Traditionally the manufacturing industry is always focused on improving the forward logistics- the focus is to cut cycle time for product innovation, time to market, order to fulfill. This led to optimization techniques of forward logistics through usage of technology. Forward supply chain visibility is a key parameter which the customer evaluates before choosing a supplier in manufacturing.
But the paradigm is shifting gradually. Today's best of class manufacturing organizations have created their own service organizations and are realizing the importance of managing the return and repairs efficiently. There is a considerable monetary value attached to this cycle- and more important it is the loss of loyalty due to an unsatisfied customer because of delay in the replacement/repair of faulty product. This loss can be easily associated with loss of revenue, market share and other financial numbers. As a result leading manufacturing companies are leveraging technology and collaborating with partners to optimize their return, repair, replacement, recycle and remarketing processes.
In order to understand the role of reverse logistics, let us look at the key functions in the value chain which impacts the overall cycle time for execution.
- Customer service management- This involves receiving customer complaints and ensuring service contract compliance, proactive updates on service calls, status monitoring and first hand issue resolution
- Transportation and Logistics- this involves authorizing returns, collecting, sorting, testing, stocking, shipping (transportation) and disposition
- Depot repair- Managing repair, reverse engineering, remanufacturing, reassembly and reuse of salvaged components
- Channel Management- This involves measuring, monitoring, tracking and evaluating the performance of channel partners
- Financial management- This involves managing warranty and financial liability, proper inventory valuation and costing and finally recovery of appropriate costs
- Sales- Refurbished product sale through promotions and other channels
We need to now carefully examine the factors that impact these functions. Once we understand those we can understand the role of efficient reverse logistics in enhancing customer satisfaction. We will discuss those in my next blog- in the meantime let me know your views and thoughts.