How Kimball Electronics triages and rescues product – and end-customers.

Efficiently outsourcing repair of longer lifecycle medical equipment requires a clear understanding of a combination of technical, business and quality issues. Concerns include RoHS/leaded compatibility challenges, maintaining adequate replacement inventory for discontinued parts, compliance with medical traceability and quality requirements, and the ability to meet agreed-upon levels of responsiveness with the end-market.

In this market segment, in lower volume products, repair services tend to evolve as a need over time versus being a planned requirement identified during initial product development. In some cases, repair depot support is provided to existing production projects. In others, the repair depot is asked to support projects the company hasn’t manufactured. This can be a reverse engineering challenge in cases where an older product lacks adequate test documentation.

Why do OEMs outsource repair? Capital equipment suppliers often provide their customers with repair or replace service contracts. If the product can no longer be repaired and the exact model is no longer manufactured, the OEM ends up supplying a much newer model to fulfill the agreement. Finding a repair depot capable of supporting near-obsolete products is often a challenge, but when done correctly can save substantial amounts of money.

For example, an ODM of a critical subassembly obsoleted the part and told the affected OEM it would be necessary to make a 10,000 piece lifetime buy of the remaining inventory in order to continue to have a supply of spare parts. The customer had an existing inventory of subassemblies in need of repair. A Kimball repair facility was able to analyze the device, determine the root cause of the failures and repair the existing inventory. The repair cost was 20% of the cost of a new unit, and saved the OEM approximately $1 million in actual inventory costs.

Handle with Care

Repair depots supporting medical products must address both the business and technical side of the equation. On the business side, issues can include logistics, customer service and information exchange.

One key aspect of repair depot logistics is incoming material handling. Medical repair varies from standard commercial repair from the first physical steps of the process. For instance, medical products that come in from a hospital or clinical environment may require some sort of decontamination step at initial receipt. An area is set aside to “triage” each individual unit. Units that have been exposed to potentially biohazardous substances receive a chemical sterilization process. In some cases, residues remain that are not broken down by a chemical wash or UV decontamination. In those cases, provisions are made to place these residues into a special biohazard container and disposed of per regulatory requirements. Production operators involved in this stage of the process are given specialized training in handling potential biohazards.

Traceability is typically required at both the serial number and component level. Defective units are received and assigned a unique barcode that corresponds to that model and serial number. Each step of the repair cycle is then recorded and becomes a part of that unit’s lifecycle history. It is not enough simply to report that the electrolytic capacitor at location C14 was replaced; there must be a record that lists the manufacturer name and date code of the replacement capacitor.

The e-waste stream generated by the repair process also can be an issue. Old components can be a liability if not disposed of through a certified disposal partner. For instance, CRTs have a significant amount of lead and generally require specialized disposal. There is not a US federal standard that deals with this, and different states are beginning to impose WEEE-like requirements. A proactive approach to good e-waste practices is the best solution in avoiding unexpected fines, unplanned recycling costs or bad publicity.

Information exchange is another area where medical products have more complex needs. Thanks to device history record requirements, medical repair customers require much more system integration than do commercial customers. Typically, the OEM maintains a master complaint database in which the initial RMA is recorded. From this point, the way information is exchanged is dictated by the type of outsourcing business model.

In the Direct Business Model, the OEM issues return authorizations, but the physical product is typically shipped direct to the repair depot from the field. A supplier database polls the OEM’s return database several times a day, looking for the latest information on returns issued by the OEM, but shipped directly to the supplier.

On the other side of the direct transaction, the OEM database is requesting (or is “pushed”) information on the status of the returned goods. This is critical, as it shows the status of product along the reverse logistics supply chain. Key points to monitor include:

• RMAs issued but not yet received.
• Product in the “to be repaired” warehouse.
• In-process repairs.
• Product in the “available to ship” warehouse.
• Shipment status.
  

This data exchange typically occurs several times per day. Also, the Direct model often includes a fulfillment aspect in which customer orders are received daily; items are picked, packed and shipped directly to the end-user by order. The payoff here is the majority of the transactions are automatically made by the system. Transactional costs drop. Most important, since returns are being shipped directly from the field to the repair depot, and then from the repair depot back to the field, two legs of transportation logistics are removed. This lowers costs and improves turnaround time.

In the case of an Indirect Business Model, RMAs are consolidated by the OEM and shipped to the repair depot. Information is exchanged in a non real-time manner. In the Indirect model, transactional costs are typically higher and cycle times longer. In this model, cycle times could be reduced by adding an “Advanced Exchange” agreement; however, the OEM still incurs the added cost of two additional legs of transportation logistics. Those two legs are the reverse logistics leg of “customer to OEM to repair depot” and forward logistics leg of “repair depot to OEM to customer.”

In the Direct model, the repair depot becomes the face of its OEM customer to the end-market. This means quality, service and support guarantees need to align with the OEM’s commitments to end-customers. Internal stocking and fulfillment procedures need to support guaranteed turnaround times of as little as 24 hours, and provide both the OEM and the end-customer with adequate visibility into repair status.

Obsolescence Management

On the technical side, obsolescence management is always a focus. Options for addressing lifecycle-driven component availability issues include:

• Identify alternate suppliers and obtain substitution approval if comparable components are available from multiple sources.
• Purchase end-of-life inventory if a component is going obsolete and substitutions are not an option.
• Maintain an inventory of repaired spares.
• Search qualified independent distribution channels to find excess inventories of the obsolete part.
• Support a redesign effort if alternate sources or acceptable substitutes are not available.

Repair depot strategy must accommodate the RoHS or leaded requirements of the product both now and in the future. A segregation strategy should minimize the potential for contamination if both RoHS and non-RoHS compliant products are repaired. Certification requirements for RoHS-compliant products must be addressed.

RoHS-compliance also drives another set of challenges in the repair area: potentially greater failure rates. Tin whiskers are an issue with some RoHS-compliant product. This may increase field returns or change the complexity of repair when products are converted from older designs to RoHS-compliant.

Another area of required technical competence involves specialized repair capabilities related to unit cosmetics or unique subassemblies. For example, in older products a mold may no longer be available for the plastic housing. The electronics may be in perfect operating condition, but if the housing is cracked or damaged and can’t be repaired, the unit must be replaced.

LCD repair capability is another area of specialized support often required. The size of LCDs changes rapidly with commercial product trends. Older medical equipment may have odd-sized LCDs that are now obsolete. The OEM either needs to make a lifetime buy of the obsolete LCDs or be able to repair the existing units. The repair itself is relatively inexpensive, but because LCD repair involves replacement of the flexible circuit tab that goes between the glass and an FR-4 PCB, a cleanroom, specialized equipment and highly skilled operators are required. The process involves removal, optical realignment and bonding with conductive adhesive.

Test also can be an area of complexity. In some cases, the customer may provide a functional test unit. But in cases where a tester is not available, the contractor may need to analyze a theory of operation and create a functional test. This process is often more complicated than when developing a test for a new product. In some cases, several levels of revision may be missing from the existing product documentation, or flash files may not be readily available. In those situations, the ability to work with the customer’s engineering team to understand the issue is very important.

Medical repair depot has a level of complexity far greater than that found in consumer products. From an OEM perspective, repair depot can be a source of hidden cost or a source of added revenue. The defining factor is the efficiency of the reverse logistics strategy. Outsourcing with a strong repair depot partner helps leverage economies of scale and specialized expertise, while turning an internal fixed cost into an external variable cost. This also adds to a company’s “Green Factor” by lower costs and environmental impact, while simultaneously improving turnaround time.

Scott Mauldin is a business development manager with Kimball Electronics Group’s Medical Product Solutions (kegroup.com); scott.mauldin@kimball.com.

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