Arrow Electronics Inc. (NYSE: ARW) just spent a bundle on augmenting its reverse logistics business and recently rolled out a multi-tiered solution in the form of three new business brands. It's a move worth noting: Reverse logistics increasingly is being cited as a problem in the electronics supply chain.
In a recent UPS/IDG survey, high-tech retailers (and resellers) consistently complain that returns processes are cumbersome and inefficient -- translating to poor policy compliance. Getting customers to comply with return processes was cited as the biggest problem, followed by challenges around disposal and recycling; restocking returned items; risk management; visibility; and extracting value from returns.
In other words, reverse logistics are a pain in the neck. Why wouldn't they be? If there's anything I dread more than holiday shopping, its holiday gift returns.
Many high-tech companies outsource the reverse logistics process to a third-party provider, which certainly can help facilitate a more efficient process. But issues clearly remain. Perhaps the most interesting perspective came from a high-tech medical devices manufacturer in the UPS/IDG report: "I don't think we're worried about the returns themselves. I think we're worried about wasteful return processes: driving things like paying expedited freight on [medical] device returns."
This is one of the pain points in the electronics supply chain that spells opportunity for a company or industry that can alleviate it. Imagine trying to return part or all of a BOM to the various suppliers and distributors you ordered from. Returns aren't just time-consuming and process-intensive -- they are also a leading way counterfeits enter the supply chain.
It seems to me electronics distributors are in the sweet spot to solve many of these problems: They have relationships with hundreds of suppliers, thousands of customers; and they already have warehouses and IT systems in place. Here's a quick snapshot of Arrow's services:
ReSolve enables OEMs and contract manufacturers to proactively manage the reverse supply chain, streamline service spares logistics, and minimize operational overhead and inefficiencies. ReSolve also provides returns management programs as well as comprehensive testing, validation, and re-introduction of after-market technology products.
Intechra, an IT asset disposition solution provider, offers services to enterprises, OEMs, and government organizations, focused on helping them eliminate the risks surrounding data security, compliance, and environmental impact, while maximizing recovery value on the retirement of IT assets around the world.
Converge is an independent distributor that complements existing supply channels with its extensive electronic components distribution services and market expertise.
This model seems to address many of the complaints outlined in the UPS/IDG survey. What has been your experience with reverse logistics, and how can the electronics supply chain improve?
I tend to think these need case-specific solutions rather than general ones. The reason is, large buyers with frequent transactions may have lower incremental logistics costs than a smaller buyer with infrequent transactions. In fact, if a company is large enough, a distributor can stock right on the client's site, the way a bread distributor keeps the bread display stocked at a supermarket. A smaller company doesn't have that luxury, and so the costs of reverese logistics may be incrementally high. Personally, I wouldn't venture to prescribe a general solution. Too many variables.
On the other hand, look at amazon.com. I wonder how they manage to ship for such little money? Maybe the solution is to let amazon.com handle part of the supply chain for you!
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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