Differences in Lengths of Life of Production Equipment & Production Systems and their implications on Acquisition & Replacement Processes

Abstract: Nowadays usage of advanced production equipment becomes more common among production industries, future challenges in the market require flexibility in production industries due to growing competition and demand responses. Decisions regarding acquisition and replacement of production equipment have a major role in future profitability and competitiveness of production industries. Production equipment life cycle is dependent on technical, economical and conceptual lengths of life. Technical and economical lengths of life are connected to production equipment and the conceptual length of life is connected to production systems. Acquisition and replacement assessment processes of production equipment within production industries require involvement from different responsible departments. Varieties of perspectives differ from different departments in their prioritization regarding economical, technical and conceptual lengths of life. Lack of collaboration and evaluation of critical factors create quality and capacity issues in production industries. This project is directed to investigate issues concerning establishment of a sustainable long term thinking in consideration of economical, technical lengths of life of production equipment and also conceptual length of life of production systems in an earlier stage of acquisition and replacement assessment processes. Investigated research questions in this project are the following; What is the correlation between lengths of life of production equipment & production systems and how they influence each other? What is the basis for acquisition and replacement assessment of production equipment? How does buyer-supplier relationship influence length of life of production equipment? This thesis work is based on both theoretical and empirical findings. A case study was performed with a survey and interviews to gather data for the analysis. Technical and conceptual lengths of life are both based on economical profitability and have to be adapted to product generations. Expensive investments in production equipment are critical and can be risky for production industries if marketing experts are excluded or if future product generation forecast are not considered in production equipment acquisition processes. Information and knowledge inputs from production equipment suppliers have to be considered in an earlier stage of concept development in production systems.