The refurbishment has been defined as the modification of an object that is waste or a product in order to improve or restore its performance and/or functionality or to meet applicable technical standards or regulatory requirements. The end result is the creation of a fully functional product that can be used for at least the purpose for which it was initially intended. As a result, the repaired item needs to be restored to proper functioning order. Refurbishment and remanufacturing are similar in how they relate to warranties because a refurbished product is required to have the expected guarantee. For instance, the reconditioned cellphones sold in the European Union have a one-year warranty as required by EU legislation. The refurbishing end-of-life technique often involves a series of steps, starting with a visual inspection and ending with the final repackaging of the restored product.
Refurbishment is typically performed on materials that are repairable (spare parts of equipment). These materials will each be valued separately. When you need to fix equipment that is already in stock and return it to stock after repair, you employ refurbishing. The second scenario is field service, when you must fix equipment that is out in the field. The equipment is visited by the service technician. For field service, you utilise the regular maintenance order. Material movements for the equipment happen during refurbishment, which has an impact on inventories. Assume you are maintaining the radio towers for Airtel. Field service is that. In contrast, a laptop repair takes place in your service department. and hence appear in your inventory.
Refurbishment Order is very much like other maintenance order except that it is always settled to a material instead of to a cost Centre. When a breakdown occurs, such as the burning out of a machine’s motor, we often make a breakdown order, send the motor out on the basis of this order, and get the machine working again. In the interim, we will reinstall the burned motor in our storage facility, which serves only as a store for us. What should be done with the damaged motor, though? Here, we use the motor’s refurbishment and repair orders.
We issue the burnt motor for this order, keep the components needed for repairing this motor, complete the work on the motor, and certify our order operation as we would with other orders. This is how we make a maintenance order with order type PM04. In order to upgrade the valuation category of this material from Damaged to Refurbished, we must now return it to the retailer. Therefore, the cost in this case will raise the value of the motor rather than settle the cost Centre.
Setting up an effective reverse logistics operation is essential for return flows as well as for products that will be recycled. The resource challenge should be approached from the beginning of the life cycle of the component or product, and a producer should think about how to retrieve the resources and products they wish to repair. These return flows, which may come via trade-ins or buy-backs, should be long-lasting. In most nations and industries, this process still receives very little attention.
The entire business development process, from the start to the end of a product or machine’s life, should be considered by manufacturers. Restoration work should be managed as carefully as possible. Additionally, definitions and standards must be created and continually enhanced through learning, client input, and comparison to other OEMs. Standards must be flexible because conditions, consumer demands, and experience all change over time.
Servicing damaged spares to restore them to usable condition is the process. Refurbished spare parts are those that can be fixed within or sent to an outside vendor for fixing. The components are then added to inventory for later use. This procedure is required for both parts that are no longer offered for sale and parts that can be repaired and reused for a small portion of the cost of a new item. For businesses where system availability is crucial (such those in the process sector, oil production and processing, or steel processing), where repairable spares ensure a high degree of system availability, it is necessary to refurbish repairable spares. The refurbishment of repairable spares also uses inventory management and materials planning processes in addition to plant maintenance operations. In materials planning, there is no differentiation between “good parts” (functional components) and “bad parts” (non-functional parts).
People and Management involved in Refurbishment
A manufacturer needs knowledgeable, qualified workers that have the correct attitude and are highly motivated before starting refurbishment. Additionally, you need individuals who can set up the machinery and advertise it. Selling reconditioned equipment requires a different approach and might occasionally be more time-consuming than selling new equipment. Having the appropriate sales incentives for reconditioned assets can also give it a boost.
Focus at the management level is also essential; from the board level on down, renovation should be a component of top management strategy, and leaders and managers should view renovation as a crucial strategic decision. Top management should determine the best strategy and vision after adopting a helicopter perspective of the entire business, and then make sure that this is communicated and trickles down to all levels of the firm.
(Re-)Marketing of Refurbished Products
A manufacturer should analyse its market before starting restoration. Study market studies, estimate market size and sectors, consider expansion possibilities and potential rivals (who can be OEMs or third parties). Laws should be verified as well because they can vary by market and country. There is little value in attempting to sell refurbished items to the incorrect clientele. Therefore, identifying your target audience in advance and mapping their requirements and needs, including their incentive to purchase refurbished goods rather than new, may be the most important component of this assessment. To preserve and build customer trust, manufacturers must also develop a strong, eco-friendly brand image. Finally, to prevent the cannibalization of new assets, reconditioned assets need to be clearly differentiated. In order for clients to have the proper expectations, be able to make educated decisions, and ultimately be more likely to be satisfied with their product, it should also be obvious what the actual differences are when compared to new assets.
Pricing of Refurbished Products and Leasing
Refurbishment can contribute significantly to additional sales. Setting the right price-point is a very important element, as is setting a limit to the costs involved in refurbishment. One way to establish the right price-point is to develop a business case and determine if it makes sense and is feasible. At the same time, the set price-point must of course be acceptable to your customers.
Leasing can let manufacturers preserve control of their assets and maximise an asset’s value over several life cycles, which can assist manufacturers revitalise their refurbishment operations. Companies can profit from a second or third income stream on next-life materials and goods as long as they have an effective recovery and refurbishing strategy in place.
Impact of Refurbishment
Environmental impacts of refurbishment is what makes it stand out. For instance when a building is recycled, a significant amount of energy is saved by choosing refurbishment over demolishing and rebuilding the structure because there is no need to remove raw materials and transform them into a new building. Apart from environmental impact, refurbishment had some other impacts as well which includes improved efficiency and productivity of the business, cost and time saving, retainment of original features/factors, etc.