copyright © 2004 reverse logistics trends, inc. copyright © 2008 reverse logistics trends, inc...

Copyright © 2008 Reverse Logistics Trends, Inc

Copyright © 2004 Reverse Logistics Trends, Inc.

Lean Repair& RL Strategic Trends

Workshop

Amsterdam

Gailen Vick

President



Welcome



Today’s Presentation

Trends in Reverse Logistics• Summary on forward logistics practices toward lean

manufacturing

Lean Repair• Why successful service providers will need to utilize

lean practices • Summary of successful lean practices• Where to go from here• Getting Started in Lean Repair



What you should expect:



Trends in

Reverse Logistics



Reverse Logistics is Really…

Asset Management !

After-the-sale product management to maximize the product asset value and to minimize the cost of doing so.

The aggressive management of assets or products. The objective is to make the fullest use of the product, to reduce the OEMs total program cost while ensuring the total satisfaction of the customer.



• OEMs are searching for companies that can manage overall product support cost reductions.

• Introduce strategies to reduce warranty support inventory throughout the process.

• Parts Harvesting reduces the cost of repair parts and warranty support. Sell / dispose of scrap.

• End-of-Life product management, sales to secondary markets of White Label, refurbished or down-level products as an “add-on” service.

• Fulfillment capability is a plus.

Trend: Asset Management



Reverse Logistics outsourcing will expand, while the number of companies will shrink.

• OEMs are looking to reduce the number of 3PSPs they deal with.

• “Turn-key” capabilities at the 3PSP provide a winning solution

• Strategic alliances & partnerships with other 3PSPs, both Vertically and Horizontally.

• Capability of “Supplier Management”.

• OEMs search 3PSPs that can manage “Closed Loop” processes and data sharing for process / product improvement.

Trend: One-Stop Shop



Trend: IT is critical

• IT Capability and IT connectability will continue to grow in importance.

• Robust, Flexible IT services

• Prepare a 3-5 page overview of IT capabilities and reporting.

• Describe in-depth all current IT operations• Describe IT Strategy with a 2-3 year plan• Describe in detail the IT options available• Provide sample reports.



Trend: Repair Cost Squeeze

• With the decline of product cost repair activity will decline, screening activity will increase.

• OEMs will move screening “upstream” to reduce the logistics cost of moving good & bad product.

• Senior Management of OEMs push for quarterly cost reduction, RL is now being targeted.

• Continuously review of repair cost against:o Other Client programso Other regional vendorso OEM cost of producto Overall return costs (warranty mgt & logistics)o Offshore / Worldwide Vendors



• RFID usage is beginning to take hold.• Wal-mart, Department of Defense and NASA are

leading the way in RFID usage.• Usage is only at the pallet or case level and

only in forward logistics applications.• However, one-third of the US Retailers plan to

invest in RFID technology in 2005. This includes investment ranging from preliminary investigation to hardware.

• Zebra Technologies (printers) and SAP have jointly developed software and hardware for RFID.

Trend: RFID–Changes Ahead



Trend: Electronics Everywhere

• Electronics/Storage Devices are finding new uses everywhere.

• Electronics will appear in devices where current service providers are not familiar with the technology.

• Field Service opportunities will expand, as well as local / regional repair & screening opportunities. Partnerships with unusual product service providers.

• Shorter life cycles of electronic devices will continue to accelerate – strong asset management will be required to support customer demanded warranties.



Trend: Data Privacy

“Data Privacy” concerns are coming to the forefront of the returns process for storage devices • End-of-Life requirement for the erasure of

information on storage devices is coming from:• HIPAA( Health Insurance Portability and Accountability

Act• State level (i.e.: Information Privacy Acts passed in

North Dakota, Alaska, Connecticut, Illinois, Vermont, and California).

• Public concern about Identity Theft

• All parties must be concerned about the guarantees given to device owners and the methods used in “sanitizing” a storage device.

• Not all degaussers are created equal



Trend: “Green Laws”

• Electronics recycling/disposal is coming to the forefront. • The European Waste Electrical & Electronic Equipment (WEEE)

Directive passed in 2003 will reach full effect in 2005 has major implications for Reverse Logistics companies and manufacturers.

• Reduction of Hazardous Substances (RoHS) European Member States will phase out identified Hazardous Substances by July 1, 2006.

• These European Directives have World Wide implications for OEMs and 3rd PSP’s.

• WEEE:• Effectively requires recycling; End-of–Life mgmt for OEMs. • OEMs seeking 3PSPs the can help solve the problem• Requires producers/third parties keep records on the mass of

WEEE, components/materials/substances of products• ROHS:

• Producers will be unable to sell non-compliant electronic products • Poor management may result in significant losses• “Lead-free” products is now impacting OEMs & 3PSPs



Lean Repair



Lean & the Repair Process

The “Lean Manufacturing” concept comes from the attempt to conduct business with less human effort, floor space, materials, operation time and

capital investment.

One of the first books to describe Lean Manufacturing was “The Machine That Changed

the World”

(Womack, Jones, & Roos, 1990)



Why Lean Repair?

• Client pressure to reduce your price.

• Focused on Client Needs

• Reduces the Indirect Costs of Repair– Extra Inventory = Extra Cost (moving it)– Extra Inventory = Extra Space (storing it)

• No Finished Goods (almost).

• Reduces Process Times

• Employee Involvement.



Introducing Lean Repair

At its highest level the Lean Process introduces the following elements into the business philosophy:

– Value to the Customer – what processes add value to the product

– Continuous Improvement – working towards the goal of “Perfection”

– Focus on the Elimination of Waste – in all areas of the operation

– Embodiment of JIT & Kanban practices



Introducing Lean Repair

The Main Tools of Lean Repair:

• Pull / Kanban: Pull through, don’t push

• Cellular Operations: don’t transport product

• Quick Setup: Flexibility to meet demand

• Value Stream Mapping: visualize change

• Work Organization: process efficiency



Lean Repair – Modern Mgmt.

Lean Repair

Cellular Process

Value Stream

Mapping

Quick Setup

Pull/Kanban

Work Organization

One-Piece Flow

Kaizen Blitz TeamsQuality at the Supplier

Visual Controls

Six Sigma

TAKT Time

Balanced Flow

Total Productive Maintenance

JIT Processes

Five S’s

Five Why’s

7 Wastes

“Jidoka” Problem Response

8D Problem Solving




Lean 7 Wastes:• Overproduction: producing more than is required or

producing it before it is needed.

• Waiting: during machine processing time.

• Inventory or Work in Process (WIP): is material in-between operations.

• Process waste: asking why a specific processing step is needed

• Material Handling: it should be minimized or eliminated

• Motion: (excessive) time to locate tools and parts

• Making defective products: is a complete waste.




The 5S philosophy:

• Seiri - Sorting - Eliminating materials that do not need to be on the production floor

• Seiton - Storage - Eliminating the time spent looking for things, locating tools, materials, and supplies in defined places

• Seiso - Shining/Cleaning religiously maintain the work area and inspect tools & machinery while cleaning

• Seiketsu - Standardize the work areas, so items out of place are obvious.

• Shitsuke – Make the above the normal routine.




Kaizen Blitz Teams • 6-10 Members for 2-5 days focused on a specific area or

process• Fast & Direct action creating immediate improvements

and Lean momentum• Requires all levels of employees to be involved –

assemblers, mgt., engineers• Teams need Champions to remove roadblocks to

accomplishing objectives• Produces intermediate steps to a long-term, overall Lean

solution



Batch Process vs. One-Piece Flow

Step One

Step Two

Step Three

5 min. process/unitOne Lot = 60 min.



Transport time 12 minutes

Transport time 12 minutes

Unit Time

Total Time

First Unit Processed

Batch 17 min 3h 24m 2h 29m



Batch Process vs. One-Piece Flow

5 min. process/unit/stepOne Lot = 70 min.

Unit Time

Total Time

First Unit Processed

Batch 17 min 3h 24m 2h 29m

Lean 15 min 70 min 15 min

Step One Step Two Step Three

Less Material

Less Handling

FG Shippable Sooner



Cellular Manufacturing

Disassembly

BGA Insertion Assembly

BGA removed & replaced on PCBA at a second location

Transportation: time & headcount

Disassembly occurs at first location

Final assembly occurs at Third location

Standard Plant Layout:

• Operations laid out by operations specialty - “Classical” layout

• Physical separation of process steps




Disassembly


BGA Insertion


Assembly


Disassembly

Disassembly occurs at first location BGA Insertion


Assembly


Disassembly


Assembly





Disassembly

BGA Insertion


Assembly

Similar Products in Assembly Process

Disassembly

Assembly

Similar Products in Assembly Process

Disassembly

Disassembly



Getting Started in Lean Repair

Plan for Lean Repair • Form a Core Team• Study about Lean Manufacturing• Train the Core Team on Lean Manufacturing

tools and processes• Research current conditions and processes• Determine target processes (for pilot runs)• Develop a roll-out plan & initial steps• Communicate the plan and get buy-in



Roll-out of Pilot Projects• Intense preparation for initial projects• Determine objectives and success metrics• Communicate the plan to all• Start with the 5S’s, mindful of the 7 Wastes• Insert additional Lean elements as possible• Analyze the results of the effort• Adjust process for future projects




Full Application of Lean Repair• Review improved implementation plan• Train more personnel in Lean techniques• Target complete processes for Lean Repair• Communicate to all personnel • Initiate Lean Repair throughout the plant• Take second look at work previously done, begin

second phase of improvement• Analyze the results





Lean Repair On-going• Educate and Involve all Employees• Continue to add “Layers” of Lean Repair

methodology and techniques, like 6 Sigma, TPM and smaller Kanbans

• Push JIT and On-demand requirements out to suppliers and service providers

• Formally Analyze results and improve strategy – with all participating



Communicate Often&

Celebrate Successes





Consider beginning with:

• The 5Ss

• Kaizen teams

• Value Stream Mapping

• Demand/Pull Systems

• Visual Management of the work flow

And a well thought out plan with ALL levels of employees involved.



Kanban Continuous Flow FG

Highly Variable Incoming

Products enter into

Continuous Flow Process

Stock to Level: Tag & Box remainder

Min/Max Kanban to signal

movement into Continuous Flow

Ship

Pull Signal

Lean Repair Flow



Final Notes

Traditional Lean Result

Batch Process or Process all to Finished Goods

One-Piece Flow – meeting customer requirements

Potential loss of Revenue, but increase in productivity

Central Planning – all stages of production

Decentralized/ Pull Demand More responsiveness, “automatic” planning

Order variation managed at the Finished Goods level

Order variations managed at the process level

Smaller FG, less rework, flexible process

Process Simplification, localized knowledge

Process Enhancement, cross-departmental teams

Knowledgeable, involved work force, investment in training

Supplier Controlled Materials Delivery

Process Controlled Materials Delivery

Reduced inventory, expenditure, Up-to-date revisions



Final Notes

• Lean manufacturing forces the mfg team to address issues (defects, no parts, etc.) that might otherwise be hidden by batch manufacturing.

• Consigned Parts: Client may appreciate a “leaner” approach to inventory (cost reduction).

• Pick Pilot projects to prove the theory. It may take 6 months to years to implement.

• Set up metrics to measure the before and after contributing costs before beginning a project.

• Employee involvement must be carefully considered at each step of Lean implementation.



Final Notes – The Math

Value of Lean Repair:+ In-Process Inventory Unit Reduction+ Process Time Reduced+ Reduction of Non-Value Adding Steps+ Reduction in Planning Requirements+ Less Investment in Old Products/Process- Training and Startup Costs- New Setup, Fixtures, Equipment Costs

$$$+ Significant On-going Savings



Thank You

copyright © 2004 reverse logistics trends, inc. copyright © 2008 reverse logistics trends, inc...

Documents

reverse logistics trends

reverse logistics slide

reverse logistics summary

reverse logistics outsourcing

forward logistics practices

todays presentation

lean repair slide

asset management slide