Redback Networks competes on the high reliability of its broadband networking equipment, so it must support stringent service level agreements (SLAs) to deliver service parts to telecom customers in as few as four hours. The company wanted to better meet its SLAs while reducing the number of global service parts depots, the amount of inventory it had to carry, and the number of people needed to manage the facilities and fulfill orders. Redback is also a highly-leveraged business that outsources manufacturing and IT operations to external experts. Part of the operational challenge was that Redback had no centralized, real-time visibility to inventory levels at its 50 depots around the world.
According to Young-Sae Song, director of marketing for the San Jose, Calif.-based company, Redback's in-house logistics operations were out of step with this corporate philosophy, so the company outsourced its entire logistics network to D.W. Morgan Company, a single logistics service provider.
"By leveraging D.W. Morgan's logistics network, Redback was able to meet the four-hour SLA requirements demanded by some customers and still close 22 of the company's 50 depots," says Song. Rather than hold all parts in all locations, D.W. Morgan has been able to use a hub-and-spoke system, supported by web-based inventory visibility applications. Four hubs are now established in San Jose, Atlanta, Amsterdam and Hong Kong. This has enabled the number of Redback SKUs held at each location to be reduced significantly, cutting total inventory in the field by 50 percent. The entire process of staff transitions and depot closings along with completion of all technology applications were completed in the first three months of our partnership with D.W. Morgan Company.
Song explains that as soon as a customer reports a card failure to Redback's technical assistance center, Redback issues a return material authorization (RMA) that initiates the part replacement process. The RMA is simultaneously sent to D.W. Morgan's web-based system that provides inventory visibility across every location to pull the item and dispatches it to a carrier selected to meet the SLA delivery deadline. When the service part is delivered, the failed part is picked up and forwarded to the designated contract manufacturer or repair vendor.
"D.W. Morgan's web-based technology supports a tracking function within Redback's enterprise portal, so a customer will know exactly where the part is and when it will arrive as well as such detail as the serial number, whether the part is new or rebuilt, its revision number and so on," says Song. "The only direct involvement Redback now has is to issue the RMA to the customer."
Outsourcing it entire logistics operations to D.W. Morgan has provided Redback with measurable benefits, including:
• Total logistics costs (personnel, facility, and freight costs) are now 30 percent less than when Redback managed them
• The total number of depots needed to serve Redback's customers has been cut from 50 to 28 while maintaining a four-hour SLA capability, and
• Overstocking has been minimized and the total value of inventory in the field has dropped by 50 percent.
D.W. Morgan's technology and consulting expertise has allowed Redback to have customized, web-based interfaces that can be used by all parties in the Redback services and returns area. The international hubs in Europe and Asia have the same information as the local warehouse staff in San Jose. With instant access to shipment and delivery information, each location can better manage its inventory and transportation requirements. Third-party repair personnel also have browser access, so they can see part status, expected arrival times, and other information.
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