Maintaining a consistent flow of materials through a return supply line is vital for the organization's remanufacturing and repair processes to ensure goods can be returned to issuable status. The $2.6 billion backlog caused delays in repair activities, contributed to significant working capital inefficiencies in the supply chain, and potentially led to new procurement instead of repair.
To address this situation, WP&C first identified and addressed the root causes of the backlog to prevent future buildup of un-issuable inventory. Next, WP&C developed and implemented a management system to reduce the current backlog.
- Root Cause Solution Process
- Evaluate: Conduct site visits to key shippers and receivers to understand current practices
- Analyze: Assess current tools, processes, training, and policies to determine root causes of backlog
- Implement: Develop feedback tools for shippers on shipment errors and their causes to enable the organization to conduct in-house monitoring of effectiveness and track compliance improvements
- Backlog Reduction Management System
- Visualize: Develop dashboard system to show leadership the sources and scale of the backlog
- Execute: Implement tiger teams to aggressively resolve backlog and report progress
- Monitor: Establish systemic tracking to demonstrate effectiveness of corrective actions
Our site visits to both shipping and receiving locations revealed both subtle and obvious issues leading to shipping errors. Our post-visit recommendations targeted several high-impact opportunities:
- Enhance shipper practices: Ensure that all shipping personnel possess adequate training and have access to clear, user-friendly visual guides to aid procedural adherence
- Improve material availability: Guarantee the shipper is consistently equipped with all necessary packaging and labeling materials to prevent errors
- Implement feedback loops: Provide real-time shipping error feedback to leadership and shippers to enable rapid self-corrective action
- Review errors systematically: Design and implement a consistent schedule to review shipping errors, identify trends, and assess the effectiveness of corrective actions
- Establish targets: Design and distribute targets, ensuring they accommodate natural variations in the flow of returned inventory
- Collaborate with receiver: Engage the receiving organization to reduce the current backlog and create joint strategies to prevent future issues
- 55% ($1.4 billion) decrease in un-issuable inventory realized within a year; this improved inventory availability for remanufacturing and considerably reduced the amount of working capital tied up in un-issuable inventory
- 44% reduction in shipping error rates, mitigating rework and troubleshooting in the supply chain
- Improved controls and practices to ensure enterprise-wide visibility of the reverse logistics processes and to prevent recurring backlog
