obsolescence in complicated machines

Service Innovation | Dr Shaun West

Obsolescence in complicated machinesCase based on the B52 bomber

Obsoleszenz, Formen und Handlungsalternativen Airbus Defence in Manching

3 March 2016

Dr Shaun West


OutlineFour points relating to obsolescence will be discussed

Obsolescence: the manufacturer’s point of view

Obsolescence: the owner/operator’s point of view

Obsolescence: cradle-‐to-‐grave life-‐cycle management

Obsolescence occurs for many reasons we need to understand how to take advantage of it. The B52 bomber will be used as an extreme case.

Obsolescence: a service opportunity


What does Wikipedia say?

Obsolescence From Wikipedia, the free encyclopedia Obsolescence is the state of being which occurs when an object, service, or practice is no longer wanted even though it may still be in good working order. Obsolescence frequently occurs because a replacement has become available that has, in sum, more advantages than the inconvenience related to repurchasing the replacement. Obsolete refers to something that is already disused or discarded, or antiquated. Typically, obsolescence is preceded by a gradual decline in popularity.


The presentation will be use the B52 as an example

The B52 flying today is very different to the B52 that was flying in 1952


The presentation will be use the B52 as an example

https://www.fas.org/sgp/crs/weapons/R43049.pdf


OBSOLESCENCE: THE MANUFACTURER


The manufacturer Looking at the B52

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1954 1955 1956 1957 1958 1959 1960 1961 1962 1963

The B52 as a product-‐ Development 1946-‐ First flight 1952-‐ Entered service 1955-‐ Operational life approx. 20 years-‐ Role as a strategic nuclear bomber

Most of the B52s were built over a 7 year period


The manufacturer How does the B52 compare with the classic product development life-‐cycle?

The B52 as a product-‐ Development 1946-‐ First flight 1952-‐ Entered service 1955-‐ Operational life approx. 20 years-‐ Role as a strategy bomber

The B52 follows the classic product development life-‐cycle curve


The manufacturer B52s have been flying for over 65 years

The B52 as a product-‐ Development 1946-‐ First flight 1952-‐ Entered service 1955-‐ Operational life approx. 20 years-‐ Role as a strategy bomber

Not all boxes in the total cost of ownership life cycle analysis have equal duration


OBSOLESCENCE: THE OWNER/OPERATOR


The owner/operatorWhat was the job at the B52 was specified for?

The role of the B52 has continually changed since 1947


The owner/operator How has the owner managed obsolesce? What do they understand with obsolesce?

Boeing and others have been providing new technologies to support the B52

-‐ Combat network communications technology (CONECT)

-‐ Military-‐standard-‐1760 modernization -‐ B-‐52 trainer upgrades -‐ Arms control activities under the New START -‐ Mode S/5 identification friend or foe (IFF) -‐ Low cost modifications -‐ B-‐52 anti-‐skid replacement -‐ B-‐52 modernization research development test and evaluation efforts

-‐ Internal weapons bay upgrade (IWBU)


The owner/operator Todays operational assumptions for the B52

-‐ The B-‐52H will conduct its assigned nuclear mission through 2040.

-‐ The B-‐52H will continue to conduct its assigned conventional mission through 2040.

-‐ The B-‐52H fleet size will consist of not more than 76 airframes through 2040.

-‐ Conversion of a required number of B-‐52Hs to a conventional-‐only role by 2018

-‐ for New START compliance. -‐ The current B-‐52H service life goal is 2040. -‐ There will be no change to current B-‐52H basing.

Important to understand the operational assumptions


The owner/operator How has the owner managed obsolesce? What do they understand with obsolesce?

Boeing and others have been providing new technologies to support the B52

-‐ Combat network communications technology (CONECT)

-‐ Military-‐standard-‐1760 modernization -‐ B-‐52 trainer upgrades -‐ Arms control activities under the New START -‐ Mode S/5 identification friend or foe (IFF) -‐ Low cost modifications -‐ B-‐52 anti-‐skid replacement -‐ B-‐52 modernization research development test and evaluation efforts

-‐ 1760 internal weapons bay upgrade (IWBU)


OBSOLESCENCE: CRADLE-‐TO-‐GRAVE LIFE-‐CYCLE


Cradle-‐to-‐grave life-‐cycle The consider the cradle-‐to-‐grave life-‐cycle and how and where the costs build up

All tasks have a cost and a risk associated with time


Cradle-‐to-‐grave life-‐cycle Risks from obsolescence to any other changes must be over come

Many of the changes are unexpected, some are due to obsolescence

Changes in operation/mission -‐ Input costs (eg, increase in fuel cost)-‐ Operational use (eg, insurgence)-‐ Adjacent equipment (eg, guided bombs)-‐ New comers (eg, ground to air missiles)-‐ Changes in ownership (eg, sold to the French)-‐ Environmental regulations (eg, noise)Technology-‐ Control systems technologies (eg, new computers)-‐ Communication system (eg, GPS)-‐ Structural failures (eg, cracking in airframe)-‐ Old technologies no longer supported (sub-‐supplier)-‐ Production technologies (eg, additive machining)


Cradle-‐to-‐grave life-‐cycle Is the customer side of the customer value proposition well defined?

A check list for customer jobs-‐ What jobs are you being asked to perform?-‐ How do you fit into their processes?-‐ Do you know why you are being asked to do these jobs?

-‐ Are there jobs that you could do better than the customer?

-‐ Are there jobs others in your ecosystem could better perform?

-‐ Are there jobs the customer could better perform?

We assume we know the customer jobs, what about the pains and gains?


Cradle-‐to-‐grave life-‐cycle Creating a customer value proposition

Supporting the owner/operator in a long-‐term relationship requires sensitivity

Process-‐ The value proposition helps described the problem and the solution

-‐ The solution is situation specific-‐ The situation may be driven by owner or supplier (push or pull)

Considerations-‐ Value propositions requires value on both sides-‐ If no equitable exchange one party feels aggrieved-‐ Forced ’up-‐grade’ can feel one sided

West!&!Pascual!

Proceedings!of!the!Spring!Servitization!Conference!(SSC2015)!

Figure!6.!!The!examples!developed!by!both!firms!only!considered!single!events!and!were!considered!confidential.!!

!Figure!3:!Every!activity!should!have!a!customer!value!proposition!associated!with!it!

!It! was! clear! after! the! workshops! that! all! of! the! tasks! should! have! a! customer! value! proposition!associated!with! them!and! this! is! confirmed!by!Anderson! (2008)!and!Osterwalder! (2014)!who!state!that! a! customer! value! proposition! should! be! created! for! all! products! and! services.! ! Before! the!workshops,!it!was!considered!that!this!might!not!be!the!case.!!However,!the!insights!that!it!provides!into!customer!drivers!suggest!that!good!practice!would!require!this.!!Side!discussions!concerning!the!customer!journey!during!the!creation!of!the!customer!value!proposition!suggests!that!this!may!also!be!a!useful!tool!to!be!employed!where!the!customer!interactions!are!either!major!pains!or!gains.!!4.6$Anticipated$extensions$to$this$methodology$It!is!anticipated!that!by!extending!this!methodology!it!should!be!possible!to:!

•! estimate!the!total!market!value!and!identify!the!share!of!spend!(or!faithfulness);!•! forecast!sales!with!timing!of!owner's!spends;!•! identify!trigger!points!for!conversions,!modifications!and!updates;!•! combine!with!the!customer!journey!mapping.!

$5.$$CONCLUSIONS$The!prototyping!of!the!combination!of!the!two!tools!was!successful.!!Using!the!equipment!life<cycle!generated! from! the! total! cost! of! ownership! in! a! visual! way! and! combining! it! with! Osterwalder’s!(2014)! customer! value! proposition! was! considered! an! interesting! approach! as! a! prototype.! ! The!workshops!proved!helpful! for! the! firms,!enabling! them!to! identify!new!services!and! to!understand!why!customers!may!require!them.! !The!three!teams!from!the!two!companies!were!able!to! identify!new!ideas!using!this!approach!and!understand!how!their!customers!might!benefit!from!the!new!(or!improved)!services.!!The! approach!was! experimental,! but! discussions! with! the! teams! and! their!managers! suggested! it!proved!useful! in!helping!them!to!discover!new/hidden!services!for!their!products.! !Discussions!also!suggested!that!there!were!potential!improvements!and!extensions!that!could!be!developed!without!increasing!the!complexity!of!the!process.!$6.$$RECOMMENDATIONS$The!tool!should!be!improved!and!used!in!a!number!of!additional!workshops!to!provide!it!adds!value!to!service!development.!!Most!important!to!understand!are!its!limitations!–!when!to!use!it!and!when!


OBSOLESCENCE: A SERVICE OPPORTUNITY


A service opportunity Other long-‐life equipment and systems can provide service opportunities

Every year the installed base grows at a predicable rate (use may be less predicable)


A service opportunity Capabilities for supporting obsolete equipment

GE Healthcare Multi-Vendor Services Technical Center of ExcellenceWhere multi-vendor service originates.

How can GE Healthcare excel at servicing all major brands of imaging systems? For the answer, look to Arlington, Texas.

The GE Multi-Vendor Services Technical Center of Excellence (TCOE) annually trains some 350 GE field and online engineers on more than 50 non-GE imaging devices. They look inside, pull them apart, and practice maintenance, repairs, trouble-shooting and more. So a GE engineer arriving to maintain or service your multi-vendor equipment, has seen it before and can get right to work – with focus, efficiency, speed, and precision.

What you see is impressiveGE Healthcare has invested millions of dollars in the Technical Center of Excellence – dedicated solely to supporting Multi-Vendor Service clients.

All modalities. Our engineers learn from industry experts on imaging modalities from ultrasound and x-ray to CT and MR.

Training by doing. The training regimen spans more than 100 classes, providing in-depth, hands-on learning experi-ence that helps our team deliver fast, high-quality repairs.

Parts, too. The TCOE repairs key components from multi-vendor systems – more than 700 fixes each year. Service parts are critical to efficient, high-quality corrective maintenance – the first time. The availability of key service parts helps GE service some models even after the OEM has declared end of service life – extending the life of your equipment.

The capabilities are not standard manufacturing capabilities

-‐ Trouble shooting-‐ Re-‐engineering capabilities-‐ Modelling of structural components-‐ System integration capabilities-‐ Alternative repair and manufacturing processes-‐ Supply chain for spares-‐ Upgrade/obsolesce database-‐ Owner/operator engagement-‐ Service centres cost to the owner/operator


A service opportunity Obsolesce and advanced services

SERVITIZATION. EXPLAINEDServitization is about manufacturers building their revenue streams through advanced services. It involves both business model and organisational transformation.

THE TYPICAL MODELPRODUCTS & PRODUCTIONManufacturers produce products for customers and take on most of the responsibility for initiating repair, maintenance and other services that ensure the product remains functional.

SERVITIZATIONServitization transforms manufacturers from a focus on production to delivering advanced services

CUSTOMER interactions change from a one off purchase to long term relationship over extended life-cycles, and the MANUFACTURER takes on the extended responsibilities, risk and penalties, and revenue payments linked to use.

ADVANCED SERVICES & PRODUCT SYSTEM

With advanced services manufacturers see themselves as service providers; they build Product-Services Systems

that exploit their own IP, emerging from design and production competencies,

to deliver and improve business processes for their

customers.5 BENEFITS OF SERVITIZATION

GROWS REVENUESTREAMS

IMPROVES COMMERCIAL RESILIENCE

Fosters additional business with existing customers and opens new revenue streams

with additional

Strengthens cash flow and customer relationships, and

locks out competitors

BENEFITS SOCIETY

Localised value capture, employment and skills

development

ENVIRONMENTALBENEFITS

Promotes dematerialisation and enables investment in,

and adoption of, cleaner technologies

SCALABLE

Can be applied equally to small, medium-sized and large companies

CUSTOMER’S FOOTPRINT OF RESPONSIBILITIES

CUSTOMER PURCHASES PRODUCT MANUFACTURER PROVIDES PRODUCT AND POSSIBLY SERVICES

CASHCASH

USE

SELECTION

CONSUMABLESMONITOR

REPAIR REPAIRDISPOSAL

PRODUCTSPARE PARTS

CASHDISPOSAL

CUSTOMER EXCAVATION CAPABILITY

MANUFACTURER PROVIDES INTEGRATED PRODUCT AND SERVICES

MANUFACTURER’S FOOTPRINT OF RESPONSIBILITIES

USE

SELECTIONPRODUCT

COMSUMABLESMONITOR

MAINTENANCEREPAIR

ORIGINAL EQUIPMENTMANUFACTURERS REPORTED A GROWTH IN SERVICES REVENUEOF THE REGION OF

5-10% PER

YEAR

TRANSFORMATIONServitization is a paradigm shift. The broader business community has yet to recognise that manufacturing is not just about production. As manufacturers change their focus many aspects of their organisation, such as the technologies they use to monitor their products, their business processes and the skill sets of their people, also have to change.

For more information about industry-driven research, networking and events, and executive education on servitization

visit www.aston-servitization.com

BY THE YEAR

2015THE USE OF PERFORMANCE BASED CONTRACTS

65%*Oxford Economics Manufacturing Transformation Report 2013

WILL LEAP TO

The management of obsolescence must focus on the customer value proposition

Obsolesce-‐ What is the cost?-‐ What can you really charge for?-‐ When is end of life, really the end?

Risk allocation and responsibilities-‐ Required upgrades – supplier risk-‐ Operational improvements/change of use – customer risk-‐ Discussion of equipment use – joint -‐ Planned inspections – joint-‐ Unplanned inspection – supplier


A service opportunity Microsoft use a subscription model to help manage obsolescence


CLOSING


ClosingObsolescence will occur and needs to be actively managed

Using the B52 an approach to managing obsolescence has been described. Advanced services can provide an approach to better managing obsolescence.

The manufacturer’s point of view is often short-‐term

The manufacturer must understand the owner’s point of view

Cradle-‐to-‐grave life-‐cycle management needs to be a joint task

Obsolescence provides advanced service opportunity


Thanks for your time!

obsolescence in complicated machines

Engineering