Case for Return Lifecycle Management Platform
Many a time Returns Visibility is assumed to be limited to track and trace of the orders and inventory as they flow in the reverse supply chain. True visibility means having actionable insights into the lifecycle of the return order. This includes maintaining and updating information at unique item level throughout product lifecycle(manufacturing to end-of-life stages), tracking the return reasons and end state dispositions and understanding the customer demographics for the returns.
Let’s take example of the Consumer Electronics Reverse Logistics ecosystem – the product category suffers from very high returns rates which has forced retailers to even charge a restocking fees, a source of irritation to customers. There are various participants - carriers or 3PL partner who manages the logistics, Sorting centers who classify the products for recycling or refurbish, refurbishers and resale partners. Due to the low CXO focus, reverse logistics usually gets less visibility during IT investment planning sessions. Most of the system landscapes I have come across at our clients have disparate systems managing various parts of the lifecycle of the returns with minimal or zero integration with the return channel partners like Carriers, Vendors, Consolidators or Refurbishers. The Return process is still labor intensive with MS Excel still being used as primary data exchange mode between partners. The complete cycle also lacks flexible, robust ways to automate business rules that govern what is a highly exception-oriented process.
There is huge amount of data in each information system silo that could be leveraged by other partners. Return data analytics is a rich source of information that can be leveraged by everyone involved in the returns lifecycle. Merchandisers and buyers can factor in cost of returns for certain product categories during the buying process, 3PL and Sorting partners can leverage these to route the products to a cost effective reprocessing channel, refurbishers and re-sale channels can plan their capacities based on historic trends for a product category and marketing managers, who are made of aware of why returns happen, can tweak the packaging, channel strategy or positioning to reduce the returns and improve initial consumer satisfaction. Companies higher on the analytics maturity curve can integrate this back to the product development process to build an information loop that drives continuous product design improvement.
Given that many companies are outsourcing their reverse logistics operations to third parties or have multiple partners involved in the execution, they should invest in building a unified reverse logistics platform through linkage of various partner systems that allows secure, reliable transfer of these insights back into the recipients that can leverage these. In my opinion this space is ripe for a SaaS or a platform based solution that allows companies to build a Reverse logistics platform for managing this often ignored side of supply chain.
Footnote: Recently my colleagues Gopikrishnan GR and Satadal published a whitepaper on a similar theme - maximizing value from the Refurbish and Resell(R&R) process through a Reverse Supply Chain attuned to the requirements of R&R business in Hi Tech industries. You can download the white paper here.
Comments
Amarpal,
Nice thoughts from your side. To put things in a nutshell, you would want to capture returns data and feed it back to your product development process. Taking the case of automotive industry, today OEMs deploy warranty management solutions to keep track of things and reduce detect to correct cycle times. Do you see a true need of a separate platform when you can capture these data through a different mechanism.
Posted by: venkataraghavan | May 20, 2009 08:47 AM
Venkatraghavan,
Looping back the data to product development process is only a slice of the leverage that can be built from the available data. Marketers and buyers can also leverage the same information. Call it by any name, the information backbone is certainly missing for the Reverse Supply Chains. Many companies have developed applications for the feedback loop, however these applications fall woefully short in terms of integration and partners still exchange data through excel sheets.The issue aggravates even more when the number of partner increases multifold, e.g., Retail.
So my definition of Platform is - an Integration Backbone which allows the Reverse Supply Chain partners to share, collaborate and work of the same data. The investment for such platforms will be driven by the partner having the biggest stake for improvement.
Posted by: Amarpal Sanghera | May 21, 2009 04:54 PM