Lean Repair
& RL Strategic Trends
Workshop
Amsterdam
Gailen Vick
President
Copyright © 2004
Reverse Logistics Trends, Inc.
Copyright © 2008 Reverse Logistics Trends, Inc
Welcome
Copyright © 2004 Reverse Logistics Trends, Inc.
Copyright © 2008 Reverse Logistics Trends, Inc
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
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Copyright © 2008 Reverse Logistics Trends, Inc
What you should expect:
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Copyright © 2008 Reverse Logistics Trends, Inc
Trends in
Reverse Logistics
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Copyright © 2008 Reverse Logistics Trends, Inc
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.
Copyright © 2004 Reverse Logistics Trends, Inc.
Copyright © 2008 Reverse Logistics Trends, Inc
Trend: Asset Management
• 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.
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• Fulfillment capability is a plus.
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Trend: One-Stop Shop
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”.
•
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OEMs search
3PSPs that can manage “Closed
Loop” processes and data sharing for process /
product improvement.
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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
ITTrends,
options
available
Copyright
2004 Reverse
Logistics
Inc.
Provide sample reports.
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Trend: Repair Cost Squeeze
•
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•
•
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
o
o
o
o
Other Client programs
Other regional vendors
OEM cost of product
Overall return costs (warranty mgt & logistics)
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Offshore / Copyright
Worldwide
Vendors
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Trend: RFID–Changes Ahead
• 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.
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Copyright © 2008 Reverse Logistics Trends, Inc
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.
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Copyright © 2008 Reverse Logistics Trends, Inc
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
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© 2004 the
Reverse methods
Logistics Trends, Inc.
to device owners
and
used in “sanitizing” a
storage device.
• Not all degaussers are created equal
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Trend: “Green Laws”
•
•
•
•
•
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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
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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
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Lean Repair
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Copyright © 2008 Reverse Logistics Trends, Inc
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)
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Copyright © 2008 Reverse Logistics Trends, Inc
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.
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Copyright © 2008 Reverse Logistics Trends, Inc
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
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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
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Copyright © 2008 Reverse Logistics Trends, Inc
Lean Repair – Modern Mgmt.
8D Problem Solving
Total Productive Maintenance
Six Sigma
Quick
Setup
“Jidoka” Problem Response
Kaizen Blitz Teams
Quality at the Supplier
Value
Stream
Mapping
Visual Controls
Pull/
Kanban
JIT Processes
Work
Organization
Lean
Repair
7 Wastes
Cellular
Process
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Five Why’s
Five S’s
TAKT Time
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Balanced Flow
One-Piece Flow
Lean & the Repair Process
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 inbetween operations.
• Process waste: asking why a specific processing step is
needed
• Material Handling:
it should
be
minimized
or eliminated
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© 2004 Reverse
Logistics
Trends, Inc.
• Motion: (excessive) time to locate tools and parts
• Making defective products: is a complete waste.
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Lean & the Repair Process
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.Copyright © 2004 Reverse Logistics Trends, Inc.
• Shitsuke – Make the above the normal routine.
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Lean & the Repair Process
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
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• Produces intermediate steps to a long-term, overall Lean
solution
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Batch Process vs. One-Piece Flow
Transport time 12 minutes
Step One
5 min. process/unit
One Lot = 60 min.
Step Two
5 min. process/unit
One Lot = 60 min.
Unit
Time
Total
Time
First Unit
Processed
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Batch
17 min
3h 24m
2h 29m
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Transport time 12 minutes
Step Three
5 min. process/unit
One Lot = 60 min.
Batch Process vs. One-Piece Flow
Step One
Step Two
Step Three
5 min. process/unit/step
One Lot = 70 min.
Unit
Time
Total
Time
First Unit
Processed
Batch 17 min 3h 24m 2h 29m
Lean 15 min 70 min 15 min
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Copyright © 2008 Reverse Logistics Trends, Inc
Less Material
Less Handling
FG Shippable
Sooner
Cellular Manufacturing
Standard Plant Layout:
Disassembly
Disassembly occurs at
first location
• Operations laid out by operations
specialty - “Classical” layout
• Physical separation of process
steps
Transportation: time & headcount
Assembly
BGA Insertion
BGA removed &
replaced on PCBA at a
second location
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Final assembly occurs
at Third location
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Cellular Manufacturing
Disassembly
BGA Insertion
Disassembly occurs at
first location
BGA removed &
replaced on PCBA at a
second location
Assembly
Final assembly occurs
at Third location
Disassembly
Disassembly occurs at
first location
Disassembly
Assembly
BGA Insertion
BGA removed &
replaced on PCBA at a
second location
Final assembly occurs
at Third location
Assembly
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Disassembly occurs at
first location
Final assembly occurs
at Third location
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Cellular Manufacturing
Disassembly
Assembly
Disassembly
BGA Insertion
BGA removed &
replaced on PCBA at a
second location
Disassembly
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Disassembly
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Similar Products in
Assembly Process
Assembly
Similar Products in
Assembly Process
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
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Copyright © 2008 Reverse Logistics Trends, Inc
Getting Started in Lean Repair
Roll-out of Pilot Projects
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•
•
•
•
•
•
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
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Copyright © 2008 Reverse Logistics Trends, Inc
Getting Started in Lean Repair
Full Application of Lean Repair
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•
•
•
•
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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
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Copyright © 2008 Reverse Logistics Trends, Inc
Getting Started in Lean Repair
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
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Copyright © 2008 Reverse Logistics Trends, Inc
Getting Started in Lean Repair
Communicate Often
&
Celebrate Successes
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Copyright © 2008 Reverse Logistics Trends, Inc
Getting Started in Lean Repair
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.
Copyright © 2004 Reverse Logistics Trends, Inc.
Copyright © 2008 Reverse Logistics Trends, Inc
Lean Repair Flow
Highly
Variable
Incoming
Stock to
Level: Tag
& Box
remainder
Kanban
Products enter
into Continuous
Flow Process
Continuous Flow
Pull Signal
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Copyright © 2008 Reverse Logistics Trends, Inc
Min/Max Kanban to
signal movement
into Continuous
Flow
FG
Ship
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
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Supplier Controlled
Materials Delivery
Process Controlled
Materials Delivery
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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.
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Copyright © 2008 Reverse Logistics Trends, Inc
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
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Significant On-going Savings
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Thank You
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Copyright © 2008 Reverse Logistics Trends, Inc