Derek Singleton, ERP Market Analysis for Software Advice has some interesting thoughts and ideas.
In a recent blog (http://www.softwareadvice.com/articles/scm/how-to-get-value-out-of-your-returns1121510/#ixzz18NXBAMyN ) Singleton said that when the concept of reverse logistics first surfaced in the 1980’s, it received little attention from the business community. The general perception among businesses at the time was that returns carried little to no economic value.
Today, however, a laggard economy and narrowing profit margins has drawn attention to reverse logistics. Singleton believes that efficient returns strategies are now being viewed as essential to an overall supply chain management solution. When used properly, reverse logistics can increase customer satisfaction, reduce waste, and recover lost revenue.
Singleton offers the following list of best practices for reverse logistics:
- Investing in Reverse Logistics Systems
When quality management decisions are combined with an optimal IT infrastructure, reverse logistics operations run at maximum efficiency.
To fully understand the benefits of reverse logistics software, consider the case study of Tellabs, the world’s largest provider of telecommunication services and equipment. Tellabs implemented Click Commerce’s return management software and now processes over 90% of returns requests automatically. Implementing the system led to an 88% reduction in return cycle times and decreased in-transit inventory by $1.76 million per month. Clearly, a software solution can deliver tremendous cost savings and streamline reverse logistics operations.
- Outsourcing Logistics Operations
The auto parts giant Mopar, the service wing of Chrysler, was able to improve their logistics operations by working with UPS. To enhance Mopar’s logistics operations, UPS used barcode technology to track returns in a centralized database. This allowed Mopar to plan ahead for inbound products and respond with staffing changes to manage the influx. It also significantly reduced travel times, enabling faster resale of the product. Today, the average shipping time for a return from China to their Michigan headquarters is only 3-4 days.
- Accessing Secondary Markets
The secondary market, valued at $300 billion, is where products wind up after businesses sell liquidated inventory to resellers.
Electronics companies have been quick to tap in to the secondary market by offering repaired and refurbished products at steep discounts. Dell features a Dell Outlet center on their website that offers shoppers the option buy used. By offering used computers at a fraction of the cost of new products, Dell recovers value from a returned item and taps in to the vast secondary market. Online retail is an easy way for retailers and manufacturers to gain access to this market. Reselling products online is easy and nets more revenue than liquidating.
- Offering Recycling Services
When the product cannot be reused or resold, disposal may be the only option. Any time that a product is disposed of, it is critical to minimize the environmental impact of disposal. This means responsibly disposing of hazardous materials and salvaging raw materials for reuse when possible. Today, its no secret that socially responsible business practices are good for company image and the environment. In this day and age, going green can bring in cash as well.
Singleton goes on to say that businesses that approach returns through the lens of asset recovery are able to maximize resource use. In order to realize the full benefits of a reverse logistics operation, it is critical to make quality management decisions and use software capabilities.