WRA? A Common Term in Indirect Material But What Does it Really Mean?

WRA is a common acronym used within the indirect material industry, but few really understand the complete meaning of what WRA entails within an operation if executed correctly.  As commonly referenced, WRA stands for Warranty and Repair Administration.  The short explanation is to administer, or manage the warranty and repair of assets within any given operation.  To fully understand the depth and breath of what the rest of the story is when it comes to WRA, we really need to break it down into several subsections.  To ease in a complete understanding I’m going to attempt to do so completely out of order, intentionally.

REPAIR
Let’s tackle the R in WRA first. Within the indirect material environment (where all material falls that isn’t part of the actual product being produced or services provided), any organization has a wide variety of material that is considered repairable after it fails in it’s intended use.  For a typical manufacturing organization you would normally expect to see machine components as an example.  A common WRA program’s inventory for the manufacturing environment is filled with components like motors, valves, cylinders, switches, control boards, tooling, etc.  These are all common components that MAY be repairable at a reduced cost vs replacing the failed component with a new one.  Conversely, for a school system the repairable assets might include things like projectors, kitchen equipment, steering pumps from buses and the like.  Lastly, and as a third example, a local community may have assets like lawn mower blades (used on the mowers that take care of their parks), or filtration units from the roof of a court house.

Regardless of WHAT the component is the question is not just one of repairing it, because like most things in life it’s just not that simple!

ADMINISTRATION
What does Administration within WRA really mean?  Well, as you might expect it means, essentially, to manage the repair program.  But as is often the case, that definition begs yet another question and that is what does Manage mean when it comes to WRA?  To manage a Repair program is much more than just repairing components that have failed.  In fact, the act of just getting stuff repaired is the easy part!  The repair of an item for any organization is really no different than buying a new one.  First you identify a source for the repair, i.e. someone who can fix the darn thing!  Then, as with any PO process you obtain a quote, cut the PO, send it to them, and BAM, they send it back fixed right?  Ok, I made that seem pretty simple but in reality it takes a bit more as anyone who has gotten something repaired knows all to well.

As I stated however the repair itself IS the easy part.  Managing a repair program is much more involved if done well than you may understand.  To best explain what I mean by this I have laid out a series of questions below.  You should ask yourself if you are addressing these aspects of repairable assets within your own organization or better yet if you use a service provider like ValuePoint, are they?  The fact is that you (or they) need to be! If not you are throwing money away faster than you may be saving it by even considering getting failed components repaired!

  1. Do you even need to repair it?  Ah Ha!!  All to often what we find is that once an organization understands that any given component that fails is repairable, every time one fails they repair it.  As a result of business changes over time, if you don’t consider the NEED for the asset you are repairing you will find yourself with a storeroom full of repaired items you are not using and have sat for months, years, or yes even decades!  You have to evaluate your inventory (a whole different topic) for balance on hand, usage, lead times, etc. and combine those data points with known business changes and decide BEFORE you ship it out if you should even be repairing it or frankly just throw it in the scrap or recycle bin!
  2. Is the repair value added?  By this I mean is the repair WORTH repairing.  What percentage of the cost of new should you pay to repair an item?   In the industry, the most common answer to that is 50%, but it’s much more common for organizations we see to not be looking at that at all!  Repaired items typically have roughly the same life expectancy as new at least after the first repair IF done in a quality fashion.  But the reality is that with more use, each additional repair tends to have a shortened life and in many cases I have seen the cost of a repair even exceed the cost of new.  If your organization isn’t comparing the quote to repair against the CURRENT cost to replace it with a new one IF IT’S EVEN NEEDED then you are throwing money away.
  3. Should you repair it?  Lot’s of components can be repaired but should you?  How do you know?  Assuming per the above that you truly have evaluated the need to replace the item, and then that the repair quote makes it worth repairing, the last item is one of should you still do it.  That question in the end is a gamble the first time you repair that type of item and it MUST be tracked!  If you have never had an item repaired you are dependent on the repair facilities word that they can effectively repair it to usable condition.  Assuming they convince you, you must ensure that you adequately track that repaired item to see if the repaired item has an acceptable life.  Managing a repair program means you serialize everything you get repaired.  When an item is then disbursed from a storeroom you need to track via that serial number that it has been disbursed and preferably to whom and for what.  You can then watch for that asset to come back to get repaired again and track the lifespan it had to assist in decisions of buy new or have it repaired.

WARRANTY
Lastly there is the W in WRA.  Warranty.  Most organizations that ValuePoint visits simply do not have a repair program as part of their indirect management toolbox.  Establishing one is a first priority and frankly some of the “low hanging fruit” to saving money as we step in to supporting a new clients indirect spend.  For those organizations that do have a repairable asset program like we strongly suggest (and implement for our clients), the last step of properly administering a WRA program is capturing and claiming warranty opportunities.  Almost without exception, most repair facilities of just about any kind offer a warranty on their repair services.  Within the typical manufacturing environment as an example we normally see 1 year on any repair from the repair service provider.  The key to taking advantage of that repair is once again the track-ability of a SERIALIZED repair.  YOU need to know the date the component was repaired, the date it was disbursed out to the field to be used, and the date it came back broken again.  Each of these dates, depending on the terms and conditions of the repair facility you choose will be important to making a claim for early failure of a warrantied repair asset.  Those key data points are easy to track if your indirect material program as the MINIMUM level of effective controls it should have to control your spend, manage your inventory, and cut costs.

Are you repairing assets to reduce your indirect spend?  Are you properly managing those repairs to ensure you get your money’s worth?  Are you EFFECTIVELY managing your inventory to support GOOD decision making about what you stock, how many, and when?

If these answer to some or all of these questions is a no, or frankly if you need to take time to think about the answer then give us a call.  Indirect material is what we do, and all we do!  Let us come do it for you.