Covid Economics: 3 Ways OEMs Can Reduce Margin Erosion
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Some businesses call it refurbishing, others call it remanufacturing. It’s the process of restoring worn products to almost new, and it represents a significant market opportunity for the supply chain, according to the APICS Foundation.
Remanufacturing is an area of growing interest for supply chain and operations management professionals, the foundation says. Previously segmented to specific areas of the B2C supply chain, like customer service, remanufacturing has established a place in both B2C and B2B supply chain models and is expanding significantly as additional markets accept and trust the “as good as new” concept.
“Remanufacturing provides obvious benefit for the forward progress of sustainable supply chain initiatives,” said Sharon Rice, executive director, APICS Foundation. “Supply chain professionals are eager for more information about this quickly evolving area because, as our survey has shown, more than 50 percent of survey respondents felt it was important for supply chain and operations management professionals to have at least some familiarity with remanufacturing as they expect a growing demand for remanufactured goods.”
Within the electronics supply chain, remanufacturing is part of a broader after-market services offering which can include recycling and disposal. Electronics distributors, including Arrow Electronics Inc. and Avnet Inc., have been building after-market units within their core businesses. The distributors sell products ranging from components to IT systems and therefore can provide lifecycle management services for OEMs and their customers. Such products as IT equipment, laptop computers and cell phones are collected by the distributors and refurbished and redeployed if appropriate. Such services also increase the industry's sustainability efforts.
Three key findings arose through the APICS surveys that further identify the current perception of remanufacturing and distinguish how professionals anticipate its future industry benefit:
- Remanufacturing drives sustainability – Sixty-eight percent of respondents felt that sustainability was the primary advantage associated with remanufacturing, and 41 percent already consider it a formal component of their organization’s sustainability policies.
- Remanufacturing provides vast organizational benefits – While 59 percent of respondents noted the additional complexity remanufacturing brought to reverse supply chains, the process was commended for the additional benefit it brings to an organization: increases customer satisfaction (66 percent), enhances product and organizational value chain (47 percent), and reduces production costs in relation to new manufacturing (46 percent).
- Remanufacturing adds career versatility – Remanufacturing requires new skills in forecasting, planning, and inventory management. With these skills, a supply chain and operations management professional can better identify potential for opportunity and innovation in forward and reverse supply chains.
These findings are part of the APICS Foundation’s recent report “Examining Remanufacturing in Supply Chain and Operations Management.” To gather information for this report, the APICS Foundation surveyed supply chain and operations management practitioners in 2013 in response to a growing interest in remanufacturing and requests for more research. For more information or to download the report, visit apics.org/remanufacturing.
About APICS and APICS Foundation
APICS is the leading professional association for supply chain and operations management and the premier provider of research, education and certification programs that elevate end-to-end supply chain excellence, innovation and resilience. 37,000 members and more than 250 international partners, APICS is transforming the way people do business, drive growth and reach global customers.
APICS Foundation, the research arm of APICS, advances supply chain and operations management innovation through research, educational programs and workforce development. Business leaders, academia and global enterprises gain valuable insights, information and actionable data through the foundation’s unrivaled supply chain network and resources.
For more information, visit apics.org, join the APICS LinkedIn group at apics.org/linkedin, and follow APICS on Twitter at twitter.com/APICS.
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