THE JOHN DEERE RE MAN

Running head: JOHN DEERE REMAN 1
JOHN DEERE REMAN
Name
Institution

JOHN DEERE REMAN 2
JOHN DEERE REMAN
Introduction
John Deere Reman is an equipment/machinery revalidation company. It rebuilds and
remanufactures worn out machines for agriculture, forestry, and production. Recently their core
return rate has been performing poorly. The challenge addressed in this assignment is the
identification of difficulties and means to improve core return rates.
Question 3: What are the difficulties in acquiring cores? How can John Deere
Reman increase the core return rate?
Difficulties in acquiring cores
Cores are an essential component in the manufacture and remanufacture of machines.
John Deere reman depends on its customers to get cores. This is the set up in which the
customers return failed cores or components to the Remanufacturer and, in turn, get a price
compensation at rates that are revised regularly by John Deere Reman. The competition
significantly challenges this core acquisition method. John Deere Reman's competitors have
developed a tendency to poach customers by purchasing the failed cores from them at almost
100% of their values. Since John Deere Reman cannot achieve a 100% return rate, some of its
potential supply for cores is diverted to the competition.
John Deere has no control liver what their customers do with the equipment they
purchase, specifically, the cores. It is essential that the company re-acquires cores from the users
to get the raw material necessary for remanufacturing. However, some of the cores are returned
in extremely damaged conditions and require sourcing of core material to supplement the
extreme damage. Such supply is costly, given the scarcity of the material, which makes the price
very high. Additionally, extensive machining is required to remanufacture the core, and this

JOHN DEERE REMAN 3
increases the cost of production, forcing them to increase the cost of remanufacturing services
(Jacobs & Berry, 2011). The challenge, in this case, is the reduced control of prices.
How John Deere can Increase core return rate
To eliminate the loss of supply to its competitors, the company can offer incentives to
customers such as free service/maintenance of their equipment to earn their loyalty (Jones,
2013). These will see the customers get motivated to continue supporting John Deere Reman’s
Supply Chain. To deal with the challenge of extremely damaged cores, the company can run
awareness campaigns to educate its customers on taking care of their equipment to minimize the
damage to cores (Singh & Khan, 2012).
Question 5: How important is this business to John Deere? Please show numbers.
The remanufacturing business is significant for John Deere. First, because it helps the
company maintain its clientele. As shown in the figures for core return rate ranging from 87-
66% in 2017; the statistics predict the fraction of customers that come back for more services
after their initial purchase. Majorly that means more revenue for the company. Through
remanufacturing, the company can provide new equipment to the customers at a fraction of the
total cost of production (50-70%) to be specific. Of the 29.7 Billion revenues in the 2017 fiscal
year, 200 million dollars were generated from the Edmonton remanufacturing plant and 500
million from the Springfield. A total of 700million in revenues were obtained from
remanufacturing business (Cedrola, Battaglia, & Quaranta, 2016). The figures imply minimal
importance of the remanufacturing business since it only contributed 2.3569% of the total
revenue.
Question 6: How does John Deere decide what to remanufacture?