Reverse logistics, the operations and process related to the reuse of products and materials, is often times viewed as a necessary evil of sorts. It's complicated. It's daunting. And if all steps aren't followed procedurally and strategically, it risks ruin for manufacturers, operators, distributors, and retailers involved in the process.
Here's the thing: reverse logistics isn't going away – for good reason. As a result of 90% of smartphone owners opting to trade in mobile devices for newer models within two years, the lifecycle of a mobile device is becoming shorter and shorter. When the lifecycle of a device becomes shorter, there's greater opportunity to put it back into the supply chain to recover its value and put it on the market again. And with consumers choosing to add more devices to their portfolio (Gartner predicts each consumer will have 3 to 4 by 2018), an onslaught of older devices will continue to flood the market. Where will they go?
As mobile devices continue to have more than one life, reverse logistics will be the revenue-driving mechanism that will make leasing prosper and be the next wave in mobile. In order for leasing to catch on, all parties involved need to trust its value. We need to break down the facts and squash misconceptions.
Tell it like it is
For the distributor leading the charge, it's important to address resistances to the supply chain. Identify barriers to entry – especially for consumers – and explain the benefits to one's bottom line that parties involved can anticipate before running the gamut of the supply chain.
For the consumer, these concerns tend to be related to data and identity theft. It's important to assure consumers that they can reset the device to its original factory settings to clear all personal information and also let consumers know they can do this themselves, which can further help to put them at ease.
Original Equipment Manufacturers (OEM) will likely show initial resistance. Considering that every refurbished phone sold into the market means the OEM has one less customer to sell a new one to, the overall total available market for new handsets is reduced. On the contrary, handsets being brought back to be refurbished are a lucrative source of devices that can be used (in lieu of newly manufactured – and thus costlier – units) as warranty replacements, insurance stock, and more.
The road to effective reverse logistics
The road to a more effective reverse logistics process begins when companies identify redeployment channels that maximize value. The first step is the returning of devices. When devices are returned and recaptured efficiently and securely, this lays the groundwork for the entire supply chain. Next is triage , where the value of devices is determined and prepared for repair. Then, it's recycle , where devices are responsibly disassembled.
After the disassembly process, products are remarketed , where value is generated from returned devices and finally, the product is redistributed. During this process, devices are recouped through global parts and device selling networks. Global markets especially come into play during the redistribution process when all parties involved can ensure maximum profitability and efficiency. When all of these steps are implemented, the supply chain is better able to manage a faster return of devices. Following this comprehensive approach maximizes the value of recaptured devices.
It's integral that distributors work to provide processes that are agile and flexible as consumer demand for devices increases, causing the supply chain to be ever changing. In order to do this, the optimal supply chain is linked geographically to allow for high consumer demand and accurate inventory levels. This also ensures rapid dissemination of information and automation of tedious processes handled by data-driven systems.
Given that the overall mobility market is largely saturated when it comes to handsets, and the fact that there isn't as much of an inherent impetus to upgrade to a new phone at the consumer level as there used to be, manufacturers must find ways to keep the device sales engine running. They need to accept that the devices being upgraded from are much more viable for continued use than a similar “trade-in” phone a few years prior. This shift in behavior leaves us with an increasingly large pool of returned devices that carry a large potential value. And the companies that can effectively and efficiently implement processes to realize that value are the ones who will succeed in the new mobility ecosystem – from third-party service providers to manufacturers and operators who collect the devices on the front end.
Leasing and its benefits
Getting consumers involved is all about lowering the barrier to entry. For those skeptical about leasing –64% of those surveyed were indeed skeptical, according to an Ingram Micro Mobility consumer awareness study – squashing misconceptions starts with simply providing the facts. Addressing consumer concerns begins with acknowledging the viability of the previous generation of devices coupled with the significantly lesser cost, combined with educating individuals of the safety and security of a lifecycle product.
As the demand for personal devices continues to grow, and more and more connected devices enter the market, it's important to follow a multi-tiered approach to ensure efficient processes are established and in place. It also helps to have partners that can serve as a mitigator and move the device through the entire flow without any interruption. Leasing is driving an increasingly large pool of devices that can be refurbished, which leads to benefits for manufacturers, retailers and consumers involved in the supply chain.