I have experience with evaluating legacy products and obsoleting products. It is usually a bigger undertaking then one would think. To your point, it is very important that companies continuously evaluate the portfolio of the products to see what is driving sales versus what is declining in sales. Through my experience there are 3 challenging aspects of obsoleting a product:
1. Value of removing a product off the market and the effects it has on base business needs. The company I worked for spent a large chunk of time determining if it made sense to remove a product that was basically declining in sales (X) but was an optional support for another product (Y). Product Y was doing very well in terms of sales but product X wasn’t keeping up. However, our largest customer continued to want and buy product X along with product Y. Therefore, this type of scenario can cause some type of disagreement as to how to move forward and in a large company these type of decisions can take forever to decide.
2. Inventory. If you obsolete a product what happens to all the excess inventory you have sitting in distribution centers. The last thing you want to do is scrap all the product and take a loss on it. Therefore, the supply chain planning of handling the current inventory is challenging.
3. Updating ERP Systems. When a product becomes obsolete you have to ensure that your ERP System is aligned and that the BOM, documents, and any other material or components that belong to the product and portfolio are obsolete as well. Getting all systems aligned is necessary. In addition, the communication to everyone involved and letting them know! Again, this a planning challenge as well.