Logistics 20 20
Reverse Logistics – Deriving value from out-of-warranty parts recovery and repair
Business Challenges – Reverse logistics
A top-tier OEM was not utilising the component parts from its out-of-warranty (OOW) notebook and desktop products to resupply its parts supply chain procurement in the USA. For their Laptop and Desktop repair models they were wholly reliant on the purchase of new-build parts, some of which had lead-times of 8 to 12 weeks.
The FGS team approached the customer with a proposal designed to recover value from the OOW products by utilising an efficient screen and repair supply chain optimization model. The screen and repair supply chain optimization model offered the customer the advantage of increased parts availability, whilst also delivering cost reductions for parts, and greater supply chain visibility and time efficiencies.
FGS Solution -Reverse logistics
* The screen and repair supply chain optimization model FGS proposed to the customer incorporated a milk run between two of our US facilities to screen and repair parts
* One FGS facility undertakes a complete upfront screen for all commodities while the other facility is responsible for the repair of motherboards (100,000 per annum), LCDs (38,000 per annum) and graphic cards
* The FGS screen and repair supply chain optimization model was successfully tested and approved by the customer in March 2008 and fully implemented in May 2008
Results – Reverse logistics
* Supply chain lead-time for parts reduced to less than 1 week for FGS-screened (NFF) found good, and repaired parts
* Lead-times for screen and repair supply chain optimization model parts are on average at least 6 times faster than new-buy parts
* Reduction in on-hand inventory of 20-30%.
* Cost avoidance on parts of between 30- 40% on the repaired units and 100% on screened (NFF) found good.
* Delivered a cost effective and efficient, screen, repair, reuse & re-cycle process for the customer’s (OOW) notebook and desktop products for the entire US market
* Customer currently planning the global implementation of the screen and repair supply chain optimization model.
* Total cost savings delivered to the customer estimated at $12m annually
Supply chain management services- Business Challenges
A consumer digital brand leader was servicing its European market by distributing all products from Asia into Europe as finished in their retail packaging and then distributing the products amongst the various national distribution centres. This supply chain strategy led to excessively high inventory levels of certain products in some markets. As consumer digital products have an increasingly short product lifespan there was a considerable amount of obsolescence. Due to fluctuating demand patterns this ‘Push Strategy’ sometimes also led to shortages of certain products across individual markets in the region.
About the Author
Flextronics Uk Services provides various Reverse logistics services in the marketplace.for more details visit http://fgs.flextronics.com/.
Episode 20 Podcast “Mann’s Journal: Acoustics Logistics”
