Competition among the Fortune 500 corporations
is becoming increasingly time based and cost effective as
companies vie to give faster and economical response to customer
needs. This case study describes how a high tech corporation, with
a large customer service base, saved cash and high inventory
dollars to the corporation and its customers by implementing JIT
Return and Repair
Analysis of the return and repair process was
completed. The analysis indicated that the defective spares were
not being utilized in a cost effective method. The defective parts
were on the shelf "just in case," marketing increased
the forecast of sales, or a supplier failed to supply parts in a
timely manner. The analysis indicated the corporation would save
five million dollars in procurement costs if complete utilization
of defective returns could be accomplished.
If defective returns could be received and
directly sent to repair and/or dispositioned at the time of
receipt and back to the customer within 10 working days the
corporation could save money in safety stock and lead time.
Parts would need to be dispositioned at
receiving as to repair, scrap, hold or to failure analysis.
A cross functional team was formed to review
the requirements of Remanufacturing, Customer Service Planning,
Finance, and Manufacturing.
JIT Remanufacturing Requirements
Through many joint requirements planning
sessions and utilizing a 9-step quality improvement process,
requirements of the system were identified as follows:
• Disposition of Failure Analysis
— Failure within 90 days of install
— High failure
— R+ Customer (within certain products)
Note: R+ is a software package that measures the
reliability of products.
• Scrap dispositioned defined as
— Not repairable
— Not economical to repair
— Parts not needed per forecast—declining service base
• Hold parts due to known future need
— End of life products
— OEM products and spares
— Last known availability due to engineering changes
• Immediate repair of parts for customer need
• Piece parts and rework bill of material needed to be
Enhancements to the online receiving system for
defective parts were defined as follows:
• Retrieve data from the forecasting system for
repair/scrap flag determination.
• Retrieve data from customer service data collection of 90
day failure and R+ for failure analysis.
• Create several tables for failure analysis and repair
locations by commodity and product.
• Online receiving system was enhanced to encompass the
additional dispositioning of parts.
The forecasting system was enhanced to
calculate customer service needs by controlling all world wide
inventory and knowing the status of that inventory was for
leadtime and new buys:
• At depot/customer site
• Intransit from depot as defective
• To repair
• In repair
• Intransit from repair
• In good spares or defective spares inventory
• Intransit from new build manufacturing
Yield factors for repair were estimated or
calculated and input into the forecasting system.
Flags were set in the forecasting system for
repair, scrap and/or hold. These flags were set by the forecasting
system based on the parameters above or could be overridden by the
A material requirement P.C. Package was purchased to maintain
the rework Bill of Material and forecast piece parts needed for
To be Continued
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