The challenges of supply side obsolescence: Obsolescence procurement's past, present, and future

Abstract

Obsolescence of critical manufacturing inputs is a major supply chain risk and represents a growing problem for procurement professionals that must be handled appropriately to profitably meet customers' needs. Supply side obsolescence occurs when suppliers end production of components and has been defined as “the loss or impending loss of original manufacturers of items or suppliers of items or raw materials.” Supply side obsolescence may radically increase costs to an organization, including high inventory holding costs, paying high prices for components on the gray market, and lost sales or lost market share due to an inability to complete products. This research utilized a grounded theory approach and discovered: (1) the risks of supply side obsolescence, (2) the impacts of supply side obsolescence on focal firms, and (3) how leading firms utilize obsolescence procurement teams to combat this potentially disastrous problem. Of specific interest to managers, obsolescence procurement teams are identified as formal teams that focus on dealing with obsolescence proactively and work to prevent the negative effects of supply side obsolescence. Finally, the study provides propositions to guide future research and concludes with suggestions for managers regarding mitigating supply side obsolescence, which will only become more urgent as the rate of technological change continues to increase.