Supply chain cost reduction - Manage demand uncertainty in a product repair return flow

Examensarbete för masterexamen
Master Thesis
Supply chain management (MPSCM), MSc
Lönn, Max
Artman, Markus
Nilsson, Sofia
Managing an aftermarket supply chain is associated with high levels of complexity. This comes in form of the need to handle extensive number of SKUs over long product lifecycles in relation to highly volatile and uncertain demand. Being cost-efficient in such an environment is challenging since the characteristics of an aftermarket requires high responsiveness to meet customer demand. Wireless Solutions is a world-leading provider of telecommunications equipment and related services to mobile and fixed network operators. Within Wireless Solutions there are three Global Services Logistics Centres (GSLC) where GSLC EMEA works as a support function managing the logistical part in the service contracts of replacing faulty parts with functioning parts towards End Customer. The efficiency of this flow is heavily dependent on the collaboration between the GSLC EMEA and the different Repair Centres that performs the repair service. To generate cost-efficiency there is a need of taking a holistic perspective of the intra-company supply chain in order to not sub-optimise the different actors. This thesis takes a balanced approach departure to investigate the purpose how supply chain costs associated with the WHS Repair Logistics Flow can be reduced by proposing actions to improve the forecasting performance and reducing the intra-monthly variance in the inbound deliveries of faulty parts to Repair Centres. From an initial mapping of the current state there are several problems identified creating a difficult planning environment for all entities. As a starting point it is hard to predict when products need to be replaced due to failure. Additional level of complexity is also generated by the customers’ behaviour. This generates a complex forecast environment creating rippling effect throughout the value chain and affecting the Repair Centres in forms of high deviations between forecast and actual demand. The analysis was conducted on the forecasting management and the possibilities of using a buffer for evening out the variation at the Repair Centres. The analysis profess that the uncertainty within the system drives unnecessary cost in terms of excess capacity for all actors involved. It also concludes that there are measures to be taken to reduce these costs. Regarding forecasting there is a need for increased functional integration as well as an alignment between actors within the system, concerning performance measurements. In addition, increased use of data other than historical demand is recommended, such as installed base data. To reduce the effects of uncertainty for the Repair Centres two distinguished strategies were proposed, both using buffering of faulty units as a levelling mechanism. In the end, a variant of Orders Outside Lead-time was considered the most feasible. By doing so the need for overcapacity to handle variation is reduced. This implies that the costly impact which emerges when less demand than anticipated are received can be diminished. In summary the combination of these measures of improvement creates possibilities for an increased efficiency throughout the supply chain, which would strengthen the value proposition and thereby increasing the competitiveness on the unpredictable aftermarket.
Transport , Övrig industriell teknik och ekonomi , Transport , Other industrial engineering and economics
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