Deletion flag is not set to prevent use of a material, the deletion flag does nothing than issuing a warning in a standard system. Please read more details in my blog: Material master deletion flag and blocking activities
you are totally wrong with this assumption: "During year end activity, we can archive that data."
if a material was in use, then it has collected stock data. you have created many transaction data using this material number. You can only archive a material if stock data for current and previous year are zero, if no data exist in the system that makes use of this material, which means you have to archive all created data and dependent master data like info record, bill of materials, orders prior to the material master archiving. if you never did any archiving, then be sure you cannot archive a material with deletion flag for many many years, maybe never if you have no overall archiving concept.
the lock XXXXXX is blocked by user XXXXXX, only one user can update a material at a time, that is like a tunnel with just one lane, it is not possible to access this tunnel with 2 cars side on side.