Page 324 - Orlicky's Material Requirements Planning

CHAPTER 17 Remanufacturing 303

different inventory states, but the advantage of this system is that the same parent part
number is used throughout the process, and only the status code changes. However,
beware that some systems will have grades or status codes that are informational only
and do not become part of a unique identifier. In this case, the MRP system would see a
total of 295 pieces of 136604 clocks in inventory from the preceding example with no dis-
tinction for usable grade.
Traceability is another requirement to many remanufacturers. Owing to product lia-
bility and configuration control, the enterprise may wish to link the parts that come off
an assembly directly back to the original assembly. As the disassembly parts move
through the refurbishment process, the intended destination product may be part of the
record. This becomes very difficult to track and is at best transaction-intensive. The end
item to which the part is destined must become a significant part of the item identifier.
The impact is that each part in the shop must be uniquely identified. The system required
to support this is very complex.
The other risk is that the part that is intended for use on the end item somehow falls
behind in its processing owing to quality or material problems and a part for a later unit
comes to the assembly line. Normal behavior would be to use the available part and doc-
ument it on the assembly paperwork. This now leaves another unit missing its legitimate
component, and the process can get out of hand quickly. This process is known as back-
robbing. This also occurs when a part is taken directly from another unit that cannot be
completed and is used on a unit that is close to completion and is missing that part. When
backrobbing starts, it is terribly complex to track. In addition, it is virtually impossible to
do so accurately. The short-term benefit of using the part is far outweighed by the system
complexity necessary to track it. The probability of getting the parts’ traceability to balance
out in the end is close to zero.
In other ways, managing the inventory assets in a remanufacturing enterprise is
quite similar to that for other manufacturing companies. Sufficient investment in inven-
tory assets is needed to be able to support the ongoing business. However, too much
inventory and cash is wasted. Too little inventory and the production operation cannot
complete its work.
In addition to the inventory strategy choices described in Chapter 4, the remanu-
facturing enterprise also must consider at what threshold replacement factor should the
inventory investment be funded. If a replacement factor is less than 30 percent, it is very
likely that too much cash may be tied up in slow-moving inventory. At lower replace-
ment factors, the material planning system may require only a fraction of a part based on
the scheduled volumes. However, the smallest quantity that any part can be purchased
in is one piece. This one piece may never be used and may remain forever as obsolete
inventory. Another strategy for these parts is to wait until the part is required and then
order. Clearly the tradeoff is response time. If the part has a sufficiently low replacement
factor, this process still may be capable of providing acceptable customer service. As in
all decisions, the consequences must be weighed against the possible alternatives and the
best overall decision made for the enterprise.