Recently, high-tech manufacturers and service providers gathered at Interlog Summer 2011 in Los Angeles. This annual conference specifically focuses on the aftermarket and brings together after-sales service parts and reverse logistics professionals in high-tech industries to share their supply chain successes and challenges.
Interlog provided the opportunity for companies to come together and discuss the ins and outs of reverse logistics, especially since this area can lead to competitive advantages in the marketplace. A 2010 Aberdeen report on reverse logistics found that best-in-class companies were recognizing $1.8 million in year-over-year savings as a result of improved velocity of returns. In addition, reverse logistics and aftermarket services consulting firm Greve-Davis found that consumers across the United States returned $200 billion worth of goods last year — that’s more than the GDPs of 66 percent of the countries in the world.
And yet, despite the potential opportunities to improve the top and bottom lines, reverse logistics is a business area that is consistently overlooked by many companies. It is true that the returns and repair process is complicated, particularly for high-value products like computers or smartphones. However, the costs of failing to focus on this area go beyond lost savings opportunities: This supply chain breakdown also can impair the customer experience and damage brand reputation.
For high-tech manufacturers, the top business concern around reverse logistics has been “meeting customer expectations”; and the biggest supply chain challenge has been cited as “getting customers to comply with processes,” followed by “losing money” and “damaging brand reputation,” according to the 2010 Change in the (Supply) Chain survey of high-tech companies conducted by IDC and UPS.
To overcome challenges in reverse logistics and get more return on investments, high-tech companies must treat this area, not only as an integral part of their supply chain strategies, but also as an integral part of their business. This means appointing executives or managers to be in charge of reverse logistics and focusing on training for all employees who touch the returns process at any point in the supply chain.
Another critical success factor in returns is understanding exactly how the process is working (or not working) at one's company today and then developing a plan for how improvements can be made in the future. This involves supply chain analysis and mapping to identify best-practices around decisions such as: which transportation modes to use depending upon the urgency or value of the return; where to stock spare parts needed for repairs; whether to route products to different locations if they are being recycled rather than repaired; and how they will increase visibility for returns to help with inventory planning.
There are a lot of factors to consider, which can be a daunting process for companies that do it alone. UPS frequently helps high-tech companies with these supply chain assessments, and many companies benefit from a third-party assessment for outside perspectives and expertise.
There also are solutions targeted specifically toward returns available to high-tech companies today. During the Interlog conference, UPS announced the launch of a new combined pickup and delivery service called UPS Returns Exchange. The service is particularly well suited for manufacturers of high-value products, such as high-tech and electronics companies that want to control cost and improve the post-sales customer experience.
In short, reverse logistics has significant top- and bottom-line impact and should be a high priority for high-tech companies. Companies that see it any other way should quickly adjust their thinking.