Three Keys to Picking the Right Reverse Logistics Provider


Small, medium, and large companies have been outsourcing reverse logistics for years and with good reason.Even Fortune 1000 companies with complex and robust supply chain management teams that expertly service the mother ship in the manufacturing process and the forward logistics area have chosen to outsource the reverse side of the cycle. The reverse part of the supply chain is often the hardest for even great companies to get right given the variability of the volumes, the pressure and focus on sales and delivery execution (thus the forward side), and often the lack clear visibility into the real costs to manage the reverse cycle. Therefore, reverse logistics is often the operation that involves a third party.
                                                                   

Great companies with great products cannot just pick a reverse partner with the throw of dart on the wall.  At the same time, simply picking a company based on the recommendation of business associate that had done business with ABC company some years back is also not good enough.  The same due diligence and planning needs to be employed in selecting a reverse logistics partner that you would employ in developing your manufacturing process, sales and delivery systems and internal controls procedures.  Following are three key areas you should consider when evaluating a Reverse Logistics Provider.

Scale and Fit: 

Not all RL companies are alike.  Some have expertise in certain lines of business and no experience in others.  Some are perfectly sized for your business…not too big, not too small.  Going with a big name can have its benefits, but if your company is not also a huge name, you may feel like you are getting pushed around and not receiving the response you need when you have problems.  Don’t just go with the big name or the referral name because it sounds good, they need to be the right fit for your business.

Stability and longevity: 

Price is always important…its supply chain!  However, don’t let yourself fall in the price trap.  Like most businesses, you are planning for multiple periods, probably at least three years.  You want a long term partner, one that is stable, profitable and has a track record for years.  The price can still be good with this type of company, but don’t be lured by the low-ball price.  There have been many RL managers that picked a 3rd party RL provider based primarily on price only to have it bite them later.  The RL provider wins the contract from you only to come back to you in six months saying they can’t make money at the contracted prices.
In the meantime your quality suffers and you are wasting more time at the negotiating table.

Quality and Process: 

The reverse logistics cycle is often dealing directly with your customers.  If not, it is dealing directly with your internal customers and has an impact in a lot of areas including forecasting, capex planning, cost containment, etc.  Given the potential adverse impacts that could arise in the process, you want to make sure your partner is maniacal about process, quality and reporting.  Look for partners that clearly state their mission around quality and process.  Look for partners that are SOX or SOC 2 compliant and invite you in to review their performance directly in their facilities and with their customers.  Be sure that you do actually go on the site visit!  There has been more than one RL manager that signed a deal with a provider without actually visiting the shop.  The likelihood of that manager staying around long is, like they say in the NFL…NFL stands for Not For Long. 

Getting this part of the business right will pay huge dividends for your company.  Fast, reliable and high quality return management and repair/refurbishment can help you out-distance your competitors, increase customer satisfaction, and minimize the capital needed for new or replacement units.  Alternatively, picking the wrong provider can have adverse impact to your business including customer dis-satisfaction, increased capex costs, and increase warranty repair costs.  Do your diligence and you will be very happy camper in the long run!

Robert Cook has been successfully running PSSI, a leading reverse logistics provider located just outside of DFW, for over 17 years.  To learn more, click here, or contact him directly at 817-527-6322.

Product Support Services, Inc. ‘PSSI’ Announces Approval from U.S. Patent and Trademark Office of a Registered Trademark – ‘Reverse Logistics Optimized’

COPPELL, TX, August 01, 2012 /24-7PressRelease/ — Product Support Services, Inc. (PSSI), a specialized provider of service supply chain and reverse logistics solutions for the electronics industry, today announced the company has been awarded a Trademark for Reverse Logistics Optimized. “I am quite pleased that our application for Trademark has been approved by the U.S. Patent and Trademark Office, indicated Mr. Biancaniello, President and COO. “This Trademark directly communicates what PSSI brings to our clients as PSSI continually strives to refine the processes, solutions, repair yield and net value recovery on the products we service. With over 125 years of industry experience among our senior executives, we provide a consultative approach to reverse logistics based on a broad base of industry experience in manufacturing, product repair, depot and field service management, service parts management and product remarketing.”

About Product Support Services, Inc.

Based in Coppell, Texas, Product Support Services, Inc. (PSSI) provides service supply chain solutions to assist OEMs, service providers, retailers, distributors, carriers and 3PLs provide reverse logistics solutions including product returns management and depot repair services that optimize value recovery on returned products and extend the life-cycle on deployed electronics. Operating from 125,000 Sq. Ft. facility in a triple free port zone, PSSI employs lean manufacturing principles and is an ISO9001:2008 certified operation.

Higher Recoveries and Consumer Satisfaction through Reverse Logistics

When you look at the value of your customer base, specifically in regards to reverse logistics, you can’t help but notice the trends that are occurring in the marketplace today. Consumers are looking for alternatives both in cost and brand; and as a tactic to capture more market share, manufacturers and retailers are utilizing remanufactured or refurbished items in order to offer savings to customers on brand-name technology as an alternative to new “second-tier” or generic brands.

There also is a growing awareness regarding technology lifecycles and end-of-life environmental concerns. Companies that offer solutions such as trade-in programs or recycling credits are utilizing these programs to increase consumer traffic in stores (or on-line).  These programs also promote a “going green” initiative for the host company. By providing lifecycle solutions and actively offering remanufactured and refurbished products, they show the consumer that older products are not being taken to the landfills, but are continuing to be useful throughout their extended lifecycle. This leaves a positive impression to the consumer and can preempt legislative action which forces recycling solutions on the industry.

Another benefit to the retailer or OEM is that these strategies bring in new demographics and help capture untapped markets. As product returns typically range between 1-6% of all product sold, manufacturers, retailers and distributors are forced to deal with the question of what to do with their returned material. Oddly enough, the same tendencies and concerns that kept the computer industry selling returned material at just 10% of original cost for a decade (the 90’s), still prevail in many product categories. Today however the consumer PC market has matured and it isn’t unusual to see remanufactured products sell at 90% of original cost. The lessons learned from the PC industry were forged through the combined market pressures of high cost technology, introduced in short production cycles, in high volumes, with a high percentage of returns in a landscape of diminishing margins for new products. In other words they had to optimize their reverse logistics. These same lessons can be shared (without the corresponding pain). Try this as a test of where you stand on the evolution of optimizing your product returns.

Here are the symptoms -

Fear of cannibalizing the sales channel with refurbished goods. A lack of knowledge about product grading, remarketing channels and the related recovery values (or corresponding costs for repair/remanufacturing). A lack of resources to handle returned material or remarketing. Yield rates of less than 95% on returned material. Turn-times of greater than one week. All these can contribute to low recovery values.

The key indicators -

Recovery values of less than 50% of original cost.

Slow turn-times or repair/remanufacturing

No developed channel for A, B or C Grade product (if you only have a channel that can take A grade material, the costs for cosmetic repair and delays in turn-times due to parts availability can significantly impact your net recovery).

It’s amazing that so many businesses (and industries) still do not have a total solution in place for their product returns or client trade-ins. With consumer acceptance of refurbished material and recent trends towards recycling, working in partnership with a reputable and experienced reverse logistics service partner that can handle all aspects of processing your returns and consult on value recovery strategies is a smart move. A reputable reverse logistics company can create a customized solution and bring additional revenue from such areas as:

  • Warranty recovery
  • Proper Application of Repair/Re-Kitting/Remanufacturing based on balancing Cost against Recovery
  • Product Remarketing Solutions
  • Harvesting of Parts for Service
  • Data Destruction
  • Proper Disposal of E-waste
  • Compliance with Government Regulations
  • Reduction (consolidation) of Returns Logistics Costs

Just because you “make it” or “sell it” doesn’t mean you can handle your returns efficiently. Saving money by trying to do it all in-house could be costly in the long run, especially in the area of data disposal and the corresponding liabilities.

A strategic partnership with a premier reverse logistics company like Product Support Services, Inc. “PSSI” will allow any manufacturer, retailer or distributor to increase their net recovery value on returned assets and provide lifecycle to their customers.

 

Resources:
Supply Chain Brain – The Top 11 Positive Supply Chain Value Creation Opportunities for 2011: http://www.supplychainbrain.com/content/nc/logisticstransportation/reverse-logistics/single-article-page/article/the-top-11-positive-supply-chain-value-creation-opportunities-for-2011/

Enhance Brand Image Through Maximized Product Value

Extending the life of any product increases its value, and imprints in the mind of the purchaser the quality of the merchandise. It not only saves the consumer money in purchases, it increases the value of the company through return customers, customer referrals and positive feedback.

The more value the customer receives the more confidence they will have in your company and all your other products. This enhances your brand name as well as your corporate reputation – and as we all know businesses are built or destroyed on their public sentiment.

Most consumers are creatures of habit. They will return to businesses they trust for replacements as well as additional purchases, even if they have to pay a little more for the items. When the customer is satisfied, they will spread the word, which increases business two-fold – from return customers and referrals. This is how companies like Sears, for example, have been able to stay in business for so many years.

In this age of technology there are more and more brands popping up. Many of which we have not yet heard of today will become big name brands tomorrow. Many more will disappear without making a dent in the marketplace. Too many larger companies have gone belly-up in recent years because they failed to make changes with the times, or simply lessened the value of their merchandise or services. There are no guarantees in this world, and consumers can be fickle if they find products or services that provide more value for their money.

What can a business do to increase their product value?

If you are a wholesale or retail business, one of the first things that need to be addressed is how you handle a customer complaint or return of defective merchandise. Do you listen to the consumers and address their issues, or do you simply give them their money back?

No customer likes to return merchandise because it is defective. It takes time out of their day, and they usually walk away with a bad taste in their mouths from the experience, even if they deal with excellent and upbeat customer service representatives.

A customer will walk away happier if they get a new replacement item at no additional charge – certainly it is expected if the merchandise is under warranty or within a short time of purchase. You will have saved the customer’s opinion of your business, even if they are disgruntled at the manufacturer. In that event you can recoup your loss by returning the product to the manufacturer.

But what if the merchandise is out of warranty, been discontinued, or past your policy for returns? What options can you offer your consumer in that event?

Make sure you have a policy or process in place that will benefit you and the consumer. By aligning yourself with a reputable business that concentrates on providing quality repairs, restoration or remanufacturing of products you can offer your customer the option of having the product repaired for a small charge, or offer them a replacement of the item that has been restored or remanufactured – at a fraction of the charge of the original item again.

It would also be to your benefit, as a retail or wholesale outlet, to have a section exclusively designated for consumers to purchase recycled items.

Best Buy has made significant increases in their business by introducing the “Geek Squad,” and as with all good ideas, other big companies have followed suit. If your consumer is satisfied, and you are able to restore your reputation by extending the life of the product and the services you can offer, all sides will be happy and you will have a win-win situation.

Educating Consumers on End-of-Life Product Value

Concerted efforts are being made by environmentalist and government regulations for consumers to return their old or damaged items to the store of origin, or to outside outlets for them to be handled in an environmentally friendly way. Many stores encourage their customers to bring their old, unused electronic items, such as cell phones, computers, monitors, televisions, etc. back to their store. Some even offer discount coupons for new merchandise.

What happens to these end-of-life (EOL) products?

Often items that have been returned still have some life left in them – although you may find the life as it exist now may no longer be viable. This means the item may possibly be repaired, refurbished or remanufactured and then able to be resold, or it can stripped of minerals and hardware inside to be used in other products. Extending the life of an item involves different options, but will all add value to your company’s bottom line.

Some stores have an agreement with the manufacturer, or an outsourced resource recovery business, to handle all of these EOL items. Some have in-house resources in place to take care of this process.

After the product is distributed to its temporary home it is triaged, where it is evaluated as to the best course of action to take in order to get the best use of the product. It will be researched as to whether it is best to repair it, refurbish it, or if it is possible to bring it back to manufacturers specifications. If none of these options are workable, the product is then taken disassembled and all parts are cleaned and evaluated for workability.

Working or repairable parts will be set aside for use in other products.  All minerals will be salvaged, where they will be melted down for reuse.

Each of these areas will bring renewed life for the product, and profit for the business. In the past items that were returned were often simply thrown away. By changing your returns process your business will make money by the product being returned to the shelf, even at a discounted price, or by reselling to another outlet.

An essential part of this equation is to motivate consumers to bring the items back to be recycled. “The ultimate goal is to create a cyclical manufacturing system that is sustainable but also profitable,” says a Virginia Tech research team analyzing the value of product recovery on business and the environment.1

In addition, consumers need to be educated on the environmental impacts of recycling their old, unused or damaged electronics. In this economy consumers should also be educated on the financial benefits of purchasing products that have been refurbished. Everyone is seeking ways to save a dollar – businesses and consumers alike. By processing and purchasing recycled products businesses and consumers alike will save money, and the planet.

 

Corporate Reputation at Stake with Product Recalls

There may come a time when manufacturers will have to recall a product. The laws of inevitability are on the side of the consumer, and each business along the supply chain needs to be prepared for this situation. How you handle the recall could be the difference between retaining good customer relations, or loss of confidence, when corporate reputation and profits are jeopardized.

Recalls are within the framework of reverse logistics, but are under the umbrella of unusual circumstances. Many businesses do not have a contingency plan in place. This is a big mistake.

Recalls are put in place to protect consumers, and immediate action is required. A smooth plan to handle the situation will impress the public with your compassion and desire to keep them from any further harm. It will also serve to protect you from further liability and possible fines.

A survey conducted in 1999 by Berman,“Planning the Inevitable Product Recall,” published in “Business Horizons,” found that of the 500 consumer products reviewed, nearly one-forth had experienced a product recall.

A manufacturer or seller could be held liable for failing to fulfill a recall in a proper manner. The recall can be voluntary, or forced by a regulatory agency or courts. This would happen if the product does not measure up to advertised claims for safety or effectiveness, a safety issue is triggered by a design flaw or production error, scientific evidence indicates the product holds potential health hazards to safety or contains toxic materials, product tampering, unforeseen uses for the product that could be potentially dangerous or failure to meet safety standards.

Reverse logistics industry experts say “product recall is a situation that nearly every manufacturer will probably face at some time or another, no matter how meticulous its quality control procedures.”

What product recall measures and policies do you have in place? Are you handling them yourself, and if so, are you up on all the latest regulations that will affect the success of your efforts? Is your public relations department up to the task? Are you confident they have the personnel and plan of action for a quick turnaround in case a recall should happen?

If not, who is your third-party service provider? There are reverse logistics firms that specialize in handling product recalls, from contacting the Consumer Product Safety Commission to handling the return flow of products.

According to Business.com, the following steps are essential to assure your product and brand integrity are preserved:

  1. Do your homework and locate a company that provides product recall management.
  2. Evaluate their recall process to ensure you are able to work with them.
  3. Select a product recall system that works for you, and can be implemented swiftly and efficiently.

For some, manufacturers’ product recall services start when the product is packaged. Software is available that allows them to quickly trace everything that goes into the product and then track shipments. This software can be integrated into your system.

Since product recall is an important aspect of the logistic process, many businesses conduct mock recall testing as a normal part of their operations. It’s better to be prepared and ready, and nothing happens, than to be caught unprepared.

Instituting Green Logistics Initiatives in Your Supply Chain

The environmental space is not interested in whether your company makes money or not. Their main concern is how you are impacting our air, water and natural resources. Hazardous and solid waste disposal and packaging have been identified as the leading issues in green logistics. The industry is pushing for measures that will tighten up regulations in order to ensure that the carbon footprint left on this planet is minimal.

“Greening” is the term used for a wide range of environmental concerns, and is usually thought of in a positive way. It is thought of as something beneficial to the planet and to the people who inhabit it. In terms of “greening”  logistics, the industry has made great strides in the last decade to begin tightening the gap between what can impact the planet and what can still make a business profitable. The answer is reverse logistics.

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Retailers, Beware of Hidden Hazmat in Returns

 

The Environmental Protection Agency (EPA), Department of Transportation (DOT), Council on Safe Transportation of Hazardous Articles (COSTHA) and federal, state and local entities addressing the handling of hazardous materials (hazmat) are constantly updating regulations and procedures. With growing concern for the environment, there is more pressure on the manufacturers, wholesalers and retailers as to how they should properly handle items being returned by the consumer.

Within the next 3-5 years, there is expected to be an increase in products being discarded and returned, as well as more regulations that will affect everyone along your supply chain. With more demand on manufacturers to produce more advanced high-tech products, and the lifespan of products getting shorter and shorter, the number of potentially hazardous products being returned or discarded annually will increase exponentially. This means that reverse logistics in your supply chain is going to become more complex. Many items you may not think contain hazardous material actually can be the most dangerous.

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Remanufactured in the USA

For years,U.S.companies have found that by outsourcing to developing nations, they can save money on labor and manufacturing costs, while maintaining stable transportation costs. Many companies, especially smaller or new ones, are not equipped to handle all the aspects of their businesses in-house. Due to the costs of purchasing and setting up equipment, as well as training a staff, it is often more cost effective to outsource some activities to other companies who specialize in specific areas.

But that tide seems to be turning now, as developing nations are growing and becoming economically more viable. Due to increasing wages and transportation costs overseas, the cost of doing business offshore is rising.

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Outsourcing vs. Offshoring for After Market Services

U.S.companies that have historically turned to outsourcing their products and services overseas as a way to cut costs and increase profits may soon see a reversal of this trend.

According to their Bureaus of Labor Statistics, wages inChinaandIndia(the top two countriesU.S.manufacturers have utilized for outsourcing) have risen significantly in the last decade, withChina’s increase in wages at a whopping 19% andIndia’s a few percentage points higher than that. Meanwhile, in theU.S., the rate of job growth has remained at a steady 3%. It won’t be long before what once was a significant gap in payroll expenditure will be leveling out.

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