options. Your colleagues start to take you out to lunch or beers because everyone can now focus on the more profitable and newer products.
But where can you go? What are your options?
While obsolescence can be a complicated topic, a good place to start is the ANSI/VITA 53 “Standard for Commercial Technology Market Surveillance.” This standard describes the types of market surveillance data needed by Department of Defense program managers in order to develop and implement technology refresh plans. Technology refresh events are fueling the large majority of new DoD acquisition efforts in the post-”Perry memo” era of increased DoD reliance on commercial technology vendor design, production, support, and repair services.
The objectives of VITA 53.0 are as follows:
- To standardize COTS market surveillance questions, communicating to commercial vendors what product road map and end-of–life-notice information DoD needs, as well as why it is needed
- To improve current DoD practices with respect to COTS market surveillance by receiving public comment from industry experts on the questions DoD is asking
- To give DoD programs a standard to reference when requesting market surveillance information, allowing them to identify vendors who do or do not provide market surveillance data during the vendor selection process
- To reward vendors who provide this service for their customers by giving them a standard to refer to in advertising and product literature – and an advantage over their competitors during product selection processes
The guidance found in the VITA 53 “Standard for Commercial Technology Market Surveillance” document can certainly get you going in the right direction.
4 steps to becoming an effective house cleaner
Step 1: As depicted in Figure 1, admit that you have a hoarding problem. This is most common with smaller companies that have a lot invested in each product line and see letting products go as a big risk. Understanding the impact on resources and team performance can often be the needed wakeup call.
Step 2: Inventory product lines by part number to see where money is coming from in each quarter. Sort the part numbers by revenue and you start to see where your bottom line could be improved by doing some judicious pruning. Be sure to factor in the strategic importance of each product as you do this step.
Step 3: Use this opportunity to migrate the customer to a newer product if possible. If not, draw the line and decide whether to a) kill off the product and manage unhappy customers; b) keep bearing the pain, and the emails, and the dark looks from upper management…; or c) knock-out obsolescence and transfer management of the product to a credible aftermarket provider.
Step 4: Schedule that lunch with your colleagues!
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Aftermarket provider
Imagine how much your group could get done, if they weren’t expending engineering effort to keep alive old products with low run rates? What if instead of hearing, “When are you going to kill off that old product?” you were hearing, “Thanks for taking care of that product line.”
Unless they’re an obsolescence management expert themselves, few people know as well as you do how complicated it is to sustain a legacy product. Between health modeling, parts sourcing, and keeping up with evolving regulations (like the National Defense Authorization Act or CE Mark certification), product support can be a full-time job in itself. On top of that, chances are, your products are being used in many different applications, each with their own regulations.
Throw into the mix:
- The factory prices for low-run
orders … - The costs of sourcing, authenticating, and testing obsolete parts …
- Diverting your engineering teams from new product development to old product maintenance …
No matter how you cut it, your resources are not focused on keeping your group competitive; they are just keeping your head above water.
If you chose answer “C” in the previous section, you’re ready to be a “house cleaner” and a hero.
- Look for an obsolescence expert that has both defense and commercial experience to pull from. Besides specializing in legacy technology, you know they’ll have the scope to meet any evolving regulations around your customer’s diverse application needs, so you don’t have to.
- A credible provider is as invested in your product’s continued success as you are. Legacy product experts, like GDCA, have years of experience bridging that gap between your long-lasting products and customers’ ongoing needs.
- Happy customers keep buying from those who take care of them, and now’s your chance to be able to assure your customers that any product they buy will never go end-of-life on them.
A good legacy management expert recognizes their history with product “house cleaners.” Whether it is 1 product line you need a solution for, or 20, GDCA knows how important it is to maintain your brand so customers keep coming back to you.
Hopefully by now, you’ve decided to stop hoarding, and are looking into a good house cleaning. The sooner you engage, the sooner you can enjoy that hero’s lunch with all that time you’ve now opened up for yourself and your colleagues.
GDCA
925-456-9900