Remanufacturing
Mastering the cross-flow hell

In remanufacturing and refurbishment, unlike traditional industrial production, push and pull flows cannot be organized sequentially. They must coexist simultaneously throughout the entire production chain, creating what we call "cross-flow" - a situation where supply constraints, customer demand, and stock building become intertwined in complex ways.

Remanufacturing and remanufacturing players must often manage three major constraints:

• Supply is not under control: we only know a few days in advance which available sources we will have to remanufacture.
• Production volumes can be pulled by customer orders.
• Production volumes can be pushed to build stock of ready-to-sell products to serve specialized distribution channels (such as B2C marketplaces in electronics).

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📖 Vocabulary‍

- Push flow: building finished product inventory on the manufacturer's initiative

- Pull flow: producing products on customer demand

- Lean flow: no intermediate (or buffer) stock between production stages

- Cross-flow: simultaneous coexistence of push and pull flows on the same production chain

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A T-shirt to highlight the problem's uniqueness

In traditional linear industrial production management (as opposed to circular), we start producing in push flow, up to a certain assembly level - often because parts are complex, standard for a wide range of products, and inexpensive to store - then wait for orders to finalize the product.

Take the example of a t-shirt! We anticipate with cotton purchasing, we weave, cut, sew plain white t-shirts → complex, standard, inexpensive to store. We add one of our 200 prints at the last moment to respond very dynamically to our retail network's needs.

In remanufacturing, push flow and pull flow are not sequential: they must coexist throughout the production flow. The reason is that in remanufacturing, unlike cotton, raw material is limited - these are products to be remanufactured. Supply sourcing relies primarily on opportunities. We cannot generate intermediate stock because tension on raw materials requires lean management!

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The prioritization challenge

Prioritization could be simple: always prioritize key customer orders (pull flow) and build stock (push flow) in available slots.

Except that unlike pull flow whose deadlines are negotiable, zero stock on a push flow sales channel leads to immediate sales loss. Constant attention must be maintained to optimize revenue as well as working capital requirements. Concretely, frequent stock-outs on a marketplace can cause sales to drop by 40 to 60% depending on the marketplace policy, with immediate impact on algorithmic ranking.

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The solution exists: Production planning, min-max and stock reservation

Min-max consists of defining minimum finished product stock levels in push flow, at minimum for high-turnover products. This allows daily alerts and even production launch suggestions so that stock for concerned products doesn't fall below expected minimums. Other solutions exist but min-max has the advantage of being easily manageable across many references, allowing adjustment of certain minimum thresholds during product shortages in the market to preserve them for pull flow.

Production planning thus allows anticipating shortages and "reserving" part of the stock for push flow. For example, on a projected stock of 100 remanufactured iPhone 12s, we can reserve 60 units for marketplaces (push flow) and keep 40 units available for B2B orders (pull flow).

Projected stock can then be used by sales teams to work on order delivery times → pull flow. Volumes are also added to the production plan to reserve products.

Virtuous effect: this double reservation system allows purchasing/sourcing teams to better anticipate source hunting, and even adapt purchase prices in real-time to secure relevant sources. The impact is measurable: better anticipation can reduce supply costs by 5 to 10% depending on categories. More importantly, this method allows staying in lean flow and thus reducing production lead time by up to 40%, which has an enormous impact on working capital requirements.

For a more comprehensive analysis of expected returns on investment from digitizing your operations: [link to ROI article]

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Special cases and adaptations

Some products, like IT, are remanufactureed to a standard unfinished state and may undergo last-minute modifications: QWERTY keyboard, RAM addition, software customization, etc. These adaptations generally fall under order preparation flow, pulled by design, and are not included in the main production plan. They require specific management with dedicated component stocks and build-to-order assembly processes.

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Conclusion: Mastering complexity to optimize performance

Remanufacturing imposes simultaneous management of push and pull flows that challenges traditional industrial models. This complexity, far from being an insurmountable obstacle, can become a competitive advantage through adapted tools: fine planning, flexible min-max systems, and intelligent stock reservation.

The benefits are tangible: reduction of stock-outs, working capital optimization, improved customer delivery times, and more efficient supply anticipation. In a sector where raw materials are inherently unpredictable, mastering cross-flow becomes a key factor for differentiation and profitability.

Are you facing these challenges in your remanufacting business? Each company has its specificities and deserves a tailored approach to optimize its cross-flow management.

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Contact us : Toore is the first operations management software dedicated to remanufacturing and refurbishment. We are aggregating all best industrial practice in our software to streamline your operations and provide you with the data needed to take better strategic decisions. 

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