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Growing Old: How Aging Parts Can Lead to Supply Chain Disruptions

Michael Wilson | May 24, 2019

How old is your equipment? As your equipment ages, it can lead to significant supply chain disruptions—but it can be difficult to address these problems before they become an ...

How old is your equipment? As your equipment ages, it can lead to significant supply chain disruptions—but it can be difficult to address these problems before they become an issue. There are new practices companies can adopt and modern technology that they can leverage if they're focused on reducing supply chain disruptions.

Aging Equipment Can Impact Operation

What happens as equipment ages? If it breaks down and cannot be repaired, it has to be replaced. But there's more to it than that. As equipment begins to age, key components begin to break down with increasing speed. If an equipment's lifetime operation is about ten years and it reaches that ten-year mark, all of its components may begin to fail in succession.

When a breakdown occurs, it causes easily avoidable supply chain disruptions. Supply chain disruptions may be minimal or dramatic, taking days at a time to repair. Depending on how dramatic the disruption is, it could cost a company millions of dollars in lost sales or canceled transactions. Even if it doesn't cause the company money directly, it could still result in other issues: delayed product delivery, reputation damage, and unsatisfied clientele.

Preventing Aging Parts from Leading to Technology Disruption

Of course, the physical management of supply chain equipment is relatively well-explored territory. Many companies have looked into ways they can minimize the impact of their equipment and technology on supply chain disruption, including:

  • Scheduling regular maintenance. Regular maintenance and inventory checks are critical to a healthy supply chain. Employees should regularly inspect the equipment for any visible issues, as well as make sure the equipment still functions as it did initially. If any problems are noticed with equipment, repairs should be completed immediately.
  • Leveraging sensors and IoT technology. Sensors, IoT technology, and automated alerts can be used to notify your staff if there are issues with equipment. A simple example is overheating. Equipment can detect its own heat through a sensor and alert that the temperature is too high. Sensors and IoT technology can also be used together to look for disruption patterns, such as those that generally precede a breakdown, or patterns that indicate equipment is may need to be replaced soon.
  • Utilizing redundant services. If there is a system that is absolutely essential to your company's operations, consider keeping a potential replacement on hand. Older equipment that has been replaced by newer equipment can be kept in storage for precisely this reason. Organizations should have thorough disaster-management plans related to what they will do if core equipment stops working. This should also include the possibility to temporarily outsource work.
  • Performing regular risk management. Auditing your equipment and the current effectiveness of your maintenance strategies is a good way to continually improve. Were there equipment issues that went unresolved? Were there potential problems that arose due to a lack of on-site part inventory? These issues should be considered for future improvement. A complete risk audit will include issues that have been discovered and recommended modifications to existing processes.
  • Investing in business disruption insurance. Even if you do everything else right, there are always freak accidents that can occur. What if your equipment is damaged by a fire, flood, or earthquake? Business-disruption insurance protects you against risks that you couldn't have anticipated to cover costs while your business is unable to capture revenue. If your business can't ship and sell products, it may quickly run out of liquidity.

With the above methods, an organization can suitably reduce its potential risk. While it's not always possible to completely eliminate the chances of risk, it is possible to reduce it—and having the right supply chain management technology helps. Continue to follow AFFLINK for more information about new supply chain technologies.

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