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Rapporten Allra Senaste MASTER THESIS WORK 2007 IDPPOPEXD: 07:98 Reverse Logistics Study at Volvo CE CST Europe Liliane Khalil & Malin Olofsson Reverse logistics study at Volvo CE CST Europe - Performed at Volvo Construction Equipment, Customer Support Division - Master of Science Thesis, D level, 20 points performed within the institution for Innovation, Design and Product Development at Mälardalen University. Report number: IDPPOPEXD: 07:98 Authors: Liliane Khalil and Malin Olofsson Program: Engineering program: Innovative Enterprising and Process development Date: Eskilstuna 2008 Commissioner: Volvo Construction Equipment Customer Support division Industry supervisor: Eva Olsson - Volvo CE CST Karl Serneberg - Volvo CE CST Academic supervisor: Mats Jackson – Mälardalen University Examiner: Sabah Audo – Mälardalen University Abstract Title: Reverse logistics study at Volvo CE CST Europe Authors: Liliane Khalil and Malin Olofsson Commissioner: Volvo Construction Equipment (VCE). Division; Customer Support (CST). Region; Europe. ----------------------------------------- Assignment: The mission of the assignment is to map the four return flows with respect to returning volume, weight, frequency, pick up- and delivery points. Today Volvo CE has a lack of information that concerns their own Reverse logistic processes. It is hard for Volvo CE to see where changes need to be done, due to limited reliable sources. Purpose: The purpose with the study is to make the return flows easier, less expansive and more manageable for both Volvo and their dealers. Further, environmental issues have to be considered in order to find improvements of the returning routines. The analysis is done to bring forth a proposal that will contribute to less unnecessary transports and that also will make it possible to reduce cost. Result: A couple of improvement areas have been discovered, some of them are radical while others are incremental. The one thing they have in common is to make sure that the return flows are being handled and seen as one common flow rather then separately treated. Among the improvements these are some recommendations to Volvo CE: - Appoint special delivery point for warranty returns and make sure that the warranty routines are followed so that unnecessary transports can be reduced. - Store less cores for remanufacturing at the Core Hub. Cores that are not needed are not necessary to transport to the Core Hub. - Make better cost registrations and cost follow ups and evaluate customer satisfaction to be able to find improvement areas in the future. Key words: Reverse logistics, aftermarket, cost reduction, customer satisfaction. Acknowledgement This Master thesis work is our final assignment before getting our university degree after 4, 5 years from the engineering program: Innovative Enterprising and Process Development. It is as a part of the examination with emphasis on logistics. We would like to express our gratitude to our supervisor and coach Eva Olsson and Karl Serneberg at Volvo CE CST for all the support and inspiration that we have been given during our research. It is much appreciated that you have giving us the chance to travel to German to get an insight view of Reverse Logistics from a dealers point of view. More rewarding is that you helped to arrange so that the benchmarking at Ford Motor Company in Germany were possible. Also, we want to thank Marcus Bergqvist, Fredrik Gerhardsson, Jannicke Lewin at Volvo CST and Christer Grefve, Thomas Rosander, Niklas Mörkberg, Håkan Adolfsson, Johan Nilsson Magnus Johnsson at Volvo Parts among many others for the interesting discussions and meetings. You have all contributed to this Master thesis. Furthermore, we address special thanks to our supervisor at Mälardalen University Mats Jackson, Professor of innovative production. Thanks for all valuable assistance during this Master thesis. Thanks, as well, to Börje Hägg with staff at the Core Hub for a well appreciated reception and for sharing useful information. Special thanks go to Christian Mohr and Martin Schmid at Swecon Baumaschinen in Germany. We really appreciate the meeting and guiding tour at your company. New experience from the day gave us additional insight and understanding that we brought along to this Master thesis work. New exciting impression that we got from the benchmarking study at Ford Motor Company would not have been possible without Ralph Dolega. That is why we also would like to send our thanks to you. Eskilstuna, February 2008 Liliane Khalil Malin Olofsson II Vocabulary Aftermarket Dw (BEAT) Aftermarket Data Warehouse receives and stores information about Volvo CE’s order& invoice data, part data, pricing data, purchasing data and more. From the data different standard reports can be created. Branch A branch is owned by a dealer and performs similar tasks as the dealer. The branch communicates with Volvo through the dealer. Buy Back A buy back occurs when a part or product is bought back from the customer. Core Core is the international term for used/old products which are the main input/raw material to the remanufacturing industry. They are in the beginning of a remanufactured product’s life cycle – and in its end as well, if the product can be remanufactured again. Examples of cores in the construction equipment industry are: engines, transmissions, starter motors, turbo charger and hydraulic pumps. Core Balance List Is a list of core debts in CMS. The list can be seen by the dealers and includes information about how many cores a dealer is obligated to return. Core Management System (CMS) CMS is a web based system that enables the parties involved with core handling to gain control over the core flow throughout the whole reman loop. Dealer Dealers sells products on behalf of a company or organisation, this is particularly common in the automobile industry. Deferred set up A set up with the purpose to get as many cores back as possible. The dealer pays for cores that are not returned to Volvo. Discrepancy A discrepancy occurs when it is something wrong with the order. For example too many products or too few products arrived. The products that arrived were defect or not the ones that were ordered. The buyer then returns these products as agreed with the seller. III Fortune 500 Is a ranking of the top 500 American public corporations. The ranking is based on measurement of the amount of money that a company receives from its activities in a given period (internet source 1). Goods system Global Parts planning system (Goods system) is a system where all warranty goods are registrated. Impaired material Material in its current condition and/or configuration that can not fulfil a supplier’s next demand. Manufacturer Managed Inventory (MMI) MMI is a web based system that has been developed to support the aftermarket needs. The system aims to control the spare part inventory so that the right products are in the right warehouse at the right time. The system was introduced in 2000 and is built upon history of sales volume. The dealer gets order proposals up to as often as once a day. MMI works as an interface between the dealers and the central warehouse. MMI enables Volvo to see what the different dealers have in their warehouse. Within Europe the different dealers can also see each others warehouse status. MMI order MMI order is an order-signal that dealers get from the MMI system. The MMI system calculates the reasonable order quantity and time based on the sales history from the dealer. If the sales behaviour for some reason will change/have changed the dealer can free of charge send the obsolete parts that MMI has proposed back to Volvo after 2 years. MOPS Spare part sales system for dealers. Order class The dealers can place an order in different order classes that indicate the order’s priority. Order class 1 means that the dealer is in a hurry to get a product, and then the back order coordinator at Volvo Parts receives the order. The acquiring team are responsible to solve lack of the order classes 2 and 5, either by turning to the original supplier of the product or by making a buy back. IV Parma ID PARMA is short for PARtner MAster. PARMA controls the information for a number of systems that uses customer and supplier data, e.g. SAP R/3. The purpose of PARMA is to create unique identities for all customers and suppliers, meaning that the same PARMA number for a partner is used at all Volvo companies anywhere in the world. PARMA is a general and international system - no company or country specific information is stored in PARMA (internet source 2). Remanufactured components (reman) Remanufactured components (or reman) are originally cores that have been factory remanufactured. Remanufactured components are sold for a less price then a new product. Further it has the same quality level, performance, endurance and warranty like a new product. Rocs ROCS is the old core handling system based on a database created in MS Access. ROCS is still used for core returns on some markets outside Europe. SAS system Is a system used for warranty handling. The system signals out to the dealer which reason the warranty product concerns, which in turns gives the dealer an indication of how to handle the warranty product. Often the dealer knows which products that is supposed to be returned. But to avoid any mistakes, the system is there as a security. SAP R/3 An Enterprise Resource System from SAP AG, the largest European software enterprise and the third largest in the world. In Volvo CE, SAP R/3 is mostly used within the accounting area to manage invoicing for instance. Sub dealer A sub dealer is a dealer of the Volvo dealer. They are not owned by the Volvo dealer. Supply Chain Management program (SCM program) SCM is an on going project at Volvo that aims to enhance the way to work in the Volvo Parts Organisation, in the aftermarket, at the dealers of all Business areas and also with Volvo’s suppliers.
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