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Planned Obsolescence: Contain the High Cost of Outdated Equipment

Outdated systems place warehouse operations at risk. See how leaders build obsolescence into their core strategy to control costs and protect their organisations.

by Billy Binder

Rethink Your Strategy Today

Most supply chain leaders recognise the warning signs of aging systems. A sorter that jams twice a week. Software that still relies on manual data entry. Outdated warehouse technology that slows order processing and limits throughput. These aren’t minor inconveniences. They are signals that equipment and systems are nearing the end-of-life, and costs will grow more expensive the longer they’re ignored.

In this FORTNA blog, learn how competitive companies don’t push outdated systems past their limits. They treat obsolescence as a strategy by building the business case early, planning replacements in advance and investing in automation before failures create disruption.

What is planned obsolescence?

Planned obsolescence isn’t just a financial concept. It’s the reality that every piece of capital equipment and warehouse system has an expiration date. High-capacity sorters or automated storage and retrieval systems (AS/RS) typically last 10 to 15 years. For software, the window can be even shorter.

Running systems beyond their expected lifecycle may keep them operational, but it drives up maintenance costs, makes sourcing parts a challenge and exposes operations to sudden failures. A sorter may still work after 15 years, but reliability and efficiency are no longer guaranteed. At that point, “it still works” isn’t a plan but a liability.

However, companies don’t care if systems are outdated. They care that their orders ship on time, every time. That’s why planned obsolescence is an important part of the conversation from the beginning. Ignoring it directly impacts performance, costs and customer satisfaction.

Financial priorities in obsolescence planning

Planned obsolescence is both an operational and financial issue. Two key factors that drive the discussion:

Tax depreciation: capturing the full value of capital investments before replacement.
Useful life: recognising when preventive maintenance can no longer ensure reliability.

Together, these shape the total cost of ownership. Leaders who plan around them avoid emergencies and gain more predictable costs and stable operations.

The cost of outdated systems

When these financial realities are ignored, the consequences cause a ripple effect across the warehouse:

Downtime: High-throughput facilities can lose six figures per hour, and in some cases hundreds of thousands of dollars per day, when critical systems fail.
Manual processes: Facilities fall back on time-consuming workarounds, reducing productivity and driving up labour costs.
Data limitations: Without real-time visibility, decisions are reactive instead of data driven.
Customer satisfaction: Fulfillment delays, shipping errors and missed service levels damage brand reputation and customer loyalty.

Overhead view of a warehouse with multiple conveyor belts and packages - FORTNA

Why the conversation has shifted

Historically, supply chain leaders rarely discussed the concept of planned obsolescence. Most companies installed equipment, maintained it and replaced parts when needed. Systems ran until they failed, and replacements were managed reactively. That approach no longer works. Automation is too central today to leave replacement planning as an afterthought.

At a recent industry event, a small group of senior executives from major retailers shared perspectives on disruption, workforce challenges and technology investment. FORTNA led a session on leading through disruption.

What began as a conversation about building flexibility during unpredictable times, like the pandemic or tariffs, shifted to planned obsolescence. As the dialogue continued, a consistent theme emerged, and the message was clear: waiting for equipment to fail is no longer an option. Automated systems are business-critical assets, and end-of-life planning must be part of every capital project from day one.

We can’t treat automation as a one-time investment to be maintained long-term. We’re now talking openly about equipment end-of-life from day one, so replacements don’t become unexpected disruptions later.

Chief Supply Chain Officer, Top Retailer

When waiting costs more than replacing

Organisations that stretch technology past its useful life often pay more in hidden costs, including sourcing spare parts from third-party vendors, retrofitting software and relying on reactive maintenance. The approach to obsolescence tends to vary by the size of the operation:

Smaller operations (<30,000 cartons/day) often push equipment beyond its lifespan and compensate with labour, which is risky but sometimes a manageable approach.
Mid-sized operations focus on gathering data to build a business case with questions such as “How do I convince leadership this is worth the investment?”
High-volume operations (>100,000 cartons/day) build redundancy and replacement strategies into their plans from the start, because downtime would be catastrophic.

Real-world example: One global apparel company learned this the hard way when they acquired a top menswear brand and still had a 25-year-old sorter in service. Sorters have a lifespan of 10-15 years, and the decision was made to keep the sorter operational and spend $1.5 million on replacement parts. Despite the investment, the system required two daily shutdowns to prevent overheating and breakdowns. This resulted in two hours of lost productivity each day. In the end, millions of dollars were spent, but they still paid the price in daily downtime.

Group of professionals reviewing reports and data during a meeting - FORTNA

Building a business case leadership will support

Securing capital before failure requires clear, data-backed analysis. The strongest cases focus on the following metrics:

Downtime: Log every outage to quantify impact on fulfillment processes, such as tracking cost per hour of downtime to show how every hour of failure adds up.
Lost sales: Tie missed service-level agreement (SLA) targets directly to customer satisfaction and revenue loss. For instance, track how many orders were delayed or cancelled and multiply by the average order value to see the dollar impact.
Spare parts: Are parts still available from the OEM or only through third-party resellers with long lead times? Calculate the spare parts turnover ratio and stock-out rate. If parts are out of stock 5-10% of the time, that’s a red flag.
Maintenance costs: Compare maintenance costs (parts + labor + emergencies) over time with the cost of new equipment. If annual repair bills are approaching 50-70% of the cost of new equipment, replacement becomes the obvious choice.

The best overview is framed around data-driven decisions and long-term strategy. Think of it like insurance, because no one waits for a fire to buy coverage. Obsolescence planning doesn’t cost anything upfront, but it starts with a plan and a strong business case.

Why does planned obsolescence matter now?

Automation has become the backbone of modern warehouse operations, and when systems fail, the impact is immediate. That’s why forward-thinking organisations are building obsolescence into their total cost of ownership models. The focus is shifting from upfront spending to long-term performance. Planning for end-of-life from the start helps avoid costly interruptions and keeps operations resilient.

The risks vary by industry:

Retail: Downtime disrupts store replenishment and leads directly to lost sales.
Industrial: Equipment outages stall production lines, delay shipments and damage supply reliability.
Life Sciences: Downtime can trigger regulatory violations or compromise patient safety.
Food and Beverage: Spoilage risk turns delayed shipments into wasted products.
Aftermarket Parts: Customers expect fulfillment within hours, and failure to deliver can mean immediate loss of business.

Across industries, the costs of outdated systems outweigh the price of replacement. Modern automation and real-time tracking protect SLAs, reduce risk and give operations the flexibility to adapt.

The role of lifecycle services

Managing obsolescence is easier with the right support in place. Lifecycle services extend the useful life of automation and provide the visibility leaders need to plan. Instead of reacting to breakdowns, these programmes keep operations running at peak performance while creating a plan for future investment.

Effective lifecycle services include:

Preventive and corrective maintenance to minimise unplanned downtime.
On-site resident technicians who ensure issues are addressed immediately.
Spare parts management to avoid delays when components are scarce.
Software upgrades and migrations that keep systems current and secure.
Health checks and audits to assess performance and flag risks.

The benefits go beyond keeping systems operational. A disciplined lifecycle approach can reduce total cost of ownership from 3–5% of OpEx to 1–2%, while ensuring obsolescence is part of the long-term strategy. Those benefits start with asking the right questions.

Questions executives should be asking

Obsolescence planning begins with visibility. Leaders should consistently ask:

Which systems or equipment would cause immediate disruption if they failed?
Where are these assets in their lifecycle?
How much downtime has been recorded in the past year, and at what cost?
Do current systems provide real-time inventory tracking, or are they still dependent on manual data entry?
Is there a long-term replacement strategy for critical assets?

These questions form the foundation of proactive planning. For those unsure where to begin, download FORTNA’s 10-point automation health checklist to identify risks and build a roadmap for the future.

Planned obsolescence as a competitive strategy

Planned obsolescence isn’t a problem to avoid, but it’s the new reality. Leaders who embrace this mindset gain faster, more reliable fulfillment and the ability to scale with demand. Those who resist are left scrambling with costly manual workarounds and unplanned downtime.

Smart executives are already building it into today’s lifecycle and capital allocation planning. They know it protects performance, controls costs and delivers the competitive edge, especially when disruption strikes.

FORTNA Can Help

Turning obsolescence into strategy requires the right partner. FORTNA takes a consultative approach, helping organisations to build end-of-life planning into their core strategy. This approach results in warehouse operations that perform at their peak today and are prepared for the challenges tomorrow.

Build Your Obsolescence Strategy Today

About the author

Billy Binder

Vice President, Sales

Billy Binder has extensive experience in supply chain sales and consulting, with a background in network strategy, transportation and operations. As Vice President of Sales, he leads a team of Sales Directors and Account Executives, helping organisations design and implement distribution strategies that incorporate advanced storage and automation technologies to drive efficiency, reduce costs and improve service levels.