Consolidating an Accessory Kit Supply Chain | Consumer Electronics
A study in success: Customized computer accessory kits
RRD’s customer is a leading global computer manufacturer that allows the creation of highly customized products through its Web store and delivery of orders to the end user within days. As a result of this successful model and rise in sales, the company required a strategy to support growth while it focused on its core competencies.
The customer required a supply chain provider to support strong growth forecasts, deliver continuous process improvements and cost reductions. An efficient, flexible, integrated solution was essential to deliver customized accessory kits 24/7 for the customer’s product lines including desktops and servers.
Serialization of all components and kits was necessary to enable a 1-to-1 match with the customer’s central processing units (CPUs). The customers kitting requirement, including significant quarter-end skews, could reach 50,000 units per day with an average of 16 touches per kit. The provider needed to manage more than 50 suppliers and consolidate the existing fragmented supply chain and logistics function.
RRD was chosen as the company’s supply chain provider and began with a program of supplier consolidation including:
- Microsoft kits, certificates of authenticity, and genuine Microsoft labels
- Third-party software
- Cables, power cords, keyboards, mice, and mouse pads
- Modems, adaptors, and locks
- Print and packaging
The RRD team also streamlined the assembly process by managing material availability, overseeing the sequencing and tracking of kits, interfacing with its customer’s IT systems and generating automated reports. As part of the solution, RRD managed hundreds of engineering changes and new part introductions per quarter — more than 2,000 total parts across the supply base.
While the customer configured personal computers (PCs), RRD assembled the corresponding unique order kits. The kitting facility received notification when the customer-configured PCs were in the final stage of production. The unique order kits were then transferred between facilities. The kits were integrated inline, just-in-time for the PC to be merged and shipped to the final customer — custom built for each individual.
Providing supply chain visibility was one of the key features of this demand-driven supply chain model, delivering a vital communication link between suppliers, RRD and the logistics partners. The system provided online access to hundreds of external users and suppliers, who could receive real-time inventory and transaction updates, request customized reports, and gain supply chain visibility.
By consolidating the accessory kit supply chain, the computer manufacturer was able to offer its customers customized computer accessory kits and faster delivery times. Working collaboratively with RRD, the customer reduced their order release to factory-merge cycle time to 90 minutes. Both companies continue to work at providing faster time-to-market for new products at lower conversion costs. Key advancements over the 18-year business relationship include:
- Significantly improved velocity resulting in a 52% increase inline throughput
- A material holding inventory of less than 10 days, with zero days at the customer’s facility
- Greater quality increase, from more than 1,100 defective parts per million (DPPM) to less than 50 DPPM
- Improvement in the customer’s cash flow by moving to a pay-by-consumption model