The 3 Pillars of Reverse Logistics Optimization

Posted by Mike Leach on Sep 15, 2016 10:00:00 AM

Mobile_Phones-1.jpgEven in the midst of digital transformation trends, reverse logistics operations tend to start with manual processes. A small team designates specific employees for tasks that suit them, and these manual processes become tribal knowledge amongst the staff. 

However, this tribal knowledge leads reverse logistics centers to grow complacent with the status quo—not resisting change, but reluctant to stray from the manual processes that have proven effective.

Whether the reasoning is that investing in technology is risky or that you want to run a low-tech, high-touch operation, reverse logistics optimization requires a different way of thinking.

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Keeping up with reverse logistics demands—especially in the smartphone industry—requires more efficient operations. There are 3 pillars of reverse logistics optimization that you have to focus on—velocity, accuracy, and automation.

Velocity in Reverse Logistics—Minimizing Your WIP

 No matter what industry you’re in, the value of what you’re processing in a reverse logistics center diminishes over time. In a direct sense, the faster you can process products, the more value you’ll return to end-customers, retailers, carriers, etc. However, there is more to velocity in reverse logistics than the direct value of a device or product.

In any kind of reverse logistics operation, minimizing your work in progress (WIP) is critical. Having a lot of WIP sitting in a warehouse is one of the 7 wastes of supply chains, leading to not only diminished product value, but also processing errors.

Your goal should be to process products on a first-in, first-out basis; but when WIP stacks up in your warehouse, it becomes increasingly difficult for operators to determine what should be worked on. Not only that, but failing to process products in a timely manner leads to increased storage costs.

Implementing a high-velocity work stream will reduce your WIP and keep everyone in the reverse logistics center organized—but you have to balance speed with accuracy. 

Accuracy in Reverse Logistics—Drive Resale Value and Customer Satisfaction

Providing accurate assessments of products that you process in your reverse logistics center is critical to the overall success of your trade-in program. There are a few key components of accuracy in reverse logistics operations to keep in mind: 

  • Consistency of Claims: The value in improved accuracy isn’t in the immediate value of a specific device—it’s in the long-term value of the reputation you’ll build in the industry. If you promise customers an A-grade resale product and consistently deliver on that promise, you’ll see higher resale values and customer satisfaction in the long term.
  • Proper Product Routing: The workflow for a customer return in its original packaging will be very different from the workflow for a product that was in the field for some time and has to be repaired. Ensuring you route products to the proper corners of your reverse logistics center is essential to maintaining accuracy and driving greater velocity.
  • Transparency in Closings: Accurately tying returns back to the right customers is essential to the overall optimization of your reverse logistics center. People get anxious if they return something and don’t know where it is in the process. If you can accurately tie products to customers and remain transparent throughout processing, you can drive greater customer satisfaction and resale values.

Achieving accuracy in these 3 factors feeds back into your need to improve velocity in reverse logistics. The more accurate your processing is, the less rework you’ll have slowing down the operation.

Improving accuracy and velocity separately is a good goal, but automation is the pillar that brings the two together.

Automation in Reverse Logistics—Scaling Velocity and Accuracy Effectively

The need for greater automation in reverse logistics centers will drive the market for warranty management systems to $3.4 billion by 2020. Companies are starting to automate their reverse logistics centers now, but if you can get ahead of the competition you can capitalize on greater resale values and customer satisfaction.

The benefits of automation in reverse logistics tie directly to the need for improved velocity and accuracy:

  • Automation Improves Velocity: Manually associating products with their return material authorizations (RMA) is a slow process. Automating these menial tasks can have profound effects on the speed of your reverse logistics operation.
  • Automation Improves Accuracy: Manual reverse logistics processes can be highly subjective. At times, you might have tens or hundreds of people assessing the condition of the same device, making it almost impossible to accurately communicate results with customers. Implementing automation might not replace manual inspection entirely, but it can greatly improve accuracy. Additionally, having employees scan barcodes to input device information rather than typing it out can eliminate typos and inaccurate inspection. Having all of this information tracked electronically gives you something to look back at for accuracy in dispute claims as well.

There are varying degrees to which you can implement solutions for velocity, but our personal experience implementing an all-in-one solution for reverse logistics has been double the number of units per hour per person in our center. 

I’ll be speaking about this topic later this month at the Consumer Returns event in Nashville, TN. If you’re attending the event, be sure to get in touch with me to talk about these pillars of reverse logistics optimization.

Learn more about transforming your trade-in program and expanding your customer base, in this whitepaper.

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Topics: Omni-Channel Device Collection

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The HYLA Mobile blog is a place for thoughtful dialogue that will ultimately change the perception of “used” phones around the world. Visit the HYLA website to learn more.

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