Smart MRO Overstock Management

Forced waste

The management of automated production systems requires the maintenance into the plants of a lot of spare parts, that are strategic or consumables. The commitment of capital, space and management is enormous. It is not possible to derogate from this requirement because the productions chain cannot stand the “breakdown „ of a workstation. This would affect the entire production system.
Despite the efforts made by the Companies to raise the level of standardization of the components used in the development of machinery for the plants automation, asking to suppliers to respect a “vendor list”, the development of production technologies requires to accept always more rapidly cutting-edge technologies, in order to ensure the alignment with international standards of production, to maintain the competitiveness of the final product and to rise the quality of the product.
The direct consequence on the warehouses for maintenance is the “aging” of the managed spare parts, replaced by more modern ones. For this reason an inventory update of the spare parts and space is required.
In order to find the necessary space for new storages, the companies need to scrap large quantities of spare parts that are new and still functioning, which become “obsolete”.
Scraping is done periodically and the revenue is not even enough to cover the costs of the scraping preparation.
That is what we call “forced waste”.

Planned obsolescence

Warning signs of transformation in “obsolescence”.
In the activity of the managing of the warehouse the software is useful because it points out the low levels of spare parts, in this way it´s possible to re-supply the missing parts and to avoid the risk to be in an “emergency situation”.
This automatic analysis is useful also in order to get another information, the “rotation index”, calculated as follows:

ROTATION INDEX = (QUANTITY DISCHARGED FROM STOCK)/(AVERAGE NUMBER IN STOCK)

If the rotation index is less than 1 it means that the part was used only 1 time in year. If the value is below 0.5 (the product has been moved 1 time in two years) it means that it is going to become obsolete.
This rule allows the company to “forecast” and to identify a product that, later, will become scrap. In this way we can propose some alternative scrap-disposal strategies, which can give you the opportunity to optimize the process and to recover most of the initial capital invested for purchasing those stocks.

Regaining of capital and spaces

It is possible to recover a part of the capital, on which the company has invested and now stays in the warehouse. Instead of scrapping you can sell the spare parts that become obsolete. Every company has the opportunity to obtain the 50% of the price that has been paid for these spare parts and reduce the total economical efforts. Considering this 50% saving, the company can use these resources in order to buy new and modern components.
If a product is sold on the market with the 50% of discount, this will attract interested companies to buy it because the price is strong discounted. It is a business for both sides.
The reselling conditions are attractive to the new customer, who would buy the unused product in order to have a reduced price. Moreover the products are all in stock, so their delivery can be immediate.
However, until now it was not possible to link immediately the new customer and the required product, which was in stock because of the big diversity of the components and the splitting of users on the territories.

The network, globalization and low cost fast logistic

Internet, the global market and the possibility to “move” products rapidly and economically allow to having a new, alternative and cheaper concepts than the older scraping strategy.

Recycling of the obsolescence

In order to achieve this purpose a few years ago we have developed, for a company operating in the industrial automation, a concept of “Obsolescence Recycling” in order to avoid scrapping and get back a big part of the invested resources.
We created a website: www.ricambistica.it, where interested companies could find the required spare part with a 50% of discount. After a couple of days a Canadian company bought the items and paid it by PayPal. After a while the products were all scraped and we had to stop our publication on the website.
If we use the “rotation index” we can determine what will be become an obsolescence in the future, and in this way it´s possible to publish this product on the website for a longer time and increase the sell success. The information could be propagated in the net better and the possibility to sell the product will be higher.

Online placing procedure

To proceed with the proposed sale a few operating steps are needed.
Once you have obtained from your ERP is a list of products to offer, the publication online can be done in few days on website www.ricambistica.it and eventually on other websites that we will create for other geographic areas and languages.
The product will be bought and paid to our company; we will issue an invoice to the customer and send the deliver note to your Stock employee, who will only have to put the delivery note on the product that will be picked up from a company like UPS or similar. We manage the sell and the shipping.

We will advertise these websites on our website www.unitecd.com which counts 2.000.000 visited pages every year.
We can also issue some regular bulk offers and send news via email to over 75,000 profiled contacts registered in our specialized.
We are sure that this new concept can reduce your forced waste and could be a valid alternative to scrapping regaining financial resources and new place in the stock.