High Tech Reverse Logistics: A Potential Cost Cutting Avenue
To put in simple terms, Reverse Logistics is the flow of Returned goods by the customer to a state where the product is disposed of, repaired, recycled or internally consumed. And because of the strict norms pertaining to disposition of goods in the high tech sector, this is a very strategic area.
Typically companies recycle most of the returned goods as part of the Value Recovery Model. But there is a huge cost involved here as there has to be a proper disposition process for parts which can harm the environment. Also, there is a high risk of these products making it to the grey market eroding the parent company’s competitive advantage.
A potential solution to this problem is consuming the parts for internal use after the necessary repairs. This reduces the additional cost of recycling the product. Also this saves additional money in terms of deploying a brand new product for internal use.
Some of the prominent high tech companies have been able to exploit this opportunity in a big way and have gone ahead with internally using the returned products over an elongated period.
If you are spending a lot of money in recycling your returned goods, internal consumption is a thought worth thinking over.
Comments
Once thought of as a non-value adding activity, recycling and reuse is certainly catching up, not just in the high tech and electronics area but in general,all manufacturers are looking at optimizing their overall 'Reverse Logistics (RL)' process.
There are two different strategies that organizations can adopt -
1. Inhouse RL: The entire RL process is handled by the manufacturing organization internally.
2. Outsourced RL: There are companies that specialize in providing RL services. They take care of transportation, storage and disposition of the returned products.
Whatever strategy the manufacturer adopts, automation plays an important role in reducing the cycle time of the entire process and hence the overall cost. Automation also helps gain better visibility into the overall returns process as it enables 'real-time' tracking thereby improving asset recovery and customer service.
Posted by: Samiksha Hariharan | November 19, 2008 04:00 AM
To highlight one additional area in reverse logistics is the use and reuse of std containers irrespective of process/discrete industies . Many companies often use containers (as assets) to pack and dispatch material to the supplier and while new containers are required based on old ones getting damaged and requires replacement or demands going above expected or they are stuck in transit and so on . The challenge is to be able to track the availability of these containers in Planning to avoid maveric buying of the same by not having visibilty on their expected returns(as a source of supply) . Can u Please explain if u have noticed any viable methods to handle these in the ERP system ( especially oracle ) since the reuse aspect is more frequent and viable in these standard containers than the RMA of the end-product itself
Regards
Posted by: Arun Narayanan | October 15, 2009 08:22 PM
Hi Arun,
Oracle ERP has a Containerization feature which allows you to define containers as inventory items and you can track this as an entity in your supply chain. Please let me know if you need additional information
Thanks and Regards,
Sandeep
Posted by: Sandeep Chatterjee | October 16, 2009 04:18 PM