Obsolescence and Overstock Services for a Heavy Equipment Company

The client and challenge
Our customer is a leading developer and manufacturer of agricultural and construction equipment that distributes its products in 180 countries on five continents. To continually serve legacy product lines and current offerings, its parts business includes aftersales parts, service and support through its dealership network and via field support. Legal obligations require companies to hold a financial reserve for non-safety parts for 10 years and OEM safety parts for life. For our customer’s large number of products, tens of millions of dollars were being held in operating budgets that have the potential to end up being a liability and lost revenue for various reasons such as low demand, supersessions, overstock, rework and end of lifecycle.

Modifying these parts and putting them back into stock enables the customer to bring in new revenue streams while reducing its reserve and operating budget. Originally, our customer leveraged an internal team to complete reviews and perform the changes to a part, but the process was time consuming and capacity for revenue recovery was limited which did not meet project goals.

The EASi solution
To improve the operational and cost efficiency of completing this work, the customer asked EASi to collaborate with cross-functional business units to analyze and determine an action plan for parts, kits and assemblies on its Overstock & Obsolescence (O&O) list. We provided: 

• An independently managed functional team knowledgeable in our customer’s specific line of agricultural and construction equipment and experience working with drawings and engineering change orders
• A customized workflow for working in concert with internal approvals
• A comprehensive quality management and performance metric system

To complete the O&O list reviews, EASi used product offering knowledge to:

• Analyze component and assembly drawings
• Develop a complete understanding around action times for breakdown
• Review old parts to be reworked into redesigned parts/kits for use in more modern/profitable product lines
• Asses standard cost and the impact of each part on the dealer net

The results
EASi reviewed more than 15,000 part numbers in less than nine months and addressed 1,560 part numbers. This part investigation was then evaluated to action the most efficient and cost effective method to use or dispose of parts. The actioned part numbers recovered more than $8 million through identified avoidance and increased revenue, helping our customer meet its aggressive cost-savings objectives.

Based on the success of our methodology and delivery model, EASi has been the primary provider of these services for this customer for more than two years.