Case Study Series: Commitment to Customer Service
Service Provider and Contract Manufacturer Work Together to Benefit the OEM
Collaboration Among Providers to Attain Customer Goals
Challenge: A Fortune 500 electronics manufacturer required a reduction in turn-around time, shipping and administrative costs when claiming warranty on units manufactured overseas by a contract manufacturer.
Solution: Renova Technology worked in conjunction with the contract manufacturer to perform the repair domestically in the United States.
Results: The manufacturer decreased overall reverse logistics costs for this particular unit by 30%. A decrease in turn-around time of 90% led to a reduction in safety stock inventory of 36%.
Returning Product to Overseas Contract Manufacturer Proves Inefficient
Returning units under warranty back to the overseas contract manufacturer proved to be inefficient for an original equipment manufacturer. Turn-around time averaged 60 days, which meant the manufacturer needed to purchase 60 days worth of safety stock inventory for parts coverage. The transportation cost to ship these units overseas were seven times the cost of a domestic shipment. The contract manufacturer was also charging an additional handling fee for all No Fault Found units.
Manufacturer Selects Renova Technology to Perform Repair on In-Warranty Units on Behalf of the Contract Manufacturer
Due to Renova Technology’s history of technical acumen, and their proven ability to create customized reverse logistics programs, the Original Equipment Manufacturer selected Renova Technology from their portfolio of repair service providers to collaborate with their contract manufacturer to perform repair services on in-warranty products. This collaboration required assimilation in EDI, development of multiple billing capabilities, and being transparent with data to help identify failure trends and improve production. Renova also identified and intercepted No Fault Found units and processed these units at a fraction of the cost originally charged by the contract manufacturer.
OEM Benefits with Maximized Supply Chain Efficiency
Renova Technology was able to reduce turnaround time 90% from 60 days down to an average of 6. The difference between the cost of shipping product overseas versus domestically resulted in a savings of 85%. Shortened lead time led to a reduction of inventory costs of 36%. Renova Technology only charged a fraction of the cost that the contract manufacturer was charging to process the No Fault Founds. This program was so successful that the original equipment manufacturer renewed their service contract with Renova Technology, and the contract manufacturer has requested Renova to collaborate with them on other projects.
Reduction of Operational Costs
Transportation Costs 85%
Repair Lead Time 90%
Total Savings $70+/ unit
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