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APRA Seminar at ReMaTec2011
How to manage variety
driven complexity in
remanufacturing
20 June 2011
Michael Haumann
(Engineer)
Agenda
1. About parts variety
2. Solutions to variety management
 Reducing variety
 Handling variety
3. Conclusions
Page 1
1
Variety – which should I choose?
Toothpaste in supermarket
Coffee capsules
Honey in supermarket
Source: Wordpress, Stadtimker, Nestlé
Page 2
Variety – passenger cars
Source: Audi, BMW, Volkswagen
Page 3
2
Variety – passenger car components
152 versions of Audi A6 glove boxes
18.819 versions of Audi A6 door covering
Source: Audi, Alphaform, Rose
Page 4
Product variety
(= active + passive part numbers)





Product groups (e.g. engines, alternators)
OE brands (e.g.
(e g Bosch,
Bosch TRW
TRW, Delphi)
Generations (e.g. 1950-2011)
Modifications, updates, upgrades (e.g. software)
Core quality (e.g. worn, defective, corroded)
Percentage
ofecompanies
Percentage
of companies
Variety – in Remanufacturing
30%
25%
20%
15%
10%
5%
Process variety
0%
1
 Different set of process steps
due to p
product varietyy
 Different set and intensity of process steps
due to varying core quality
2
3
4
5
6
7
8
9
10
Number of product groups
Number
of product groups
Average amount of part numbers per company:
2.470
Page 5
3
Variety is good – variety is bad
 Offers market niches
 Balances weak demands
between product groups
 Increases turnover
 Increases customer satisfaction
 Causes complexity in all areas, e.g.
 Production processes
 Administrative activities
 Causes costs
 Dilutes cost calculation of products
Page 6
What is the problem about variety I
80-85
15-20
Total
costs
Source: McKinsey
Costs of variety [%]
Complexity of production program (~variety) causes considerable costs.
20-40
5-10
30-40
Not/hardly
applicable in
remanufacturing
10-20
10-20
R&D
Purchase
Production
Logistics
Sales
Page 7
4
What is the problem about variety II
Cost
per unit
+20-30%
+100%
Source: Wildemann
Part numbers
Page 8
Agenda
1. About parts variety
2. Solutions to variety management
 Reducing variety
 Handling variety
3. Conclusions
Page 9
5
What you can do about it I
Common approaches to variety management
Avoid
variety
i
Reduce variety
Handle
variety
i
New production
Remanufacturing
Leverage of approaches to variety management
Remanufacturing companies can only reduce or handle parts variety
Page 10
What you can do about it II
Goals:
 Managing variety by developing
efficient solutions for
 Production organization
 Production planning & control
 Warehousing
 Identification
Work
packages:
 Analysis of existing processes
 Development of efficient solutions
 Implementation
Duration:
 2010 until 2013
Page 11
6
Agenda
1. About parts variety
2. Solutions to variety management
 Reducing variety
 Handling variety
3. Conclusions
Page 12
Multi-purpose products I
Core purchasing
Remanufacturing
Sales
OE number
internal part
number
OE number
Page 13
7
Multi-purpose products II
Pe rcentage of part numbers
Analyzing cross-references
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
company 3
company 2, product 2
company 2, product 1
company 1, product 2
company 1, product 1
Number of OE numbers per internal part number
Page 14
Same parts list (“one fits many”)






Bases on bills of material
Requires consistent data management
Helps finding profitable part numbers
Reduces effort for administration of parts
Reduces effort for seeking, purchasing etc.
Reduces inventory (space, cost)
0815xx
0816xx
0817xx
0818xx
Rotor
ro1
ro1
ro2
ro1
Screw
sc2
sc1
sc2
sc3
Gear
ge1
ge1
ge2
ge2
Gasket
ga1
ga2
ga3
ga4
Housing
ho1
ho3
ho1
ho2
…
…
…
…
…
Page 15
8
Positioning strategy
Positioning strategy
Umsatzanteil kumuliert
U
100%
100%
Turnov
ver,
cumulated
Tur
rnover
cumulated
Business
strategy
90%
90%
Analysis of production program
80%
80%
70%
70%
60%
60%
50%
50%
40%
40%
30%
30%
20%
20%
A
B
C
10%
10%
Positioning strategies in the market
0%
0%
 Full service/product provider
(e.g. all brands, many products, all performance classes)
 Product specialization (e.g. engines)
 Brand specialization (e.g. only Bosch)
 Performance class specialization (e.g. heavy duty)
 Product generation/age group specialization (e.g. classic cars)
 Niche remanufacturer (e.g. engines for Mercedes classic cars)
numbers
Part Part
numbers
Page 16
Agenda
1. About parts variety
2. Solutions to variety management
 Reducing variety
 Handling variety
3. Conclusions
Page 17
9
Assemble-to-order (ATO)
Customer related area
Customer non-related area
 Calculable quality
 Small lot-sizes
 Incalculable quality of cores
 Big lot-sizes
Remanufacturing 3
…
OPP (order
penetration point)
Upstream
optimization
Delivery
ATOintermediate
warehouse
Final testing
Remanufacturing 2
Assembly
Testing
Cleaning
Disassembly
Remanufacturing 1
Downstream
optimization
Page 18
-62%
62%
-56%
56%
32
2 km/week
-90%
90%
4.780 boxes
75%
77.794 co
omponents
100%
30 days
Gains by ATO
-19%
50%
before
26 km
m/week
2.080
0 boxes
3
days
25%
29.29
92
comp
ponents
after (with ATO)
0%
Delivery time
Stock of
components
Stock of transport
boxes
Transport routes
Page 19
10
Production planning and control (PPC)
Instruments for decentralized planning and control
Instruments for direct communication from shop-floor to PPC
Flexible structures (layout, workstations)
Page 20
Agenda
1. About parts variety
2. Solutions to variety management
 Reducing variety
 Handling variety
3. Conclusions
Page 21
11
Conclusion
Variety management is only one element
of a comprehensive business strategy
Variety exists – take the challenge
Be aware of variety and
try to find efficient solutions
Page 22
Visit us at our booth 11.222, Hall 11
Booth at ReMaTec 2009 in Amsterdam
Page 23
12
Thank you
13