Supply Chain & Logistics: Manufacturers Look for a Better Return on Returns
The push for sustainability has had a dramatic effect on reverse logistics services. Once considered a fringe activity, reverse logistics (also known as returns management) has in recent years become a key element in manufacturers' corporate social responsibility (CSR) initiatives since it encompasses the 4 R's of the green movement: reduce, reuse, recycle and recover. Manufacturers and their supply chain partners are being held accountable now for the entire lifecycle of their products, including what happens to the products after they've been returned or discarded.
See Also: Lean Supply Chain Logistics Best Practices
While the growth of online aftermarket exchanges in particular has opened up new markets for manufacturers and retailers, it's also extended their responsibility to protect their brands. As more companies look to return management as a new and potentially lucrative revenue stream, they find themselves under increasing scrutiny to ensure their activities have a positive effect on the environment, rather than just contributing more waste to landfills.
"Traditional disposition processes include many inefficiencies that impact maximizing recovery and increase costs in the reverse supply chain," explains Cayce Roy, executive vice president and president, Retail Supply Chain Group, with Liquidity Services Inc., a firm that helps companies sell surplus, returned and end-of-life assets. He cites the process of having returned products moving from retail stores back to the supplier, who then ships the product to a return center, which sends it on to either a recovery provider or a refurbisher, with numerous overlapping steps in the process.
A more streamlined process, Roy suggests, would be to place greater focus on end-to-end supply chain efficiencies by working directly with a recovery provider. For instance, a large computer OEM had been selling its refurbished products to a small number of wholesalers and retailers, who offered the products at deeply discounted prices to move them as quickly as possible. Working with Liquidity Services, the OEM switched tactics and adopted a multi-channel approach, using various logistics tactics, such as offering pallet and truckload volumes to a broad base of retailers with coordinated pricing, as well as moving pallet-loads of older models onto online liquidation marketplaces. The OEM reportedly increased recovery by more than 20% in six months.
That mirrors the type of approach Jabil Circuit Inc., a manufacturer of electronic circuit boards and a provider of electronic manufacturing services (EMS), is taking. Jabil is teaming up with package delivery giant UPS to offer return and repair programs to high-tech OEMs such as Dell. Acting in the capacity of a third-party logistics provider (3PL), the Jabil/UPS collaboration will offer OEMs access to strategically-located repair and distribution facilities near their customers, with services such as order fulfillment, next- and same-day transportation, returns processing, whole unit and component repair, planning and inventory funding. The goals of the collaboration are to help OEMs reduce repair turnaround time, transportation spend and capital expenses, while improving customer support.
