Reversing the Trend in Reverse Logistics

{complink 453|Arrow Electronics Inc.} 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?

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