How Mil-Aero Buyers Are Dealing with Part Obsolescence

Procurement professionals in defense and aerospace industries face significant challenges with part obsolescence. As technologies and designs evolve rapidly, components can quickly become obsolete, impacting long-term supply chain operations. This issue is exacerbated by stringent regulatory requirements, long lead times, and lengthy certification processes. Procurement and supply chain teams must anticipate and mitigate obsolescence risks through proactive supplier management, alternative sourcing strategies, and systematic lifecycle planning. 

Moreover, ensuring continuity of supply while maintaining continuity of supply is critical to meet critical customer requirements. Collaborative efforts with suppliers, continuous monitoring of market trends, and forecasting tools are essential to navigate these challenges effectively.

Special Needs of Military and Aerospace Buyers

The unique requirements of military and aerospace buyers further compound the challenge of electronic part obsolescence. Unlike commercial applications, where off-the-shelf components are usually sufficient, military and aerospace systems often require high-reliability and ruggedized components that are specifically tailored to withstand harsh operating environments. 

Furthermore, stringent certification and qualification processes are required to ensure that components meet the rigorous standards set forth by military and aerospace regulatory bodies. This adds an additional layer of complexity to the procurement process, as components must not only be available but also compliant with strict industry regulations and standards. Unlike commercial industries where products can be easily replaced or upgraded, military and aerospace systems often have extended lifecycles, often spanning decades. This requires a forward-looking approach to strategic sourcing. 

Procurement professionals in the defense and aerospace industries face a combination of challenges stemming from the unique characteristics of both sectors. Here are some of the key challenges they encounter.

Security and Classification. Both industries deal with sensitive technologies and information, often classified at various levels. Procurement professionals must ensure strict adherence to security protocols to protect classified data and prevent unauthorized access throughout the supplier community. 

Regulatory Compliance. The defense and aerospace sectors are heavily regulated, with stringent requirements imposed by government agencies such as the Federal Aviation Administration (FAA) and the Department of Defense (DoD). Procurement professionals must navigate complex regulatory frameworks to ensure compliance with export controls, procurement regulations, and quality standards.

Complex Supply Chains. Aerospace and defense projects involve complex supply chains with multiple tiers of suppliers, often spanning different countries and regions. Coordinating and managing these supply chains can be challenging, particularly when dealing with long lead times, dependencies on critical components, and geopolitical risks.

Long Procurement Cycles. Defense and aerospace procurement projects often have lengthy procurement cycles due to rigorous testing and certification requirements, bureaucratic processes, and contractual negotiations. Procurement professionals must effectively manage these long cycles and lead times while ensuring timely delivery of equipment and systems to meet project deadlines.

Sourcing Challenges. Aerospace and military equipment can have life cycles of 30 years or more, during which time they need legacy-parts support. But the internal components for those systems, have much shorter life cycles. Electronic components can become obsolete as suppliers struggle to source the raw materials or stop manufacturing them altogether. Changing components can begin another long qualification process. 

Budget Constraints. Both industry segments are subject to budget constraints and uncertainties, with defense budgets influenced by government priorities and aerospace projects impacted by market dynamics and customer demands. Procurement professionals must carefully manage budgets and seek cost-effective solutions while maintaining quality and performance standards.

Technology and Innovation. Defense and aerospace industries are characterized by rapid technological advancements and innovations. Procurement professionals must stay abreast of emerging technologies, assess their potential impact on project requirements, and collaborate with designers and suppliers to leverage changes in technology. 

Quality and Reliability. Ensuring the quality and reliability of equipment and systems is critical in both industries, where safety and mission success are paramount. Supply chain professionals must use established robust quality assurance processes, conduct thorough supplier audits and evaluations, and enforce stringent performance criteria to mitigate risks and ensure product integrity.

Sustainability and Environmental Concerns. Increasingly, sustainability and environmental regulations are becoming important factors in defense and aerospace procurement decisions. Procurement professionals must consider the environmental impact of materials, manufacturing processes, and supply chain activities, and seek out suppliers that adhere to sustainable practices, all while meeting industry specifications. 

Electronic Part Obsolescence: An Ongoing Challenge

Electronic part obsolescence poses a significant challenge in military and aerospace procurement. Obsolescence occurs when electronic components become obsolete due to factors such as discontinuation by manufacturers, technology advancements, or changes in market demand. For military and aerospace systems, which rely heavily on highly specialized and often custom-built electronic components, the impact of obsolescence can be intense.

McKinsey reports in 2022 that aggregate obsolescence-related nonrecurring costs for the military aircraft segment alone are in the range of $50 billion to $70 billion. These costs stem from a variety of factors, including the need to redesign systems, requalify components, and maintain aging infrastructure. Moreover, the risk of system failures or degraded performance due to obsolete components can have far-reaching consequences, and in the case of defense applications, jeopardize national security.

Strategies for Mitigating Electronic Part Obsolescence

Despite the formidable challenges posed by electronic part obsolescence, military and aerospace buyers can develop a range of strategies to mitigate its impact and ensure the long-term viability of critical systems.

Proactive Lifecycle Management. Adopting a proactive approach to component lifecycle management is essential for mitigating the impact of electronic part obsolescence. This involves monitoring the lifecycle status of components throughout the entire procurement process, from initial design to end-of-life support. By identifying potential obsolescence issues early on, procurement professionals can take preemptive measures to mitigate risks and minimize disruptions in supply, such as last time buys. 

Diversification of Suppliers. Relying on a single supplier for critical components can leave military and aerospace buyers vulnerable to supply disruptions. To mitigate this risk, procurement professionals should opt to diversify their supplier base, engaging multiple suppliers to ensure redundancy and flexibility in the supply chain. 

Long-Term Contracts and Supplier Relationships. Establishing long-term contracts and relationships with suppliers can provide military and aerospace buyers with greater stability and continuity in the supply chain, as well as a greater flow of information. Buyers can work with supplier partners to invest in long-term supportability and obsolescence management, ensuring access to critical components. 

Implementing robust obsolescence management programs is crucial for effectively addressing electronic part obsolescence in the military and aerospace industries. These programs involve proactive monitoring of component lifecycle status, risk assessment, and the development of mitigation strategies such as last time buys, redesigns, or alternative sourcing solutions.