SRC Logistics and our sister divisions provide many positive benefits for OEMs in their quest to improve their Remanufacturing Sales. This article covers many of those benefits and tips to correctly initiate core management.
$ 100 Billion strong Remanufacturing (REMAN) industry is not new to the World. It’s been active since Second World War, when only Army equipment's were remanufactured. But, it’s potential has been realized in the past decade, as WCMs (World Class Manufacturers) started focusing on Remanufacturing as profits from their new product sales started shrinking.
Many WCMs are already yielding good profits from Remanufacturing. For example, in 2013, Cummins, a global leader in engines and related technologies, had 3,000 employees working from nine global facilities, contributing $1 billion to total sales of $17.3 billion. Automotive giant Renault has also expressed its growing faith in remanufacturing, as has Caterpillar & GE, to name a few.
WCMs (World Class Manufacturers) are adopting Remanufacturing, because of following business benefits:
- Increases the life of materials & profitability
- WCMs will be able to offer quality products at lesser price, which also boosts profitability
- Reduces dependency on raw materials, whose prices are always volatile
- Supports the WCMs in meeting Environmental norms by reducing the use raw materials & lessens pollution by not discarding end-of-life products
- Helps WCMs in meeting the “Extended Producer Responsibility (EPR)” regulations
When trying to realize the above benefits, the WCMs are faced with many operational challenges, which are,
- Material Management and Operations Synchronization:
- Complicated inventory management
- Unable to source supply to meet demand
- Uncertainties in core quality, sourcing market, product life and technology changes
- Production Estimation and Remanufacturing Operations:
- Complex Reman cost Estimation, Planning and taxation
- Complex documentation and low automation
- Managing additional activities like inspection, dismantling and cleaning
- Non-synchronized interaction between procurement and redistribution entities
- Difficulty in generating customized reports on ad hoc basis
Without addressing the above challenges, it is difficult to realize the benefits of Remanufacturing. Companies that successfully implement re-manufacturing strategy will be the ones who sustain growth and success in the future.