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- 1. Building your Aftermarket Supply Chain HiTech & Electronics Logistics Summit Europe, 2007
- 2. Content A cknowledge the need for developing your Aftermarket I dentify your Aftermarket Supply Chain B uild your Aftermarket Organization D efine your Commodity Aftermarket Policy M ake your Aftermarket Trade-Off’s S et up your Aftermarket Supply Chain B uild your Service Parts Logistics Value Streams U nlock the un-leased Potential of your Aftermarket O utsource your Aftermarket Business
- 3. Acknowledge the need for developing your Aftermarket Service is the product Service differentiates the Product Service supports the Product Product is the Service
- 4. Identify your Aftermarket Supply Chain Forward Logistics Plan Source Make Deliver Service Logistics Re- Return Service Make
- 5. Identify your Aftermarket Supply Chain The Closed Loop Supply Chain Forward Logistics Service Logistics Plan Source Make Deliver Return Service Re-Make Spare Parts Reverse Logistics Repair Demand Planning Parts Demand Warehousing Planning Testing Procurement Recovery Warranty Warehousing Refurbishment Validation Research & Procurement Manufacturing Customization Design Warranty Customization Remarketing Redemption Remanufacturing Re-Utilization (Re- Inbound Logistics Fulfillment Fulfillment Make) Recycling The Extended SCOR Model – Stef de Bont 2006
- 6. Identify your Aftermarket Supply Chain • The traditional Forward Logistics Supply Chain is extended • The Service Logistics Supply Chain is focussed on all activities related to the support of products after delivery to the market • Linking the Foward and Service Logistics Supply Chains creates an integrated Closed Loop Supply Chain • The Closed Loop Supply Chain is covering all Supply Chain activities during the Life-Cycle of a product
- 7. Build your Aftermarket organization Customer Relation Service and Maintenance Management Field Service Call Management Operations Service Parts Logistics Service Parts Fulfillment Reverse Logistics Management Logistics
- 8. Build your Aftermarket organization • Build solid organizations for Customer Relation Management, Service and Maintenance Management and Service Parts Logistics Management • Optimized aftermarket management requires an integrated and aligned management of all individual disciplines • Disconnection between the 3 entities heavily impact the effectiveness of the service delivery and associated supply chain costs: – Warranty entitlement – Failure diagnoses – Field returns – Spare parts inventory levels
- 9. Define your Commodity Aftermarket Policy Services Management Concepts for High-Tech Product Commodities Warranty Product Reverse Service Re-Utilization Return Type Commodity Redemption Type Logistics Strategy Strategy Strategy Repair Depot Same-for-Same Repair Whole units Phone, Laptop Repair IW Repair Repair Return Centralized Like-for-Like Repair CRU, FRU PCBA, LCD Replacement IW Repair Repair Return Centralized Credit, Advanced Swap CRU, FRU Harddrive Replacement Repair, Recycling Return Replacement Beyond Economical Centralized Accessoiries Keyboards Replacement N/A Recycling Repair Return Routers / Centralized Lease Return Equipment New N/A Refurbishment Servers Return Centralized Refurbishment / Asset Return Equipment Server New N/A Return Recovery Centralized Remanufacturing, End-of-Life Return Equipment Laptop New N/A Return Remarketing
- 10. Make your Aftermarket Trade-Off’s Service Parts Logistics Trade-Off's Importance Low Area Service Levels Inventory Levels Supply Chain Costs Service Levels Advanced replacement Same day delivery services High Like-for-Like / Same-for-Same Inventory Levels replacement Centralized inventory Supply Chain Costs Next day delivery services Decentralized Inventory
- 11. Set up your Aftermarket Supply Chain Service, Maintenance and Area Reverse Logistics Fulfillment Logistics Repair Field Centralized Return Centralized Spare Parts Location Repair Depot Repair Depot Return Decentralized Spare Parts Repair Vendor Vendor Direct FSL Car Return Car Replenishment Collection / PUDO PUDO Delivery Country Stock Room Country Stock Room FSL Customer Replaceable Unit (CRU) Spare Parts Type Field Replaceable Unit (FRU) Whole Unit Channel Partner Channel Partner Channel Partner Management & Direct (insourced) ODM / OEM / Vendor Direct (insourced) Execution Direct (outsourced) Insourced / Outsourced Direct (outsourced)
- 12. Build your Service Parts Logistics Value Streams Reverse Logistics Management Process RMA Management Execution Processes Receiving De-trash Verification Testing Put-Away DGI Service Parts Management Procure-to-Pay (Order) Management Management Process Warranty Redemption Re-Utilization Management Demand Planning & Sourcing Management Execution Processes Pick Pack Ship WIP Receiving Verification Put-Away Fulfillment Logistics Management Process Order-to-Cash (Sales Order) Management Execution Processes FGI Pick Kitting Testing Pack Ship Example: Centralized Return with External Repair
- 13. Unlock the un-leased Potential of your Aftermarket Aftermarket Focus Area Area Opportunity Call Field Service Reverse Service Parts Fulfillment Management Operations Logistics Management Logistics Avoid No Fault Found (NFF) returns by improving failure diagnoses Reduce Spare Parts inventory by early detection of NFF returns Spare Parts Inventory Levels Reduce Spare Parts inventory by improving Repair Cycle Times Reduce Spare Parts inventory levels by outsourcing Turn-key Service Parts Management Optimize Warranty Redemption (claim warranty at OEM) Service Costs Avoid warranty costs by improving warranty entitlement Optimize Reverse Logistics processes by improving RMA alignment Supply Chain Costs Optimize Supply Chain costs by outsourcing Service Parts Logistics (new) market potential for returned Business Development products by exploring Re-Make opportunities
- 14. Outsource your Aftermarket Business Forward Logistics Contract Manufacturing Physical Distribution Plan Source Make Deliver Service Logistics Physical Distribution Service Logistics Contract Manufacturing Service Logistics Re- Return Service Make Mid-1980s 1990s Today
- 15. Outsource your Aftermarket Business Parts Broker ODM / OEM Specialized Call Center 4PL / BPO Provider Vendors Channel Partner Vendor Repair EMS 3PL Aftermarket Area Activity Customer Relation Management Call Center Maintenance Service and Maintenance Repair Reverse Logistics Testing Warranty Validation Warranty Redemption Re-Utilization (Re-Make) Spare Parts Demand Planning Procurement Warehousing Service Parts Logistics Customization Fulfillment Repair Recovery Refurbishment Remarketing Re-Manufacturing Recycling Core Competence Business Development
- 16. Outsource your Aftermarket Business Economy-of-Scale Opportunities in an Outsourced SPL Model Area Concept Description Advantage Building a commodity generic return Lower supply chain costs and increased Warranty Redemption OEM Channel channel for warranty redemption with the warranty redemption effectiveness OEM Managing commodity generic and Lower inventory levels across multiple Spare Parts Management Service Parts Pool unbranded spare parts inventory levels brand owners Optimized End-of-life management of a Product Life-Cycle Outsourcing End-of-Life management in the Product Steward Ship product reducing E&O inventory levels and Management overall product life cycle process increasing re-utilization of products
- 17. Summary • The aftermarket is an emerging and dynamic area of the supply chain • Outsourcing of aftermarket activities can be the next level of outsourcing after Physical Distribution and Contract Manufacturing • Multiple market players are extending their service offerings in the aftermarket • There is no defined business model about who is who so there are multiple opportunities for all market parties • There are multiple business models possible which requires collaboration across the aftermarket supply chain
- 18. About Logi3 • Logi3 is specialized in supporting organizations to build, manage and optimize their Services Business • Logi3 offers Interim Management and Management Consultancy services in the area’s of Distribution Logistics and Service Logistics • Logi3 is specialized in Implementation Management for Outsourced Business via the Check Point Model concept
- 19. We like to inform you about our services: Logi3 – Logistics & Supply Chain S.A. (Stef) de Bont P: 0031-(0)6-28568600 E: info@logi3.nl I: www.logi3.eu