Attention Reverse Logistics Magazine has gone ALL … · ence & Expo inegas ws.org s erse ent Reverse Logistics Magazine welcomes articles and abstracts. Please send to: [email protected]

Edition 26

Third Army Leads Largest Reverse Logistical Movement Since WWII - Page 18

Finance is from Mars and Reverse Logistics is from Venus“How we can talk to each other”

Page 12

Protecting Brand Reputation Page 36

State-of-the-Art Reverse Logistics Systems Part 2

Page 40

Brig. Gen. O’Connor - US Army

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On the Cover Articles

Features

Page 18

Technical Trends 46

Advertiser Index 49

Returning Thoughts 50

CONTENTS

Publisher – Gailen VickEditor - Lyndsey TurnerTechnical Director - Matt GwilliamCreative Design – Lyndsey TurnerDirector of Marketing - Jeff RobeRegistration Manager - Laura TeifelMembership Relations - Cynthia Talbot

Board of AdvisorsJack Allen – Cisco SystemsEdwin Heslinga – MicrosoftChuck Johnston – WAL-MARTChristopher Gant – Federal ExpressHartmut Liebel – Jabil Global ServicesDr. Dale Rogers – U. of Nevada, RenoBernie Schaeffer – MotorolaDoug Schmitt – DellTony Sciarrotta – Philips ConsumerElectronicsSusan Wackerman – Hewlett-PackardFor more information on the Board of Advisors, go to RLA.org Editorial and Circulation Office441 W. Main Suite DLehi, UT 84043-2024Phone: 801-331-8949 x28Fax: [email protected] RL Magazine is BPA audited since 2010Printed in the U.S.A.

ISSUE 2 VOLUME 6REVERSE LOGISTICS MAGAZINE (ISSN 1934-3698) is published bi-monthly for $18.00/per year by Reverse Logistics Association located at 441 W. Main Suite D, Lehi, UT 84043-2024. Periodical Postage Paid at Lehi, UT 84043 and additional mailing offices.

POSTMASTER: Send address changes to 1040 N 1300 W Apt 48, St George, UT 84770.

Edition 26. published January 2011.

The information presented in this publication has been provided by corporations and is believed to be accurate; the publisher cannot assure its completeness or accuracy.

Issue 2 Volume 6

Copyright © 2011 by Reverse Logistics Association. All rights reserved. Reproduction in whole or part without permission is prohibited.

Page 40

Message from the Editor 6

Feature Article

Page 12

Third Army: a world class logistics company supporting the US Army

by Pfc. Dan Rangel; 27th Public Affairs Detachment

Few companies can claim a 235-year history. Even fewer dispense over 2.7 million gallons of fuel and consume over 780,000 meals daily. However, Third Army is the only logistics organization that supports the 46,000 civilians and over 200,000 Servicemembers of U.S. Central Command.

CoL is Brig. Gen. John O’Connor is charged with balancing the capabilities and requirements for both Iraq and Afghanistan using his expertise of reverse logistics.

Technology Trends and Implications for the 3rd Party Service Provider:

by Jeffery Harrison, Blue Raven Technology

Technology is evolving, and evolving rapidly. In order to remain current and competitive, so must the skills, equipment, and knowledge of the repair providers that support it. The more sophisticated the de-sign and the more advanced the technology, the more sophisticated the overall repair is likely to be.

Protecting Brand Reputation

By Gary Richards, Director, Westcoast Asset Management

Protecting brands is clearly of primary importance to success, but it’s no longer just about product quality or effective advertising - brands and their products need to be protected throughout their entire lifecycle.

State-of-the-Art Reverse Logistics Systems Part 2

by Curtis Greve

Efficiently processing returned goods can literally be the difference between a company losing money or making money. The reverse logistics system (RMS) used to process returns is the critical component of the reverse logistics process. The returns system will determine if a company is going to maximize the value of returned assets or if they will needlessly throw money in the trash, literally.

Industry Events 31

Finance is from Mars and Reverse Logistics is from Venus“How we can talk to each other” by The RLA CE Committee

Reverse logistics and asset recovery may be the largest source of savings inside most companies. As will be shown in the

examples in this article, the RL Operations managers that can slow the flow of returns, and show reasonable recovery of cost on returned goods, can deliver more to a company’s bottom line than sales increases.

Read the Press 23

Edition 24

LG Electronics Reverse Logistics Supports Retail Partners, Enhances Customer Experience - Page 16

Lessons in Spare Parts Planning-The Supreme Importance of

Avoiding a False StartPage 10

Donation as a Reverse Logistic Solution and Why Today’s Non-Profits Must

Operate Like a 3PLPage 22

Standards Committee - Standardizing Warranty Data

Page 34

Rubina Farooq – Director of Reverse Logistics for LG Electronics USAJames Nelles - VP of North America Supply Chain

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Reverse Logistics Magazine welcomes articles and abstracts. Please send to: [email protected]

magazine

Extending the Life Cycle of Your Organization’s

Services Marketing and Business Development

Activities Page 12

Hips, Knees and RFID: Inside Orthopedics -

A Reverse Supply Chain Like No Other

Page 20

Providing GE Security’s Homeland Protection

Business with the Global Logistics Support It

Requires Page 36

Best Buy – Turning Returns

Processing into Profit Center

Page 28

Edition 15

RL Magazine is publishes 12 issues

annually — 6 printed editions and now with

12 new digital editions!

Page 26

Advisory Board 9

Industry Committees 10

Focus Committees 39

Technology Spotlight 42

Page 36

Go to www.RLmagazine.com. Individual subscriptions are available without charge to qualified individuals within the U.S. Non-qualified rates are as follows: Single issue: $4.95One Year Subscriptions: U.S.: $18 Canada: $35 International: $70

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ubsc

ribe:

To unsubscribe: email [email protected].

Message from the Publishor 8

4 Reverse Logistics Magazine • Edition 26 Edition 26 • Reverse Logistics Magazine 5www.RLmagazine.com www.RLmagazine.com

In 2008, I was in Beijing for the Summer Olympics. Being a proud Canadian citizen, I went over to the Canadian tent which displayed the process and layout Vancouver was going through for the 2010 Winter Olympics. As I walked around the building looking at all the displays, it was apparent that they were trying very hard to implement a green and environmentally sustainable plan.

One area I found especially interesting was the refrigeration system for ice surfaces. It was a sustainable technology developed specifically for the Vancouver Olympic and Paralympics Centre.

Heat generated from the refrigeration plant was to be recovered and reused to heat other areas of the building, reducing energy consumption by 50%.

In 2010, I was one of thousands of supportive Canadians in attendance at the Winter Olympics in Vancouver and saw firsthand some of the sustainable processes that were put in place. The roof of the Richmond Oval (ice track) was made of wood salvaged from trees killed by the Mountain Pine Beetle - an insect that has threatened 80% of BC’s pine forest. The use of the damaged wood shows how this material can be used instead of wasted, and saves healthy forests from being cleared. The roof also was used to collect water to irrigate the surrounding landscaping and trees, and to provide water for bathroom toilets.

The Olympic village had 1,100 apartments, plus commercial space for shops and restaurants, and since the Olympics, as intended it has become a residential neighborhood for 3,000 people.

Two percent of the materials used in the Olympic medals came from cathode ray tube glass, computer parts, circuit boards, and other trashed tech. Each bronze medal contained just over one percent e-waste, and the silver medals contained small traces of recycled electronics. This was the first time recycled materials had been used in Olympic medals.

All in all, I had a great time and I saw as many events as I could. Thanks to these efforts, I didn’t feel so guilty about my added carbon footprint and was proud to see what could be accomplished when an RL mentality was applied to an Olympic venue.

Lyndsey Turner, Editor [email protected]

Our mission is to educate and inform Reverse Logistics

professionals around the world. RLA focuses on the reverse logistics processes across all industries. No matter the industry — High Tech, Consumer Electronics, Automotive, Medical/Pharmaceutical, Food and Beverage, Apparel, or other — our goal is to provide RL process knowledge to all industries. We want to educate everyone about the Reverse Logistics processes that are common to all industries and to

be a catalyst for innovation in developing and implementing new RL processes. We have been and will continue to provide our services to the industry at a moderate price.

Managing the latest information in services such as

repair, customer service, parts management, end-of-life manufacturing, service logistics, field service, returns processing and order fulfillment (just to name a few) can be a little intimidating, to say the least. Yet that is exactly

what the Reverse Logistics Association provides through our membership services. We serve manufacturers and retailers in a variety of settings while offering ongoing updates on market trends, research, mergers and acquisitions and potential outsourcing opportunities to 3PSPs. We have gained the attention of 3PLs like FedEx, DHL, USPS and UPS. 3PSPs like Teleplan, Foxconn, Flextronics, Canon, Sony and Jabil, along with small- and medium-sized service providers have found that RLA resources help

advertise their services to a regional and global audience. OEMs like Microsoft, HP, RIM, and Sony, along with Retailers like Wal-Mart, Canadian Tire, Tesco and Best Buy all participate at our events. Through RLA Events, RLA Connect services and our publications – RL Magazine and the Weekly News Clippings email – we help OEMs, ODMs, Branded and Retail companies find service partners and solutions providers that were previously unknown to them.OU

R M

ISSI

ON

6 Reverse Logistics Magazine • Edition 26 www.RLmagazine.com

Reverse Logistics Conference &

Expo in São Paulo Brazil

APRIL 27-28Sponsored by the Reverse Logistics

Association

• Professionals worldwide will attend this event.

• Major OEMs & Retailers are looking for Third Party Service Providers that can manage their Reverse Logistics in this region.

• Enjoy the fall season in the Brazilian sun!

Plan now to learn from the experts in Reverse Logistics and network with other RL professionals.

MARK YOURCALENDAR NOW

RLAshows.com

Conferência e Exposição sobre

Logística Reversa no Brasil

De 27 a 28 de Abril

Patrocinado pela Reverse Logistic Association

• Participação de profissionais de todo o mundo inclusive da mérica do Sul e Central

• Principais OEMs e Varejistas estão procurando por empre-sas terceirizadas para prover serviços de gerenciamento e administração do processo de Logística Reversa nesta região.

• Desfruta do maravilhoso sol Brasileiro de São Paulo em pleno Outono.

Programe-se agora mesmo para aprender com os especialistas em Logística Reversa e aproveite para fazer uma network com outros profissionais do ramo.

Para maiores informações, visite: www.RLAshows.

com/brazil.php

Conferencia y Exposición de

Logística Inversa en São Paulo

Brasil

27-28 de abril

Patrocinado por la Asociación de Logística Inversa

• Profesionales por todo el mundo asistirán este evento

• Los fabricantes y minoristas principales buscarán terceros proveedores de servicios que puedan administrar su logística inversa en esa región

• Gozar del otoño en el sol brasileño!

Planear ahora para aprender de los expertos de Logística Inversa y hacer contactos con otros profesionales

MARqUE SU CALENDARIO AhORA

RLAshows.com

Message from the Publisher A Board of Advisors comprised of industry experts has been set up to monitor and assist the Reverse Logistics Association management team in making informed decisions. Advisors include:

Board of Advisors

Jack Allen – Scientific Atlanta, a Cisco Systems company

Jack Allen currently serves as Director of Global Supply Chain Processes at Scientific

Atlanta. In his role, Jack is responsible for the creation, development and performance of Scientific-Atlanta’s supply networks in the United States and internationally. His leadership and commitment to the recent success of several product and distribution center transfers, the development of a cross functional supply chain team and the development of an integrated forecasting/production planning/procurement supply chain planning process resulted in the improvements in Scientific-Atlanta’s supply chain and significant annual savings for Scientific-Atlanta.

Christopher Gant – Fedex

Chris Gant is Director for FedEx Supply Chain Sales. He is responsible for all business development strategy and

execution for both the FedEx SupplyChain Systems and FedEx Emerging Products Sales teams.

A 20-year veteran of transportation, logistics and electronic commerce, Chris has extensive expertise in the development and delivery of complex supply chain solutions for some of the world’s largest corporations inclusive of both Forward and Reverse Logistics. He be-gan his career with FedEx Ground (formerly RPS) in 1989 as an operations coordinator before joining the company’s sales team in 1991. He quickly rose through the sales lead-ership ranks, holding the posts of area sales manager, district sales manager and senior national account manager for FedEx Ground.

edwin Heslinga – Microsoft

Edwin is currently Director of Reverse Logistics Programs and Policies for Microsoft Devices. In his po-

sition Edwin is responsible for development and enforcement of policies surrounding re-turns and all related costs to the returns and is also involved in the Customer Satisfaction Continuous Improvement Council. Working with Microsoft Call Center and the Microsoft Manufacturing Operations Edwin is driving the improvement of consumer satisfaction through agent assisted support and on-line support while managing the costs.

Prior to working for Microsoft Edwin worked for Jabil Global Services as the Director of IT Solutions, where he worked with various teams on the proposal and implementation of reversed logistics services for various compa-nies at the Jabil factories around the world.

Charles Johnston – WAL-MARt Stores, inc.

Charles Johnston is General Manager at the Bentonville Return Center, WAL-MART

Stores, Inc. Chuck has been with WAL-MART for the past 14 years and his responsibilities include Returns, Imports, Exports, Tires and Printing and Mailing Distribution.

Hartmut Liebel – Jabil Global Services

Hartmut Liebel was named President, Jabil Global Services (JGS), in October 2004. He joined Jabil as

Executive Vice President in July 2002 and was named Chief Operating Officer in October 2003.

Dr. Dale Rogers – Univ. of nevada, Reno

Dale Rogers is the Director of the Center for Logistics Management and a Professor

of Supply Chain Management at the University of Nevada. Dr. Rogers is a frequent speaker, a consultant to several leading firms, has been published in several logistics journals and has published several books on logistics and re-verse logistics. His current research interests are focused on the following: reverse logistics and returns, supply chain technologies, e-busi-ness supply chain management, and supply chain management.

Bernie Schaeffer – Motorola

Bernie Schaeffer is corpo-rate vice president of Post Sales Support for Motorola

Mobility. His global organization is respon-sible for providing both in- and out-of-war-ranty repair services to both consumers and carriers, provides consumer support services through call center, web access and on-de-vice solutions, is the fulfillment engine for value-added services, manages asset recovery on equipment returns and is the source of information on product field reliability.

Doug Schmitt – Dell

Doug Schmitt serves as VP of Dell’s Global Field Delivery organization with international responsibility for global break/fix field

engineers, same day service delivery, spare parts depots, parts planning, service logistics, repair, reverse logistics and Dell’s global com-mand centers. In addition to Doug’s role as VP Global Field Delivery he has responsibili-ty for Americas Support Services. Previously, Doug held executive and senior management positions in service and finance at Dell, Inc.

Doug came to Dell in 1997 from Sequent Computer Systems where he held various senior level finance positions. Before Sequent, Doug worked in the banking sector.

tony Sciarrotta – Philips Consumer electronics

Tony is Director of Returns Management at Philips Consumer Electronics North

America. In this position, Tony leads returns reduction and entitlement initiatives for mainstream consumer electronics, and is also currently concerned with further driving the implementation of electronic registration for Philips products at leading retailers. Working with Philips Sales, Service, Marketing, and the Philips Business Excellence Group, Tony is helping drive several teams to improve the consumer experience and subsequently reduce the high rates of products returned with no defect found.

Susan Wackerman – Hewlett-Packard Company

Susan Wackerman is cur-rently a Sr. Operations Manager in the Americas

Supply Chain for HP’s Imaging and Printing Group. In her position, Susan is responsible for the Recycling Operations for HP Americas and the Returns Operations / Remarketing for HP Americas Imaging and Printing Group. This includes supply chain development, re-verse logistics, disposition and processing, refurbishment, resale, channel management. For Recycling Operations her product re-sponsibilities cover all HP product categories including inkjet and laser printing, digital im-aging, supplies, scanners, shared printing, PCs, notebooks, desktops, servers.

Complete biographies are available from the RLA site at:

www.ReverseLogisticsAssociation.org/company_advisory.php

Inclusive or Exclusive Almost every week I’m asked how the association is doing, which is exciting to respond to! Another question is how the industry did last year, of course I always ask, which industry, because the RL process is found in every industry. So first to answer the association question; the association increased in total membership, year over year in 2010 and we expanded into South America with the launch of our event in Sao Paulo, Brazil. It was a challenging but rewarding year. The second question is interesting because the answer has 2 parts. First, the need for RL professionals is growing every day and

the cost savings found by those professionals is astronomical. But at a time when budget cuts were implemented to keep companies afloat, many RL budgets were also cut because they report into the logistics departments. Do you see the same irony in that as I do? The very objective that everyone was looking for, “cash”, which could be generated by beefing up RL budgets, was overlooked due to budget cuts. I am sure everyone understands this crazy dilemma, yet that is the world of RL. So now to the reason for the title of my editorial, Inclusive or Exclusive; just as many companies missed the very objective of finding cash to keep their companies running, I see the same philosophy when it comes to marketing in the RL space. Over and over again so many “3rd Party Service Providers” try to hide customers from one another, as if their competitors are unhooked from all forms of communication. I’m repeatedly told that 3PSPs don’t want to invite their key OEM or Retail clients to a conference a competitor is attending, so they don’t invite them, even when the 3PSP is exhibiting. Yet their competitors are doing just that, inviting potential clients with the hope of building a relationship with them for the future. Doesn’t it seem natural that to strengthen a relationship with present clients you would invite them to every event where you exhibit? Put yourself in the client’s shoes, if they aren’t invited, what conclusion would this lead you to? “Perhaps the company I am doing business with is sheltering me from competition because they don’t have best practices, and they’re afraid of losing to someone better.” So to you OEM, Cell Phone Providers and Retailers; surely your vendor is intelligent enough to know that you chose them because you want them as a partner. One that will continue to find new and better ways to reduce costs and process times, and that the partnership is based upon trust to work as a team! If they are leaving you off the invitation list, please remind them why you chose them, and that as a team member, they shouldn’t shy away from competition, they should embrace it. The next time you are thinking about excluding someone from your invitation list, think again. Including everyone will always result in a better return on investment.

Gailen VickRLA Executive Directorwww.RLA.org


Reverse Logistics Association Industry Committees

Focus Committees & Regional Focus continued on to page 39

AutomotiveChairman Needed

• Austin Rappe, Inmar• Charles Chappell, Genco-

ATC• Dave Vikartofsky, A.T.S.

AviationChairperson - Bernie Gagnon, Kuehne + Nagel, Inc.

Consumer ElectronicsPresident - Chris Tejeda, InmarCo-Chair - Maryellen Daniels, Itran

Co-Chair - Charles Dunton, Genco-ATC Committee Members:• Chad Burke, Ryder• Jack DeButts, Dell (Past

Chair)• Brian Eddy, SubCon

Industries• Christopher Fabian,

Professional Service Solutions, LLC (Founding Chair)

• Todd Fenix, Ozark • Elaine Gasser, HP • Matt Gwilliam, Reverse

Logistics Association • Joel Jacobs, The Recon

Group • Dave Keltner, Cerqa • David Liscom, Hyper

Microsystems Inc.• Pedro Mauricio, CellBras • John McGurk, Globalware• Jeff Robe, RLA • Paul Rupnow, Andlor

Logistics Systems Inc • Bita Salimian, National

Electronics Service Dealer Association

• Jordan Sielaff, Ace Wireless • Steve Vertun, Segue

Corporation • Javier Villarreal, Ace

Wireless

Data StorageChairperson - NeededCommittee Members:

• Ed Inal, Western Digital• David Lick, Seagate• Gary Gear, Toshiba

• Glenn Grube, Moduslink• Wes Stott, DEX• Doug Pratt, Iomega• Kevin Arra, Onelife

Digital• Vladermir Gatti, Pandisc• Herman Goemans,

Sprague• John McGurk,

GlobalWare Solutions

Retail & Dot ComChairperson - NeededCo-Chair - Pat Sullivan, Inmar - CLS Reverse Logistics.

WirelessChairperson - Doug Zody, MicrosoftCommittee Members:

• Will Blomqvist, The Kane Company

• Dennis Cain, DEX • Gary Cullen, 4PRL LLC • Bob Hathaway, TeleCycle,

LLC • Gailen Vick, Reverse

Logistics Association• Glen West, Celestica, Inc.• Jacob Aharon, Asset

Science

TelecomChairperson - Gary Cullen of 4PRL

• Glen West, Celestica• Dennis Cain, DEX• Bob Hathaway, Telecycle• Will Blomqvist, Kane

Company

Food & BeverageChairperson - Bruce Stevenson, RMS IncCo Chair – Mike Rawlins, IndependentCommittee Members:

• Tad Anderson, CH Robinson

• Matt Gwilliam, Reverse Logistics Association

• Oliver Hedgepeth, Hedgepeth Transport, LLC

• Misty Hicks, Americold Logistics

• Elyse Lyons, Ocean Spray Cranberries, Inc.

• Mike Rawlins, Independent • Jeff Robe, RLA • Bruce Stevenson, Return

Management Services, Inc.

Medical/PharmaceuticalChairperson - Needed

• Michael Blumberg, Blumberg Advisory Group

• Robert Ticknor, Services Innovations Group

• Dan Gardner, ATC Logistics & Electronics

• John McGurk, GlobalWare Solutions

Medical/Electronics Best PracticesChairperson - Needed

• Eric Miller, Agnitio Management Consultants

Want to make a difference? The following committees need members:

• Apparel• Appliances - White

Goods• Aviation• Household/Small

Appliances• Home Improvement• Marine Electronic

Equipment• Notebook/PC• Office Equipment• Photographic & Optical

Equipment• Televisions & Display

Devices – Brown Goods

Join today at www.RLA.org

Industry Committees are set up to provide a standing forum for Reverse Logistics Professionals to meet on a regional and global basis and discuss common Reverse Logistics issues at the RLA Conferences & Expos. Industry Committees educate the industry on reverse logistics:

• “Best Practices”• Consumer Satisfaction

Issues• Regulations on a

Worldwide & Regional Basis

• Processes that can Reduce Costs


Most companies focus on the drive to increase revenue. The battles to lower department budgets or to eliminate “unnecessary” costs are constant and oftentimes bloody. Hidden costs in areas such as Reverse Logistics can be missed because the managers in Finance and the managers in Reverse Logistics Operations do not speak in the same language. We hope to improve the discourse, or at least agree on the language for the battles.

The lack of collaboration between Finance and Reverse Logistics in many consumer goods companies is preventing easy improvements to the bottom line. If we can learn each other’s language the savings impact is tremendous, as we will show. By finding the passion to work across divisions, managers in these areas can improve a company’s bottom line by reducing returns, increasing asset recovery, putting in proper controls, and evangelizing best practices within the industry. “The first year Philips took a serious look at returns

resulted in savings of over $40 million dollars, and Finance became best friends with Returns” says Tony Sciarrotta of Philips Consumer Lifestyle. Recently, the Reverse Logistics and Finance team at Cisco showed contribution of $147 million to net income in 2009 by reducing returns and their associated costs. Finance is the land of black and white numbers. The value add of RL Operations can be difficult to measure and report. However, as long as Finance drives the numbers, and RL Operations cannot quantify their value add, Finance will win. “A Returns Operations manager should have a finance manager as a best friend,” says Wayne Fillers, Director of Customer Care, Philips Consumer Lifestyle. Finance managers often have career goals to run some operations within their companies, and they should have a best friend who is successful in Reverse Logistics. Reverse logistics and asset recovery

may be the largest source of savings inside most companies. Companies without a true returns management group that operates independently of sales, marketing, or finance/credit, usually do not have controls in place to reduce the reverse flow of products from the market, or to sell the returned goods into the right channels for a profit. As will be shown in the examples in this article, the RL Operations managers that can slow the flow of returns, and show reasonable recovery of cost on returned goods, can deliver more to a company’s bottom line than sales increases. F inancial Tool K iT For reverse logisT ics “The right tool for the right job” – how many times has that been said, in so many situations. For Reverse Logistics, there are many tools to offer both sides of the aisle that can help. There are many approaches to reducing costs on the planet

of reverse logistics. Finance and Returns managers have options today that were not available until recently. Finance and Returns managers can work together to calculate the impact of Reverse Logistics initiatives and offer a Return On Investment (ROI) proposal to senior management.

The first tool is the Return Savings Calculator (“RL$ Savings”), an Excel

file. This file will be made available to anyone to download through the Reverse Logistics Association website (www.reverselogisticstrends.com), and is a simplified but detailed spreadsheet with terms and formulas developed by Finance and Returns managers working together. Yes – all of us involved with this article agree – a returns manager needs a finance manager as a ”best friend” to be successful, and a finance manager

can learn a lot about RL operations from a good returns manager, especially when they can speak the same language.

The RL$ Savings Calculator allows for any manger to insert specifics about sales volumes and return rates for a given product or category. The returns manager can then insert per unit costs for refurbishing, handling,

Finance is from Mars and Reverse Logistics is from Venus “How we can talk to each other”

FEAT

URE A

RTIC

LE

by the CE Committee

VARIABLES VALUE UNITS

SALES

Avg. Annual Shipment Quantity In Units (#) 400,000

Avg. Unit Sales Value In Dollars ($) $150.00

Avg. Annual Sales $ Avg. Quantity x Value $60,000,000

Standard Cost (Landed) $120.00

Market Price (M.S.R.P.) $200.00

RETURNS

Returns Percent Baseline, projected return % 10%

Returns Quantity Return % X Avg Annual Shipment 40,000

Product Original Value (Baseline) Return Qty x Avg Unit Sales Value ($6,000,000)

**Market price decline should be incorporated

Scrap Avg. Industry Results - 25% $120.00 ($1,200,000) 10,000

Sold to Liquidators Avg. Industry Results - 5% of Market Value $180,000 30,000

Freight Cost Returns Qty x Freight Cost/Unit $3.00 ($120,000) 40,000

Retailer Return Handling Fees Prod. Orig. Value x Handling Fees 10% ($600,000)

Warehouse Handling Fees Prod. Orig. Value x Handling Fees 2% ($120,000)

Cost of Money (for 6 months) Based on 2% of Returned product original value 2% ($80,000)

Model 1: Returns Processing Costs ($1,940,000)

TOTAL RETURNS LOSS Returns Value + Scrap & Liquidation Program ($7,940,000)

Expense per unit shipped Returns losses / units shipped ($19.85)

No Trouble Found % of No Trouble Found 65% 26,000

Defective Unit Number of defective units 25% 10,000

Scrap Estimate of Non-Sellable, To Be Disposed 10% 4,000

Cost associated with Plug & Play Plug & Play 100% Units Returned $5.00 ($200,000)

Refurbishing/Repair Cost per Unit Refurbishing of Defective Units $22.00 ($220,000)

Packaging: Old Recycled, Repkg. of Refurb. Materials Cost per Returned Product $3.00 ($108,000)

Reaccessorizing Missing Accessories Used $2.00 per unit $2.00 ($72,000)

Total Returns Processing Costs ($600,000)

Resale Refurbished Price/Unit Estimated 60% of Avg Unit Value for resale 60% $90

Resale Refurbished Quantity Returns Qty x 90% 90% 36,000

Total Returns Resale Refurb. Quantity x Refurb Price/Unit $3,240,000

Model 2: Returns Processing Net Total Returns Resale Less Processing Costs $2,640,000

TOTAL RETURNS LOSS Returns Value + Improvement Program ($3,360,000)

Expense per unit shipped Returns losses / units shipped ($8.40)

COMPARISON OF MODEL 1 & 2

Original Returns Loss (Baseline) Return Qty x Avg Unit Sales Value ($6,000,000)

($1,940,000)

Model 1: Total Returns Loss ($7,940,000)

$2,640,000

Model 2: Total Returns Loss ($3,360,000)

Model 1: Existing Scrap & Liquidation + Baseline Returns Costs

Model 2: New Asset Recovery Model + Returns Improvement Programs

RETURNS SAVINGS CALCULATOR

MODEL 1: EXISTING SCRAP & LIQUIDATION - BASELINE RETURNS COSTS

MODEL 2: NEW ASSET RECOVERY MODEL RETURNS IMPROVEMENT PROGRAMS


warehousing, freight, and resale value. These numbers should come from a finance manager (your best friend) before ever going in front of senior management. The spreadsheet then allows for the cost of any returns reduction initiatives to be added on a per unit basis, and automatically calculate estimated savings to a company for implementation.

The RL$ Savings calculator spreadsheet file is a tool that the Finance and Returns managers will be able to use with senior management and present together. The process of gathering and filling in the right figures for an accurate executive summary will often make “best friends” of the Finance and Returns managers if both of you want to be successful.

Terminology For BoTh F inance and rl managers

Even with the right tools to do the job sometimes the terminology

used (or misused) often derails otherwise successful communication. Obviously across industries, companies and even individual groups within organizations definitions will vary slightly, however alignment between operations and finance on how standard financial metrics are gathered and reported must be clear to avoid pitfalls. Furthermore continuity of operating terminology between sales/marketing and reverse operations can have profound impact on the profitability and success of both operations.

For example - Standard Cost. What does this actually entail for your company/product? Does it differ from Cost of Goods Sold? Is Standard Cost pegged to initial cost of goods sold or to current product value? Is there a difference, if so how is it accounted for? How much freight is included? How is standard costs used for your RL operations? One can begin to see the financial implications of understanding what it is finance or operations are actually talking about.

CostsAny operations or finance manager worth their salt knows and plans for the obvious costs of doing business. Freight, Labor, Overhead, Repair parts and collateral, etc… these are black and white costs of doing business. Although variable they have a distinct definition and more than likely some clear cut strategies for how to manage them. They are invoiced, easily observed and to a great degree under the control of managers and analysts alike. What many fail to consider are the hidden costs that tend to piggy back on these known costs. These hidden costs are often times camouflaged as necessary evils or passed off as just the way it is. The truth is these parasitic hidden costs can go undetected for long periods of time, well that is to say aside from their effect on the bottom line. Most RL Operations have many hidden costs.

It is true not all aspects of our RL businesses are controllable but they can be accounted for and their risk can be mitigated if not neutralized. Freight cost for example, clearly represents a dollar value, it is easily traceable to a line on the P&L, it is planned for and forecasted to, trended and watched all month long for spikes or valleys. As a consequence, Freight Cost is a metric just about every operation watches. In fact it is probably no stretch of the imagination someone’s performance evaluation is tied to just such a metric.

When a carrier shows up late for a pickup or delivery or damages goods in transit it doesn’t change the cost of freight. Yes, a claim may be filed against the value of the damaged goods or the carrier may receive a mark down on their scorecard, but who pays for that? Who covers the overtime the dock supervisor pays his or her associates and what does it cost for a clerk to file damage in transit claim, what is the opportunity cost of that product not making it to market? Many times the answer is: “well it is a cost of doing business and there is no way to plan for it”. While that may be said of a great many factors in a reverse logistics


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RETURN ONASSETS

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÷TOTAL ASSETS

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operation it does not change the fact that these costs, unchecked, quickly corrode the already slim margins most organizations operate on.

Moving on to inventory, as an organization masters shrink and waste in its operations, effective Materials Requirements Planning (MRP) takes center stage in controlling inventory cost. Order too much and then the excess and obsolete materials are the result, eventually translating to sale at a loss or a write off. Order too little, widgets do not get produced and sales are lost. So, where is the hidden cost? As your friend in finance will tell you, excess inventory hurts cash flow and increases good old fashion carrying costs. Until it is sold or disposed of it takes up square footage, it may need to be inventoried and even then it represents an unrecoverable sum of money. Shortfalls can be just as caustic to the bottom line. Until it is sold or disposed of it takes up square footage, requires continued attention from inventory control functions and all the while the “world” is still turning. As inventory ages there are other concerns that represent a significant hidden cost that increases with time

hidden reverse logisT ics F inancial cosTs

Price creepPrice Creep is the gradual and steady increase in the valuation or market price of an asset. Price creep refers to a situation in which either an individual or a group of individuals gradually lessen its reservations about

paying higher prices for a given asset. As it pertains specifically to Product Returns, Price Creep can occur in many aspects of the Product Return Life Cycle including:

• Increases in transportation costs associated with the shipment of product returns.

• Cost of processing returns by a third party repair and/or refurbishing company who was subcontracted to receive, plug & play, process, repair, refurbish, re-accessorize, re-package, store and ship refurbished product returns on behalf of the manufacturer.

Market value:Product returns never result in a profitable situation, i.e., the cost of reclamation and subsequent intrinsic market value will never exceed the profit of the initial sale of the product. To the contrary, product returns result in losses to the manufacturer, the dealer and often the end user consumer.

From a manufacturers perspective, a return results in a lost sale, the return shipping cost (dependent on sales agreement and reason for return), the cost to plug & play, repair and/or refurbish, re-accessorizing and re-boxing, storage cost, resale of the refurbished or as-is merchandise and transportation cost of shipping the product to the ultimate purchaser.

From a dealer or retailer perspective, any return results in a lost sale,

possibly a lost customer, repackaging and shipping costs associated with the return to the manufacturer and a lot of paper work to obtain an RMA, process it through the manufacturer and obtain a credit for the returned merchandise.

From the customer or end user perspective, a return can be measured in frustration that the product purchased failed to work as expected, re-cartoning the product and returning the product to the retailer they purchased it from or via a third party authorized service center who was unable to make the repair due to the type of defect or unavailability of the appropriate service parts.

Finance managers will recognize that innovation and newer products will impact market value, sometimes causing obsolescence, and Reverse Logistics managers need to have processing speed related to market price erosion. All might agree for example, that digital cameras should be processed more quickly than appliances based on their estimated 15- 20% annual erosion rate. Finance and RL managers also have to recognize a point when scrapping the products in an environmentally responsible way will make more sense as a disposition option.

condiT ion classiF icaT ion oF invenTory Classification of Inventory if fairly straight forward for “A” stock which is considered new, pristine product which has never been opened, sold

through to a consumer or used. There is no set criteria used universally to classify inventory that does not meet the very straight forward requirements for “A” stock products. The classification for refurbished and “As Is” products will vary somewhat from one manufacturer to another. Although there is no set “B”, “C” or “As Is” stock

definition used universally in the industry, there are some generally accepted guidelines that are typically utilized to classify this used inventory. It should be noted that many OEM’s and manufacturers have incorporated some type of usage mechanism into the hardware, firmware or software in recent years to enable them to detect the amount of time the product has been used, to serve a similar purpose as an odometer in an automobile. For example, many copy machines and printers have sheet print counters, and most television product and accessory players including recording devices have some type of internal clock or other mechanism that is capable of detecting product operational time.

dealing wiTh r e T u r n e d goods: reTurn r e a s o n classiF icaT ions

Transportation, defect and policy are the three major categories used to classify the reason for product returns. These categories can certainly be separated into more specific and detailed groups, but for the purposes of this discussion, they will be classified as sub-categories (key drivers) of product returns.

1. Transportation- Damaged, Concealed Damage. When damage occurs while product is in the forward logistics process it is generally considered a transportation related return. When ownership of a shipment transfers from the manufacturer to the retailer typically determines who is ultimately responsible for resolving a shipping related issue. The moment of transfer is generally defined by contract.

2. Defective Products – Initial Failure and in-warranty defects. This class of returns results when an end user (dealer or consumer) discovers a defect in the functioning of the product

during initial operation or while operating either on the dealer floor or at the consumer’s home. The decision to repair versus return is generally determined by corporate policy of the manufacturer who generally offers a warranty period on all new products

sold through distribution. In this document we will only consider product returns that related to product defects. The definition of defect can often include perceived defects rather than actual product failures.

3. Return Policy. Product sold into the market falls under specified or contractual policy between the manufacturer and the dealer. The manufacturer’s corporate policy also establishes the warranty period of products it manufactures and sells as well as the service policy as it relates to product repairs and product returns. These designations can serve to drive returns in a variety of ways.

r e T u r n on asseTs (roa) approach To reverse logisT ics

Reverse logistics is often considered a cost center vs. a potential break-even or possible profit center. Many firms still do NOT have an EOL (end of life) or product inventory disposition exit strategy to optimize their Return on Assets (ROA). Using a ROA approach is an untapped area methodology that can dramatically improve both RL operational and financial improvements.

ROA: Return on assets provides an operational perspective and metric to show how effectively a firm is managing their assets to generate


COVE

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camp ariFJan, KuwaiT – Few companies can claim a 235-year history. Even fewer dispense over 2.7 million gallons of fuel and consume over 780,000 meals daily. However, Third Army is the only logistics organization that supports the 46,000 civilians and over 200,000 Servicemembers of U.S. Central Command.

Third army: a world class logisT ics company.

The Responsible Drawdown of Iraq and the Build-up of Afghanistan has been nicknamed Nickel II, an allusion to Gen. George S. Patton’s repositioning of Third Army during World War II. Not since then has the American military undertaken such a shift of priorities.

Today, Third Army is commanded by Lt. Gen. William G. Webster, the business world’s equivalent of president and CEO. But in the Army

— just as in business — the CEO relies heavily upon an emerging executive position: Chief of Logistics (CoL).

Third Army’s CoL is Brig. Gen. John O’Connor, who is charged with balancing the capabilities and requirements for both Iraq and Afghanistan using his expertise of reverse logistics.

“Right now President Obama’s guidance is to draw-down forces in Iraq to 50,000 [troops] and build-up forces in Afghanistan by 30,000,” Brig. Gen. O’Connor said.

Plans for this historical movement originate from the top as a team of generals and admirals from each service coordinate together to meet the priorities of the commander-in-chief. Third Army’s commanding general reports to the commander-in-chief and his generals, just as a corporation’s president and CEO reports to the chairman-of-the-board and the board members.

One of the ‘board members’ orchestrating the various moving pieces is Air Force Gen. Duncan J. McNabb, who oversees all military logistics as the commander of U.S. Transportation Command located at Scott Air Force Base, Ill. U.S. Transportation Command, which coordinates missions worldwide using both military and commercial transportation resources, is comprised of the Air Force’s Air Mobility Command, Navy’s Military Sealift Command and Army’s Surface Deployment and Distribution Command.

Brig. Gen. O’Connor coordinates a team of such organizations, both military and civilian, to complete the mission.

“In this particular operation we’ve been very fortunate to leverage our commercial partners 100 percent in the distribution to and from the theater of operation,” Brig. Gen. O’Connor said.

From the largest vessels in the world that carry wheeled cargo to heavy-equipment transporters, from ocean-going barges to container ships — on land and at

sea, Third Army commercial partners use a vast array of equipment.

In the air, contracted AN-124s and IL-76s (Russian-made cargo aircraft) compliment the apportioned in-theater air assets to move containerized and oversized equipment such as engineering equipment, material-handling equipment and Mine Resistant Ambush Protected vehicles.

“We used to do a port-to-port model, now we’ve moved to a door-to-door model. That’s where our commercial partners go right to the port and deliver to the foxhole,” Brig. Gen. O’Connor said as he explained how Third Army commercial partners move cargo.

“We essentially buy space. It’s like riding on a bus,” he said. “When we need to move something, we offer up cargo. We may not need the whole

ship, but we can put it on a specific vessel and we let the carriers work out the details on how much space we get and how many ships.”

“The same works for surface transportation,” he said. “Moving up the theater into Afghanistan we use ‘jingle trucks’ and regional transportation contracts to support operations where we don’t have U.S. forces.”

How Third Army shipping contracts are divided is regulated by U.S. law.

The Cargo Preference Act of 1954 requires at least 50 percent of the gross tonnage generated by the U.S. government is to be transported on privately-owned, U.S.-flagged vessels if they are available at reasonable rates.

Third Army: a world class logistics company supporting the US Armyby Pfc. Dan Rangel; 27th Public Affairs Detachment, photos by Spc.Eric Guzman


In addition to Third Army’s commercial partners, the Army’s SDDC, the Air Force’s AMC, U.S. Central Command’s Deployment Distribution Operations Center, U.S. Air Forces Central Command, U.S. Naval Forces Central Command, the Responsible Reset Task Force and the rest of the military materiel enterprise, make the big push of Nickel II possible.The operation will cumulate in August when the Responsible Drawdown of Iraq is projected to have removed over 67,000 troops (bringing the new total in Iraq to 50,000 in accordance with President Obama’s guidance) and the Build-up of Afghanistan brings an added 30,000 troops (bringing the total in Afghanistan to 98,000). In addition, 18,000 vehicles are projected to leave Iraq and be returned to the continental U.S. and over 5,000 vehicles will go from Iraq to Afghanistan.

Third Army, which now serves as the overarching logistical-support unit headquartered in Kuwait, is responsible for positioning troops and equipment in accordance with the commander-in-chief’s priorities and guidance.

“From a logistical perspective, this is one of the most complicated and dynamic set of maneuvers and deployments in military history,” Brig. Gen. O’Connor said.

“Here in Kuwait, we act as the center of gravity for all things logistics,” he said. “Our job is to orchestrate this complex operation, integrating and prioritizing the movements of people and equipment through multiple information databases and systems to make sure we have accountability, visibility, and oversight in support of our warfighters.”

One of the information centers used for such oversight is the Combined Operational Intelligence Center (a NASA-like, mission-control center located in Third Army’s area of operations).

The information brought together at the COIC allows for the deliberate, accountable, more cost-effective shift of everything involving the Responsible Drawdown of Iraq.

However, even with the most sophisticated information systems, getting Servicemembers and supplies from Iraq into Afghanistan raises a number of issues, not the least of which is distance.Make no mistake — Iraq and Afghanistan may seem relatively close on a map, but the supply routes are long and circuitous. Even if one were to travel in a straight line, Baghdad is over 1,400 miles away from Kabul.

There are two primary routes Third Army uses to get supplies from Iraq to Afghanistan, both of which go around Iran. (The most direct way to get from Baghdad to Kabul is through Iran, but is off limits because of the country’s sensitive relationship with the United States.)

“These are the cards that we’re dealt,” Gen. McNabb said.

The standard route from Iraq to Afghanistan is south from Baghdad, by ship through the Persian Gulf and the Strait of Hormuz to Karachi, Pakistan, then overland once again. Much of these supplies arrive at Bagram Airbase or Kandahar Airbase by the local Afghan and Pakistani trucking industry, also known as ‘jingle trucks’ — so named because of the ornate way that the local vehicles are decorated.

More recently, Third Army opened a second route. The route runs north through Turkey, then east through Georgia and Azerbaijan, by ship across the Caspian Sea to Kazakhstan, then south on the old Soviet rail lines of Uzbekistan into Northern Afghanistan. This route is still being forged as the U.S. strengthens its alliances within the region.

To track this army-on-the-move, Third Army uses Radio-Frequency Identification technology.

“Technology plays an important role both on the ground and remotely as we work through this very complex environment,” Brig. Gen. O’Connor said. “[RFID] allows the defense supply chain to reap the benefits of commercial-industry technology as well as systems of record within our own formations.”

To effectively execute the in-theater logistics management mission, Third Army produces a holistic view of the daily status of logistical events in the COIC for Lt. Gen. Webster and dozens of other key leaders, which includes assessments of progress and actionable information.

This holistic logistics view is the ARCENT (U.S. Army Central Command) - Theater Common Operating Picture (A-TCOP), which consolidates, analyzes, validates, assimilates, and presents the volume of data found in a variety of divergent formats and is obtained from the multitude of sources required to produce the total operating picture.

“This particular system is essentially an Oracle database that ties together all of our automation systems,” Brig. Gen. O’Connor said.

One of the primary feeds in A-TCOP is the Army War Reserve Depot System. AWRDS is an automated information system capable of building and maintaining databases containing Army War Reserve stocks and other equipment data. AWRDS uses bar-code and RFID technology to collect equipment data and track and maintain changes in cargo configurations. Brig. Gen. O’Connor explained how Third Army uses AWRDS in business terms.

“[AWRDS is] a system that takes our equipment from retail, at the unit level, and moves it up to wholesale,” he said. “This is another database that allows us to quickly move equipment in and out, get visibility, as well as a wholesale perspective, so that we can track and make decisions on equipment.”

With this technology, Third Army leadership not only tracks what goes out to the battlefield, but what comes back in to be refitted or used back home.

“Industry uses the term reverse logistics. It’s no different in the military,” he said. “We leverage all the tools available to us to get rapid disposition to our forces as we manage the multitude and magnitude of all of this equipment moving both in and out of theater.”

To keep up with the disposition of forces, units in the field are required to generate operational needs statements on a daily or weekly basis. Through this process, Third Army was able to deal with the Improvised Explosive Device (more commonly known as IED) threat to Humvees as it emerged.

Edition 26 • Reverse Logistics Magazine 21www.RLmagazine.com

“Add-on armor was made available to the units,” Brig. Gen. O’Connor said. “We evolved with the threat. We ended up with Frag Kit 1 through Frag Kit 7 as a result. As this was happening, the Army began looking for a new vehicle solution at the Life Cycle Management Command and depot levels. We [then] began fielding the MRAPs while we were still installing Frag Kit 7s.”

Although the MRAP is now widely deployed, the Army does not discontinue the use of Humvees.

“We are working hard to reset, reuse, and redistribute the majority of our Humvees. We have sent over 7,500 pieces of rolling stock back to the states for reset. These vehicles will be reset and fielded to units for training. Other vehicles are refurbished and offered for sale to the Iraqi and Afghan [security forces],” he said. “The only decommissioned Humvees are those that [cannot be economically repaired]. These are decommissioned by demilitarizing and selling as scrap.”

Any equipment containing highly-specialized armor kits or other classified materials returns to the continental U.S. for demilitarization.

Brig. Gen. O’Connor described the four-step process Third Army uses to assess what to do with excess equipment.

“Consume what’s already there; redistribute assets within Iraq and Afghanistan (or one of the other 20 countries we oversee); transfer equipment to other governments through foreign military sales or excess defense article transfers; and turn equipment over to the Defense Logistics Agency for reutilization,” Brig. Gen. O’Connor said.

Third Army has moved from keeping a logistics stockpiling model to lowering their logistical footprint as close to ‘zero’ as possible.

“We are attempting to consume all that we can within the theater,” he said. “We are gauging our consumption rates with stock objectives … this includes consumables like rations, fuel, ammunition, and repair parts.”

When deployed units do not consume equipment and supplies or transfer them to other American units, it’s then transferred to local governments. To date, Third Army approved transfer of

RLA Software Solutions Committee Presenting 2 Interesting Workshops at Las Vegas Conference & ExpoAt the Reverse Logistics Association conference in Vegas in February, the RLA software solutions committee will organize 2 interesting workshops:

1. February 7th, 10.30 AM: ‘Reverse Logistics Solutions Workshop:Test, Screen, Diagnose and Financial Management’,

This workshop will address topics like:• Key considerations for choosing RL

software• Assess these requirements by Goals,

Functions, and Metrics• Prioritize your requirements• Customize when needed

2. February 7th, 1.30 pm: ‘Sustainability and Recall Management’

Imagine the Power of Possibility…Getting the most out of Reverse Logistics Creating organizational alignment

This workshop will address topics like:• Why do sustainability programs fizzle?• Checking your Sustainability

assumptions at “the door”• Understand and mange the change

process• Are you in or out of Alignment?http://www.rltshows.com/v11_pre_event.php

February 11, 2011 is Hydrogen Fuel Cell Friday in Graniteville, S.C.18 January 2011-Join key federal and state government officials, leaders in sustainable energy solutions and executives from Kimberly-Clark, GENCO ATC, Plug Power and Air Products for a ribbon-cutting ceremony and technology demonstration. This event features the first hydrogen fueling station in the world to supply hydrogen directly for industrial, commercial and government use and showcases the fueling and use of hydrogen-powered forklifts in Kimberly-Clark’s 450,000 square foot distribution facility, managed by GENCO ATC. http://www.reverselogisticstrends.com/shownews.php?id=8329

New E-Waste Laws Create More Need for Ethical Electronics Recyclers18 January 2011-Laws concerning

electronic waste, or e-waste, have recently tightened in several states, including New Jersey, Pennsylvania, and Indiana. To meet the new demand for e-waste recycling, Florida-based computer recycler, Salma Systems, recently announced that it is equipped to provide e-waste recycling services to businesses and corporations across the United States. http://pr-usa.net/index.php?option=com_content&task=view&id=592020&Itemid=28

Asset Science Releases Re-Cell-Suite Software for Mobile DevicesSanta Ana, CA—18 January 2011—Asset Science has released Re-Cell-Suite, a groundbreaking set of software tools for repair depots and mobile device refurbishing companies. Re-Cell-Suite includes four software tools designed to aid in increasing capacity and quality for cell phone functional testing, and to ensure that mobile devices are clear of any undesired data when leaving the factory. A complete set of analysis and dashboard tools are included in the suite for tracking and reporting on data. http://www.reverselogisticstrends.com/shownews.php?id=8336

Cisco Names Ryder Supplier of the YearMiami, FL—18 January 2011—Ryder System, Inc., a global leader in supply chain, warehousing and transportation management solutions, today announced it has been named Supplier of the Year by Cisco. This prestigious award recognizes Ryder for achieving the highest average Global Balance Scorecard performance in the Innovation and Distribution/Warehousing categories. http://www.businesswire.com/news/home/20110118006838/en/Cisco-Names-Ryder-Supplier-Year

CPS Unveils Its Unique Solution With Demonstrated Financial and Environmental Benefits With All Five US Facilities OpenDeer Park, NY—14 January 2011—Consumer Product Services Group, Inc. announces that all Five US facilities have opened and it has begun implementing its ‘Single Source Solution’ business model which includes reverse logistics of returned items, remanufacturing, recycling and re-selling of Major Appliances, Small Appliances, Outdoor Power Equipment

(such as Pressure Washers) and Floor Care Products (i.e. vacuums). The company’s capabilities include the complete repair of microwave ovens, refrigerators, washing machines, dryers, power washers, grills, coffee makers, vacuums, heaters and air conditioners as well as many other large and small appliances. http://www.prnewswire.com/news-releases/cps-unveils- i ts-unique-solut ion-with-demonstrated-financial-and-environmental-benefits-with-all-five-us-facilities-open-113625234.html

Arrow Electronics launches three reverse supply chain brands14 January 2011-Arrow Electronics has launched a full-service reverse supply chain business segment. The offering consists of three brands: ReSolve, a global reverse logistics services brand; Intechra, a source for IT asset disposition services; and Converge, a global provider of extensive electronic components distribution services and market expertise. http://www.logisticsmanager.com/Articles/15332/Arrow+Electronics+launches+three+reverse+supply+chain.html

Data Deletion Processes & Standards14 January 2011-Even with widespread awareness of data storage and data deletion practices, the numbers from a recent Kroll Ontrack survey are eye-opening. The information management firm found that of the 49% of businesses that are systematically deploying a data erasure method, 75% don’t delete data securely, leaving them susceptible to data breaches. http://www.processor.com/editorial/article.asp?article=articles/P3301/32p01/32p01.asp&guid=

Warranty & Service Issues To Consider14 January 2011-Nowadays, new IT equipment is in many cases a luxury rather than a necessity. “Some people like having the extra comfort of having new equipment in their data center, but refurbished hardware will save you a lot of money in the long run,” says Brandon Kasper, marketing specialist at Word Data Products (www.wdpi.com). http://www.processor.com/editorial/article.asp?article=articles/P3301/12p01/12p01.asp&guid=

Read the Press


RLM

hundreds of items to the government of Iraq, which has generated millions in foreign military sales.

Third Army also contributes equipment to the overseas program of the National Association of State Agencies for Surplus Property (NASASP, which is made up of a consortium of state agencies, works to bring reusable military surplus property back to the states for donation to eligible non-profit organizations).

The race to move all this equipment began in March, while its scheduled completion date is Aug. 31.

“Our biggest challenge right now is working against the clock. August is critical for both theaters. Our success will be contingent on the flexibility we have in making good running estimates so we can make adjustments to the plan,” Brig. Gen. O’Connor said.

“The actual plan we are executing now is constantly being updated as we maintain our flexibility. We are

still in contact and need to ensure that we ‘right size’ to maintain what’s needed on the ground for the remaining forces in Iraq,” Brig. Gen. O’Connor said.

Third Army leadership continually balances the needs of Afghanistan with their responsibilities in Iraq.

“While Iraq’s responsible drawdown is a priority, our top priority is to set the Afghanistan theater by Aug. 31,” Brig. Gen. O’Connor said.

The Associated Press cites top generals confirming our efforts as being on track as of July 21. At this rate, Third Army will soon be able to declare Nickel II a success, but as Brig. Gen. O’Connor notes, they can’t do it alone and there’s always room for improvement.

“Nothing is done in a vacuum — at least nothing successful,” he said. “The plan is always being updated based on lessons learned.”

Dan Rangel enlisted in the U.S. Army to serve as a combat journalist in April 2006. He has written hundreds of news and feature stories,

produced and captioned thousands of photos. During his first deployment to Afghanistan from February 2007 to April 2008, he served primarily as a combat journalist, going on missions out of 31 different Forward Operating Bases (FOBs) with the 82nd Airborne Division, 173rd Brigade Combat Team (Airborne), the 10th Mountain Division and several of their supporting units. While stationed at Fort Bragg, N.C., Dan covered stories within the community for military and civilian publications such as the “Paraglide” and “Up & Coming Weekly”. Dan has returned to the Middle East for a second deployment to cover the drawdown of Iraq and buildup of Afghanistan. He works as a staff writer in Kuwait for Third Army’s “The Desert Voice”, a bi-weekly magazine. While covering Third Army, he has work closely with logistics experts such as Brig. Gen. John O’Connor.


RLM

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In the late 1970s, the first room-sized liquid-cooled Cray-1 was built, clocking in at 136 MFlops of sus-tained arithmetic computation. The term supercomputer was coined to describe the unprecedented compu-tational capabilities of the machine, and a new generation of computing technology was born. Barely three decades hence, garden-variety handheld smart phones are approaching 50 Mflops, and high-end desktop computers are typically measured in gigaflops. Such massive increases in power and equally mas-sive decreases in size have given rise to enormous complexity in integrated circuit design, with its atten-dant challenges of manufacturing complexity, heat dissipation, and problem diagnosis. Modern mobile computing exacerbates theses challenges with

environmental unpredictability, and the need for con-sumer ergonomics is frequently at odds with design for manufacturability. The end result: the exploding power and sophistication in consumer-grade electronics has given rise to the need for frequent repairs which can be expensive to correct, and time-consuming to complete.

A few recent trends will serve to illustrate the problem in detail.

processor speed and inTegraTion

Moore’s Law has been in effect since the invention of the transistor; it states that transistor density dou-bles every two years or faster. Half-pitch feature size is halving every 5.4 years; processor performance is doubling every 1.8 years; the average

transistor price is halving every 1.6 years. These and several other similar metrics indicate that every form of communications and computing technology is doubling in price-performance, bandwidth, component density, and capacity every year. The practical implications for consumer electronics are enormous.

For example, modern notebook and netbook designs now feature highly-sophisticated logic boards that integrate variegated ports and peripherals, random access memories, WiFi controllers, video and HD sound chipsets, HDMI, USB and Fire Wire. These feature-rich logic boards typically utilize extremely dense, high-pin-count devices for the processor, video chip, Northbridge and Southbridge components. Such density increases the probability of

Technology Trends and Implications for the 3rd Party Service Provider:by Jeffrey Harrison, Blue Raven

failure somewhere on the board, and with it, the frequency of replacement. Similarly, the complexity of repairing these logic boards at the individual component level is dramatically heightened.

Density and complexity have attendant heat dissipation and airflow considerations as well. Consider the Northbridge chip as a specific component example. The Northbridge chip is responsible for communica-tions between the CPU, RAM, and video cards, and also plays an important role in determining how far a computer can be “over-clocked.” Modern Northbridge designs can approach temperatures of 55 degrees C (130 degrees F). End users who may inadvertently restrict air flow can exacerbate heat build-up inside the unit, causing these components to fail prematurely. Mobile devices are particularly susceptible to this kind of mistreatment, but even non-mobile computing equipment is susceptible to solder joint stress frac-tures when exposed to extreme temperature swings. These can be particularly troublesome, because the failures may be intermittent, and therefore difficult to diagnose.

The following profile demonstrates the frequency of logic board replacement contrasted with the remain-ing primary components.

Note that this profile is inclusive of in-warranty, extended warranty and out of warranty repairs, all customers supported, and spans more than 15 brands. The study is based on a ran-dom sample of 10,000 notebooks and 1500 desktops repaired in 2010. The customer mix and sample vol-ume are regarded as sufficient to discount any risk that may be introduced by the nature of our client’s contracts with their end users. See figures 1 and 2.

soFTware and conFiguraTion

Today’s multi-platform operating systems such as Windows Vista and Windows 7 running on 32 and 64 bit platforms are highly-configurable, particularly regarding wireless and networking capabilities. Tech-nicians are therefore required to ensure that the drivers and controllers are appropriate to the operating system

under scrutiny. Coupled with the proliferation of installed applications and the possibility of vi-rus infection, this has the effect of obfuscating the boundaries between configuration, driver, software and hardware issues. The result is the frequent misidentification of software or configuration issues as a hardware problem when performance suffers or fails entirely.

display Technology

Many newer consumer electronics products are now configured using LED screens instead of LCD screens. Both technologies are backlit, but LEDs offer greater contrast ratios, better color representation, wider viewing angles, and lower power consumption than their LCD counterparts. They are higher cost components, however, in part because of the complexity of manufacture. The presence of integrated power inverters, for example, has made the diagnostic and part-swapping process easier, as technicians have now have fewer individual elements to diagnose, but accessing and repairing the inverter board has become more complex. It’s a classic case of moving the challenge to the back end of the product cycle.

The case For Third parTy repair

Technology is evolving, and evolving

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Figure 2

Figure 3

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Figure 2

Figure 3

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Figure 2

Figure 3


rapidly. In order to remain current and competitive, so must the skills, equipment, and knowledge of the repair providers that support it. The more sophisticated the de-sign and the more advanced the technology, the more sophisticated the overall repair is likely to be. Some of these advances have made it easier to diagnose a defective part, but this is more than offset by cost and complexity, not only of the part in question, but of the technology needed to undertake the repair. The need for expensive equipment, highly-trained technicians, and tightly-controlled processes has become critical, and the business case for utilizing third party repair providers for cost-effective in-warranty, ex-tended warranty and out-of-warranty repairs is now self-evident. OEM/ODMs specialize in design and manufacturing; retail organizations specialize in sales; warranty companies specialize in risk and contract management, but none are likely to nurture the core competencies necessary for post-sales, repair and aftermarket customer service - exactly what third-party repair providers excel at.

There are multiple technical and operational factors to consider when choosing to outsource your com-puter repair.

source oF supply

A typical OEM/ODM will only manufacture a limited number of replacement logic boards to support the in-warranty cycle. When these parts are required outside of the

manufacturer’s warranty period, the sup-ply may not exist until it can be harvested from these same damaged or obsolete computers at a later time. During the extended warranty period or out-of-warranty period, proprietary components such as logic boards can be difficult to source. Generic parts such as hard drives, optical drives, memory, batter-ies, etc. can be sourced more easily. The challenge is to locate quality parts that are readily available at an economic price.

inTernal componenT-level repair

Component-level repair should be regarded as a key competency for any repair provider. It is, however, an exceptionally challenging service to offer, due both to the cost of equipment and engineering staff needed to support it. Board-level repair allows a repair facility to offer the ability to replace individual on-board components; rather than simply replace entire logic boards, video cards, etc. that resides in the defective device. This has multiple benefits; including reduced turn-around time, reduced cost, and total control over the quality of the repaired assembly. The tradeoff is the expensive equipment and the inten-sive training required to be able to do this.

As BGA’s (Ball-Grid-Array’s) become more and more dense (packages can now have as many as 1400 contacts, or pads) the science of successfully removing and reapplying a replacement device is exceed-ingly complex. The objective

is to apply enough heat to remove the desired device within the proper time-temperature continuum, without also removing any of the surrounding parts, or damaging the pads or circuit traces. Too much heat applied too quickly can risk damaging the device or the circuit board; too little heat for too long can have similarly deleterious consequences. This difficulty is exacerbated by a simple fact: when accounting for factors such as the number of pads on the device, the thickness of the board, the surrounding components, and the type and content of the solder, it is immediately evident that each and every board is unique. See figure 3.

It is also important to note that the ability to repair defective logic boards not only reduces costs but also reduces pressure on the OEM/ODM to provide a steady supply of spares during the warranty period. This results in reduced manufacturing and inventory costs.

clean room capaBil iTy

Clean rooms are a requirement for repolarizing LCD and LED panels and for tab bonding of LCD panels. A defective LCD panel on a computer or television can often be repaired by replacing the polarizing film and eliminating scratches or imperfections on the screen. See figure 4. Replacing tabs by bonding on a replacement tab circuit will often remedy horizontal or vertical lines of pixels that are not functional. See figure 5. Neither of these technologies, however, is capable of repairing isolated pixels

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Figure 4

Figure 5

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Figure 4

Figure 5

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Figure 4

Figure 5

or broken glass. Again, the ability to repair an LCD screen makes the service provider less reliant on outside sources, re-duces costs, and enables greater control over the repair operation.

iT auTomaTion

Tightly-controlled processes and accounting for customer assets as well as the service provider’s inven-tory are critical activities for managing any kind of volume repair. Capabilities such as automated order entry via EDI or FTP feed, barcoded status’ and tracking, customizable reporting at both a detailed and summary level, and electronic invoicing will streamline operations and help make repairs both efficient and cost-effective.

scalaBil iTy

Local Mom ‘n Pop repair shops are predominately designed for

addressing individual single repairs. Larger Contract Manufacturers, by contrast, are designed to manage thousands of identical devices. The ability to scale from low volume customers to high volume customers with a high product mix, therefore, will enable the service provider to offer flexibility but growth in tandem with your business.

Knowledge Base

The ability to repair multiple brands and multiple vintages of out-of-warranty computers is dependent upon possession of both technical data and an accurate bill-of-materials. Repair companies with market longevity, particularly in a high-brand-mix environment are more likely to have these resources for older models requiring repair.

Whether you are an OEM looking for an in-warranty repair provider, a

warranty company looking to have a 3rd party administer and repair your extended warranty claims, or a major retailer looking to out-source out-of-warranty claims, a 3rd party repair provider with the above capabilities can provide a cost-effective repair solution, and enable you to focus on your core business.

Jeffrey Harrison is the Director of Business Operations at Blue Raven Technology, responsible for Product Marketing, Product Management and Business Analytics.

Blue Raven Technology helps manufacturing, and retail clients develop and maintain brand equity through comprehensive aftermarket repair, fulfillment, and returns management services. For more than 25 years, Blue Raven Technology has been a leader in the North American service and repair industry, with volumes in excess of one million parts and depots serviced.


RLM

RLA Conference & Expo – Las Vegas, NVFebruary 7-9, 2011http://www.rltshows.com/vegas.php

RLA Conference & Expo – Sao Paulo, BrazilApril 13-15, 2011http://www.rltshows.com/brazil.php

RLA Seminar - BentonvilleMay 19, 2011http://www.rltshows.com/ark11_event.php

RLA Conference & Expo – Amsterdam June 15-16, 2011http://www.rltshows.com/amsterdam.php

RLA Seminar - TorontoJuly 18, 2011http://www.rltshows.com/tor10_event.php

Industry Events

The Reverse Logistics Association Conference & Expo kicks off on Monday with the opening of the Exhibit Hall. Tuesday and Wednesday are two full days with the Keynote address, sessions presented by RL professionals, leading academics and interactive panel discussions, followed by Workshops and Committee Meetings on Thursday.

Session topics include “Customers Give the Best Insights into After- Sales Effectiveness,” “Using Technology to Enable Collaborative Independence” and “Designing an Integrated Reverse Logistics and Service Support Network.” A wide range of Reverse Logistics companies will be in attendance from repair/refurbishing to recycling/e-waste and transportation logistics. Be sure to visit the Exhibition Hall where OEMs, ODMs and Retailers will be looking for Third Party Service Providers (3PSPs) that can manage Reverse Logistics in Europe and around the world. This is a rich opportunity for OEMs and Branded companies to identify future service partners among the many exhibitors showcasing their Reverse Logistics solutions.

For more information, visit: www.RLAshows.org

Over 500 RL Professionals

Location:Amsterdam, The Netherlands

Venue:Dorint Amsterdam Airport Hotel

Date:Workshops - July 19Conference & Expo - July 20-21

8th Annual RLA/RLTS Conference & Expo

Three Full Days of RL Thought Leadership,

Innovation and Networking!

profits. Within reverse logistics, the big item within ROA looks at the firm’s effective or not effective utilization on their product inventory.

NOTE: Insert ROA diagram (call to discuss reproducing this chart)

There are many links and drivers that impact ROA, and here are a few key areas:

• Cost reductions that come through reduced COGS and operational expenses.

• Enhanced and Improved asset turnover through better inventory systems/controls and management

• Increased revenues from increased throughput from more returned items sold to secondary markets.

One key reason why companies fail to get RL programs to produce results is the existence of too many silos. RL touches many facets of both internal departments and external supply chains. It is common to see firms allocate costs to each department and not understanding their total system wide costs in reverse logistics. Thus, without establishing a true reverse logistics P&L and knowing all these costs, it makes it impossible to get any significant results, let alone enhance ROA.

Understanding your total reverse logistics supply-chain costs is a key step to address the ROA.

All the itemized and detailed costs to process and touch/handle a returned product or order, can be greater that the value of the product itself. One cost factor not listed is time. Depending on the product & category, (ie: consumer electronics), returned inventory can quickly depreciate, & high price erosion can dramatically impact the yields that can be achieved on the remaining residual recovery values in the various secondary

marketplace channels. For example, if a company has 1 million dollars of excess or obsolete inventory, and experiences an average price erosion of 10-15% per month over a short time span ( 6 months of doing nothing), the total loss of inventory value is over $500,000. Thus, idle inventory is not like wine, since it does not get better with age. Having the right process in place to proactively deal with returns will yield better results. Knowing your inventory polices, and properly aligning these to your specific product life cycles will help to optimize your ROA. Quick and early action is critical in the entire inventory disposition process, as “lost” time is “lost” money.

If you company has a fragmented approach, or just is unable to effectively manage or implement this RL process, then dealing with product returns may be a non-core activity. Thus, you may consider doing a RFP, and outsource some or all of your operational returns processing process steps to a third party service provider whom will enable you to achieve your desired ROA targets & enhance your bottom line. case sTudy 1 – rl$ sav ings From FreighT claims

A manufacturer of consumer electronics products had no standard procedures in place to insure that all legitimate damaged in transit (DIT) freight claims were being filed in accordance with the interstate cargo act. The general rule is that a receiving or delivering carrier is liable for the actual loss or damage to a shipment upon proof by a claimant of (1) delivery to the carrier in good condition, (2) arrival at destination in damaged condition and (3) the amount of the damages. The carrier’s defenses to the claimant’s cause of action are very narrow. Basically, the carrier must first prove freedom from negligence, and then, that the loss or damage was caused by one of five specific exceptions:

1. An act of God; 2. An inherent nature or vice of

the goods; 3. An act of the shipper; 4. An act of the public enemy; or 5. The authority of law.

In this case, the volume of returns were substantial and subsequently, the dollar value of damaged in transit product returns was sizable.

A project was established and representatives from each cross functional touch point in the process were assigned as team members to a newly established project. The team, utilizing Six Sigma methodology, followed the standard DMAIC process to define measure, analyze, improve and control the process of filing legitimate damage in transit claims in a timely an accurate manner.The net result of the implementation of a definitive process to properly file DIT claims in a timely and accurate manner resulted in claims reimbursement in excess of $2M US dollars annually which significantly improved the manufacturer’s bottom line profitability.

case sTudy 2 – rl$ sav ings From reduced reTail reTurns

Philips worked with a large national retailer to implement electronic registration of the product serial number at point of purchase. At that time, like many other national retailers, there were returns by consumers in the 10-12% range. Most would go back to the manufacturer, adding costs for both companies, and high rates of “no fault found (NFF).

Both the retailer and Philips agreed many of the NFF returns were related to ease of use and the consumer experience, and Philips developed projects to make improvements in those areas. It was also known that some percentage of the returns were fraudulent. The products might have been older, from another retailer, or from a local flea market. In some cases, stolen products were going out the back or front doors and being

returned for cash refunds. The retailer had no way to validate returns, as most occurred without a sales receipt, and manual attempts to validate them would slow down the register and negatively affect consumer satisfaction.

After electronic registration began, the retailer and Philips could compare the amount of returned items where the serial numbers were never captured at the register during the bar code scans. From a low of 90% capture and valid serial numbers, the 10% fraudulent volume was reduced to 1.5% over a two year period by use and enforcement of the registration program now built into every register.

Here is an example of the numbers for a high average item cost manufacturer

• $500 million annual sales• 12% returns rates = $60 million

volume• 8.5% of the returns eliminated

as fraudulent (serial number not valid) = $5.1 million

• 40% of the returns “deferred” due to age (over 90 days old) = $24 million

• “Normalized returns” rate at 6.2% on $500 million volume = $31 million

• Savings to both companies = $29 million

Projects by Philips in the manufacturing process, customer care and support, and ease of use designs further reduced returns at this national retailer, and others. The cost to implement the electronic registration program was recovered in far less time than Finance had expected or forecast. Other initiatives to reduce returns can also have significant financial impact. Every reverse logistics team should always have a Finance member.

margin leaK - rl$ sav ings – conTrol oF h idden cosTs and margin leaKs

Margin leaks are items that increase costs, reduce profit margins or can be

a macro level rev iew By BoTh The operaTions and F inancial Teams will y ield a comprehensive sharing

oF processes & idenTiF icaT ions oF “margin leaKs”

Improve Asset Turnover

Reduce Labor Expenses

Reduce Operating Expenses

Lost Time & Money• How many times is a

product “touched”? • What is

administrative cost to manage?

• Are there unclaimed credits from OEM/ODM?

Service Delay Issues• Spare Parts not

available• Refurbishment:

Is grading criteria appropriate for the return sale value?

• Manuals, Accessories, etc. not available

Product Life Cycle:• How fast is

the product depreciating?

• At what point do you sell “as is” or dispose?

• Does sale of refurbished product negatively impact sale of new product?

• Is there $ value in your e-scrap?

What is Square Footage & $/sq.ft. for:• Inventory &

Packaging with “dust” on top?

• Inventory held for Discrepant, Freight Claims, etc.

• Items to be Recycled or Disposed

Packaging Materials:• What is cost for

disposal? • Is packaging “labor

friendly” or add unnecessary labor cost?”

• Any extra $ for fuel surcharges & “DIM weight”?

• What is freight claim $ due to packaging?

Freight, Fuel & Location:• Does size & weight of

product require unique shipping & packaging?

• Is repair, inventory, & returns operations in 1 location?

• Do you “Cross Dock”?

• How many shipments are LTL?”

Managers • Cost: Number of

meetings x people x minutes?

• Analyze too much or not enough?

• In office or on the production floor?

Purchasing & Inventory• Time spent

managing “overdue”?

• Routine ordering vs. research new part?

• Automated process or manual?

• Are expedited parts used same day as received?

ERP System:• 1 system for

Inventory, Procurement, Accounting, etc.?

• Inventory classification useful & correct?

• Data available for timely analysis & reporting32 Reverse Logistics Magazine • Edition 26 www.RLmagazine.com

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RL Connect – We help YOU connect to . . .

We help OEM’s, Retailers, Brands, and 3PSPs who are trying tofindapartnerforReverseLogisticssavetime,energy,andmoney by using our proprietary process called RL Quote. OEM’s, Retailers, and Brands post RFI’s anonymouslyon the RLA website and 3PSPs respond. We help facilitate thesearch,andyoureapthebenefits. For more information: call +1.801.331.8949 ext. 5email [email protected] or visit RLAconnect.com

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opportunities to reduce the costs and stop the leak.

A macro level review by both the operations and financial teams will yield a comprehensive sharing of processes & identifications of “Margin Leaks”.

The sidebar includes a number of examples of margin leaks to start your search and improve your profits.

conclusion

The next step is to develop a best friend on “Mars or Venus”. This will require effective communication. Your discussions will demand that you listen and speak knowledgably. Review the terminology and case studies in the article for ideas to start your dialogue. Look for a common ground by identifying a shared business vision.

If you already have a best friend, improve your communications to

build teams, promote & improve an idea, product, service or process. The objective is to create value for your business. Improve the bottom line and identify margin leaks in the areas of asset management, operation expenses and labor expenses.

Enjoy the journey to your common destination – Improved business results!

This article and tools have been prepared by the RLA Consumer Electronics Committee

Tony Sciarrotta, Philips Consumer Electronics

Christopher Fabian, Professional Service Solutions, LLC

Maryellen Daniels, ITRAN

Charles Dunton, ATCLE

Brian Eddy, SubCon Industries

Paul Rupnow, Andlor Logistics Systems Inc

RLM


reverse supply chain all the way through to resale completely outside of their usual mainstream channels.

respecT a Brands inTegriTy

With big brands dominating the market place the issue of consumer trust is fundamentally important. Businesses such as Toyota, who jeopardised its connection with customers when it took its eye off the quality of its vehicles, is suffering severe consequences with a downturn in sales and a huge PR and confidence building exercise ahead of it to regain the integrity of the brand.

By wanting to just get rid of returns as quickly as possible and take the easy way out, many retailers in particular have been stung by the quick buck/quick turnaround marketplace. Unless a reputable company is used, brands can end up being sold on a number of sales channels with little or no control about where the goods appear or how they are marketed.

Consumers purchasing from these channels are often dissatisfied with the service, with problems such as missing parts, damage, and a lack of warranty support, all of which can cause irreparable damage to a brand and a customers perception which companies can spend thousands if not millions of pounds putting right.

In addition increasing legislation, particularly with regard to the disposal of goods, is impacting on

the electrical goods market. With the introduction of the WEEE legislation in the UK, manufacturers are obliged to dispose of all scrap units correctly in line with the legislation or face a significant fine. Brands need to insist on proper disposal routes and clear certification to avoid getting caught out.

daTa proTecTion

The increase in popularity of consumer electronics products that allow consumers to store personal data raises important data protection issues for any company operating in the sector. It’s essential that data protection procedures are handled by an experienced company with the product knowledge to eliminate any of the risks associated with memory based products such as laptops, digital cameras, mobile phones and PC’s.

A specialist approach, such as the one taken by Westcoast Asset Management, ensures any hard drive or memory can be professionally cleaned and the data erased permanently to avoid any issues if the product is re-entering the product chain. In doing so, the brand owner is protected, as well as the original

owner of the product, and it is this attention to quality that is fast becoming the over-riding factor in choosing a third party remarketing partner for many brands.

As this article details there is a raft of issues created through the reverse supply chain that can affect a brands reputation and therefore to overcome any potential problems it needs as much attention and investment as the forward supply chain. Without attending to this detail it’s not just the value of the product that can be lost but the value of the brand and in the longer term its very reputation.

Gary Richards has over 25 years of management experience in the consumer electronics market, both with DSG and Comet and latterly

with Westcoast Asset Management (part of the Westcoast Group) who provide a comprehensive recovery service for end of line, excess, returned and recalled computer and consumer electronics inventory, including collection, sortation, refurbishment, remarketing and recycling.

He can be contacted on 00 44 (1) 118 912 6256

In these testing financial times, businesses with a keen survival instinct should be examining every aspect of their organisation to remain competitive in the face of razor-thin sales margins. Protecting brands is clearly of primary importance to success, but it’s no longer just about product quality or effective advertising - brands and their products need to be protected throughout their entire lifecycle.

For many companies there is still a disconnect between marketing and core supply chain processes. Issues such as returns, illegal dumping and badly handled product recalls can all damage a brands reputation for years.

Conversely, offering customers a quick, easy and efficient returns process is a sure fire way to build and safeguard brand loyalty – organisations such as Marks and Spencer and Best Buy in the US are prime examples of brands whose customers, particularly around peak season, will make a purchasing decision based on the returns and after sales service policies.

But without a structured process to manage these returns back through the reverse supply chain and off to eventual disposal, costs can add up and eventually be seriously damaging to the bottom line or indeed potentially cause considerable damage to a brands reputation.

Previously retailers and manufacturers using the reverse supply chain function have caused damage to their brand through a lack of control over the channels being used for disposal. Products sold in unauthorised channels can have a damaging impact on the full price retail strategy of the brand, especially if there is cross-over into the clients primary retail channel. Anecdotal evidence has revealed a manufacturer who has created an entirely new brand for their clearance stock to limit price erosion to its existing mainstream brands - a clear statement that shows how real the issue is now becoming.There are other examples where both retailers and even some manufacturers will control the entire

by Gary Richards, Director, Westcoast Asset Management

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Protecting Brand Reputation

Reverse Logistics AssociationFocus CommitteesFOCUS COMMITTEES

Corporate Social ResponsibilityChairperson - Brian F. Eddy, SubCon IndustriesCommittee Members:• Larry Maye, Precision Camera &

Video• Christopher F. Fabian, Professional

Services Solutions• Wes Stott, Data Exchange Corp

(DEX) Software SolutionsChairperson - Leonard Schneeman, DEXCo-Chairperson - Paul Rupnow, Andlor Logistics Systems IncRLA Advisors - Matt Gwilliam Committee Members:• Jacob Aharon, Asset Science M.

Brian Carter, SAP Labs • Haozhe Chen, E.Carolina University • Matt Domachowski, GENCO-ATC • Peter Philippens, Ideatics BV • Norman Plummer, Haeiwacom, Inc. • John Rinehart, Intel • Paul Rupnow, Andlor Logistics

Systems Inc • Lee Sacco, Oracle

Spare Parts Management Chairperson - NeededCommittee Members:• Tim Andreae, MCA Solutions• Matthew Cutone, Horizon

Technology• Shawn McFay, Dell• Mitch Williams, Superior Service

Solutions• Jürgen Donders, Gordian Logistics

Experts• John Weatherup, Tech Ed

Networks• John Wild, Flash Logistics• Jack McHale, Choice Logistics• Jesus Sales, Juniper Networks• Edward Higgins, MasterWorks

International• John Baehr, KLA-Tencor

Corporation• Alan Wheatley, MasterWorks

International• Derek Scott, Canon Europa N.V.• Michael Bisk, Prelco Electronics

• Andy Chuang, ZyXEL Communications Corp

• Herman Goemans, Sprague Magnetics Europe

• Mike Joy, Tech-Ed Networks• Dan Gardner, ATC Logistics &

Electronics• Roy J. Steele, RoShar Associates,

LLC

StandardsChairperson - Ron Lembke, UNV, RenoCo-Chairperson - Ken Jacobsen, ConnexusCommittee Members:• Haozhe Chen, East Carolina

University • Beth Foster, United States Postal

Service • Matt Gwilliam, Reverse Logistics

Association • Ken Jacobsen, Connexus • Ishak Kang, dot UI • Ron Lembke, University of Nevada,

Reno • Jeff Redford, Service Logistics,

LLC • Paul Rupnow, Andlor Logistics

Systems Inc

Sustainability and Environmental Management Chairperson - NeededCommittee Members: • Gina Chiarella, WeRecycle!• Renee St. Denis, Hewlett-Packard• Robert Gallagher, Li Tong Group• Dr. Lutz-Guenther Scheidt, PE-

International GmbH• Gary Cullen, 4PL• Chris Soh, Mentor Media Ltd.• Adrian Jooste, Duons MCO Pty Ltd• Bob German, Rochester Institute of

Technology

REGIONAL FOCUS

APACChairperson - Needed• Kenichi Kato - KatoTec• Colin Kempter – ECN group• Brian Noone – INFINET Service

Solutions• Peter Chung – Chungco• Andrew French, Asia Manufacturing

& Technology

BrazilChairperson - Needed• Vlademir Gatti, Pandisc Information• Pedro Mauricio, Keylab

China Chairperson - Haozhe Chen, Ph.D., East Carolina UniversityCommittee Members:• Glenn Norem, eeParts• Yu Tian, Ph.D., Sun Yat-Sen

University• Yuan Xu, China Marketing

Association• Daniel Pengfeng Xue, Sprint• Meiping Liu, Bostar Consulting Ltd.

China

EMEAChairperson - Needed• Ian Rusher, Cisco• Dr. Lutz-Guenther Scheidt,

PEInternational GmbH• Dr. Lutz-Guenther Scheidt,

PEInternational GmbH• Herman Goemans, Sprague

Magnetics Europe

India Chairperson - Sanjeev Kakar, inTarvo Technologies Limited, IndiaCommittee Members:• DK Sareenn, Electronics &

Computer SW Export Promotion Council

• John Mehrmann, ZSL, Inc.• Oliver Lemanski, MGH Consulting

Ltd• MK Tan, Western Digital• Ian Rusher, Cisco• Sivakumar Sethuraman, Amazon.

Com• A. Venkataraman, Cadensworth

India Ltd.• Gurudutt P. Kamath, Koosh

Logistics

In this second part of the series, we will discuss shipping and quality capabilities along with “must have” reporting and visibility tools that should be part of every state-of-the-art reverse logistics system.

The final phase of processing assets in the reverse logistics pipeline is the shipping process. This is literally where the cash register rings in the reverse logistics process. This is that part of the process where returned assets are removed from the company’s inventory in exchange for credit toward future purchase and/or cash. Shipping product out of a return center is quite different from shipping product out of a distribution center. In a distribution center orders are received, picked, and prepared for shipment. The outbound process is fairly uniform and is controlled by the order picking process and the transportation preparation requirements. However in a return center, shipping is quite different.

Items are “cutoff” based on vendor agreement terms and conditions, not “shipping orders” or transportation requirements. Because of the required cutoff criteria, a reverse logistics system must have several additional features that typically do not exist in a traditional warehouse management system.

The triggering mechanism to pick and ship goods in most top tier RMScompanies is the cutoff criteria. Remember, upstream in the returns processing functions items have been segregated based on item condition and “return point”. Each of these return points will have its own “cutoff criteria”. By “cutoff”, we mean group processed parts or goods based on return agreement terms and conditions into approved

State-of-the-Art Reverse Logistics SystemsBy Curtis Greve

shippable quantities. There are a few methods to cutoff returned or recalled items in a state-of-the-art RMS: By quantity of items; cases or pallets; by “cap” which establishes a percentage of sales by time period; by value of goods that is to be shipped; or time that the oldest item has been processed within the returns facility.

Each return point can have a unique cutoff. In addition to this unique cutoff a “global cutoff” should be set as well. The global cutoff will usually be something like “ship every 30 days or $10,000.” The RMS shipping process will be set up to run through a hierarchy that looks to the individual return point cutoff criteria first and then to the global cutoff. Once one of these are reached, the return authorization (RMA) must be processed.Return authorization is the process of “getting permission” from the company you are going to send the returns. This notifies the receiving party of the quantity and make up of the returns and it establishes the basis for the financial transaction that will be processed upon shipment. There are four types of returns authorizations (RA or RMA):

• Call for RA – The shipper applying for credit calls the receiver who will give credit and request an RA number that will be used to track and credit the return

• Fax or Email for RA – Same as calling for an RA but a fax or email either requesting an RA number is sent automatically by the RMS without human intervention

• Standing RA – An RA number is

provided upfront by the ultimate receiver of goods and this RA number is used by the sender for all outbound shipments with no additional advanced notice or approval

• No RA Needed – no tracking number, advanced notice, or permission needed

Often, requiring the shipper to request an RA can delay credit and slow down the shipment of goods. Because of this, an RMS must have a number of RA reports that can track RA aging, RA dollars outstanding, etc. The RA process and RA related reports are critical to keep return product flowing through a returns facility. This part of the RMS must be very robust and flexible to ensure product is shipped and the financial claims are filed in a timely manner.

One of the most important metric in a return center is inventory turns. The shipping process determines the number of inventory turns a return center can achieve. A good benchmark for return center inventory turns is between 20 and 30 turns per year. This is only possible however, if the RMS has the processes and visibility tools to enable the user to monitor inventory, process return authorizations, pick items and ship the returns in a timely manner.

Remember, the shipping process of an RMS is literally where the cash register rings in the returns process. Up to the point of shipping, the returns process has only cost money. A lot of broken and recalled stuff has been collected but it is still your stuff. The shipping process cuts it off, ships it out, and charges to the receiving

Part 2

In the first segment of this series published in the previous issue of the Reverse Logistics Magazine we discussed receiving and processing capabilities that should be part of every best-in-class reverse logistics management system (RMS). In addition, we explained how one uses the RMS can have a dramatic impact on one’s company’s bottom line.


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Army to Enlist Smartphones for Active DutyWhen one thinks of equipping soldiers for the battlefield, the delicate glassy casing on an iPhone doesn’t seem ideally suited for the job. Yet the Army plans to equip every soldier with an iPhone or Android smartphone early next year. Many smartphone vendors are positioned to make adjustments for the rugged needs of a war zone, says 451 Group’s Chris Hazelton, making them more durable, as well as waterproof, windproof and dustproof. http://www.technewsworld.com/story/Army-to-Enlist-Smartphones-for-Active-Duty-71462.html

Wearable robots may help those who are paralyzedBrain-machine interfaces – devices that let users control electronics with their minds – have long enabled paralyzed individuals to perform everyday tasks such as sending e-mails and playing video games. But the problem with such interfaces is that they tend to lack the feeling of movement that typically goes along with these activities. h t t p : / / w w w. m s n b c . m s n . c o m /id/40687535/ns/technology_and_science-innovation/

Analysts downgrade RIM on competitive threatResearch In Motion Ltd. will face intensifying competition in 2011 as the BlackBerry maker

battles iPhone and Android-based smartphones and enters the nascent tablet market, analysts said Tuesday. http://www.theglobeandmail.com/globe-investor/analysts-downgrade-r i m - o n - c o m p e t i t i v e - t h r e a t /article1828600/

Acer to Phase Out Netbooks in Favor of TabletsAdd Acer to the growing list of companies with new tablets in the pipeline. The Taiwanese computer manufacturer has announced plans to release both a 7-inch and a 10-inch tablet in 2011. h t t p : / / w w w . w i r e d . c o m /gadgetlab/2011/01/acer-tablets-netbooks/

RIM bets on existing users for BlackBerry growthAmid reports that it is falling behind rivals Apple and facing imminent threat from Google in the enterprise smartphone market, Research In Motion (RIM) says it is growing its BlackBerry user base through a strong consumer base, particularly in emerging markets such as Indonesia and Thailand. http://www.zdnetasia.com/rim-bets-on-existing-users-for-blackberry-growth-62205659.htm

Cash for Clunkers: Best Buy Offers Buy Back Program for Obsolete Electronics

Best Buy is offering a profitable solution for electronics hoarders with its just-announced Buy Back program, which allows customers to give back old electronics in exchange for significant amounts of cash.h t t p : / / w w w . f a s t c o m p a n y .com/1716560/cash-for-clunkers-best-buy-offers-buy-back-program-for-obsolete-electronics

Bye-bye, physical media? Sony closes CD plantSony Corp., the company that brought us the Walkman and the parent company of music label Sony Music Entertainment, plans to shut down a CD-manufacturing plant in southern New Jersey in March.http://www.zdnetasia.com/bye-bye-physical-media-sony-closes-cd-plant-62205617.htm

Motorola formally splits; companies begin tradingAfter years of preparation, consumer-electronics pioneer Motorola Inc. formally split into two companies on Tuesday – one for its consumer-oriented businesses such as cell phones, and the other for police radios and other products targeted at professionals.http://www.theglobeandmail.com/news/technology/motorola-formally-splits-companies-begin-trading/article1857039/

party for the shipment. In order to do this effectively, the RMS must have a flexible return point cutoff process, aging reports, picking logic, manifest capabilities, verification processes, and financial transaction processes built into the shipping module.

Before we go too much farther, it should be pointed out that there are two basic infrastructures used to process returns. One is referred to as the “Direct” method of processing and the other is referred to as the “Centralized” method of processing.

The Direct method is when returns are processed at the point of return by the original customer and returned directly from that point in the field to the item’s final destination. This is a decentralized design that relies on people in the field, or store, to prepare and ship goods. Good examples of

“Direct” return processors are small retailers, field repair depot operations, and hospitals that return medical equipment parts. The Centralized method revolves around a central location where recalls and returned goods are shipped to from the field and consolidated in a return center facility for processing. Goods are received from the field, prepped, consolidated by final destination/disposition, and shipped. Depending on the company and the volume of returns, the centralized method can provide significant savings and a higher quality processing. The vast majority of large hi-tech manufacturers, retail chains, and internet sellers use a centralized model to process returns.Whether an organization should use the Direct model or the Centralized model depends on a number of

factors. These include:

• Volume of returns• Disposition of returned assets• Residual value of returns• Number of field or store locations• Labor required to process returns • Risk from processing errors• Regulatory risks• Existing field systems• Cost of centralized facilities• Transportation costs• Supporting corporate

infrastructure

Whether a company has a centralized model that relies on an RMS for processing and visibility or if they use a direct model that relies on a point of sale system or some other back office application to process returns, the visibility requirements

Technology Spotlight


are quite similar and will enable the Reverse Logistics Executive to monitor and manage the returns process and the assets flowing through the reverse logistics pipeline. The following is a list of reports or visibility requirements broken down by functions:

receiv ing

• Advanced shipment notification – receipts in transit by date, store/field/customer, carrier

• Receipts by store/field location/customer - by receiving, RMA, month, quarter, year

• Returns by SKU/Category/OEM – by RMA, month, quarter, year

• All reports will need to show quantity and value per unit and in total

processing

• Total units processed – by day, week, month, quarter, year

• Units received and processed by disposition – Return to OEM, liquidated, repaired, restocked, donated, recycled, destroyed – by day, week, month, quarter, year

• Manpower reports showing hours worked within each function

• Thru Put – In returns facilities thru put is typically calculated as follows:

• Total Units Received / Total Variable Hours

shipp ing

• Shipments waiting for return authorization – by date, value, quantity

• Pick tickets outstanding• Hazardous material manifests

ready for shipment – by class• Manifests – by date, OEM,

liquidator, recycler, charity

QualiTy assurance

• Inbound receipt verification• Cycle inventory• Physical inventory – in total, by

OEM, category, dollar, units• Process verification – by function,

employee, month, quarter, year• Location verification – by type

of location: bulk, rack, flow rack, shelf, security, etc, day, week, month, quarter year

• Outbound verification – by OEM, liquidator, hazardous shipments, recalled/regulated shipments, random manifest

When it comes to visibility there are endless variations for each type of report listed above. The first RMS installed in Walmart’s returns center in 1988had a total of 26 reports. Today, the average RMS has well over 100 reports out of the box and many now incorporate an easy to use report writer that will allow the user to develop an endless list of reports. There is no magical number of lists of reports. Best-in-class reverse logistics systems today offer all reports via the net and can be accessed from anywhere in the world. As with all reporting, however, reverse logistics executives should be careful not to get too caught up in developing new reports or constant reformatting of existing reports. Visibility is only valuable when decisions are being

made that impact the business in a positive manner. There is nothing to be gained by having ten new reports that nobody in one’s organizations uses or understands.

Over the next five years, every company will have to rethink their existing reverse logistics network, infrastructure, and systems. As the cost of transportation continues to escalate, the cost of processing will drive dramatic changes in disposition. The decisions around these changes must rely on quality data that comes from an organization’s reverse logistics system. This system will be the only source for the accurate data needed to revise existing returns networks and will be critical in maximizing the value of returned assets and minimizing associated risks in the future.

Curtis Greve is a Principal of Greve-Davis, a consulting firm that specializes in reverse

logistics. For the past 25 years Curtis Greve and Jerry Davis , the Principals of Greve-Davis, have worked with third party logistics providers, liquidators, retailers, manufacturers, and distributors to help them improve reverse logistics capabilities. Together with the rest of the Greve Davis team, they have over 100 years of experience in reverse logistics, liquidation, and supply chain management. To learn more about Curtis Greve or Greve-Davis, go to www.grevedavis.com or Call 877-638-7357 or Email [email protected]


RLA Seminars are one-day events held around the world that bring RL professionals together to address specific industry topics pertinent to OEMs, Retailers, and 3PSPs. The highlight of these events is a facility tour showcasing efficient return, repair and services operations from industry leaders such as Best Buy, HP, Walmart, Motorola and Dell.

Upcoming RLA seminar:

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Bentonville, Arkansas • May 19thFacility Tour: Walmart Returns Facility Sponsored By:

RLM

TECHNICAL TRENdSHaptic Happy Yes, but only for a little while longer


complex communication interaction with the electronics. In short haptic uses gestures and gestures are massively more efficient than button pushes. But like all things, this too will pass. The reason haptics will eventually die is the need for higher human-interface bandwidth and to get that bandwidth the cell phone must get closer to the brain. The next step in getting closer to the brain and the higher interface bandwidth is the eye. Everything about human interface with a machine is always about the brain. We just use intermediaries (button pushes, voice commands or gestures) to connect the two. One side note is voice command. Voice command was really the next step in the evolution from keyboards and the technology to make voice commands work has been around for quite a while-so why is voice used so little? Privacy. When we are on a phone even in a public environment

little of the conversation can really be understood because of two things; first we do not have the context of the conversation and second we only have one side of the conversation. With voice commands their very nature is to eliminate those two roadblocks. As a result using voice commands in public makes people feel very self conscious, thus not a winner.

Now onto the need for an eye interface. The background here all comes from the military. The military came to learn about the choke point of getting information into and out of a human decades ago in aircraft. What they found is that we needed ways to allow pilots to effectively manage information and actions not just fly. They solved this problem with two concepts; HOTAS (Hands On Throttle And Stick) and HUDS (Heads Up Display), now the HUD has become replaced by the HMD

(Helmet Mounted Display). This is the display you have seen in movies that allows a pilot to select and fire on targets with input directly from the eye.

For cellphones we are really describing technology that would be integrated into some type of eyewear that would communicate via Bluetooth or wireless USB with the handset. Later the entire functionally would be in the eyewear. That form factor also give good proximity to your other vital communication areas (hearing, voice and later direct from brainwaves) A cell phone interface with the ability to send data to the eye and by eye-tracking get command straight from the eye, has a lot of benefits. By my count there are five keys;

• Private• Secure

by L. Bryant Underwood

FEAT

URE

Stroll through any selection of cell phones for sale and you can see firsthand the amazing transformation that haptics (AKA: touch interface) have provided to wireless. Since Apple brought the haptic interface front and center there has been a massive revolution in almost all computing, gaming and communication products. Almost every cell phone sold (at least the ones that your middle school daughter would not be embarrassed to have) has a haptic interface of some kind. The great thing about this is stability. Since the interface is totally separate from any physical interface mechanisms, the phone

can be a stable platform over time. This is very much like the Jeep (CJ, Wrangler, etc…) or VW Beetle. There are changes and improvements that can happen over time but the core engine and mecahnicals remain consistent. Features are then easily added via SW upgrades. Consider further the benefits of this situation in the context of the growth in pre-paid/no-contract/month2month cell phone plans. We have designs becoming stable and helping to lower costs at that same time we have marketing plans that pass on more of the directs cost of the product to the consumer. All of these trends are good for service

because the true value of the product is now seen, making genuinely profitable repair more viable.

Before we get too ‘happy’ about this, lets take a minute and consider how we came to have these haptic phones and will they be staying with us much longer? The short answer-no. Here’s why. The whole notion and application of haptics improves our interface with various devices because a gesture can contain more information than a button push. Prior to haptics you needed a full size keyboard (bad for small things like phones because of space) to have any

We are on the cusp of a sea change in computational power. When we break over to

widespread use of quantum computing the bit will become the qubits and instead of

binary states we will have a quantum superposition of 4 states. This advance computing

power will bring integrated technology that supports very high informational throughput,

direct to the individual. This connection and interface will be far more than

transformational or disruptive this will be super-revolutionary in the affect and outcome.

Personally I do not think all of the change will be good. But it is coming nonetheless and

at a blinding speed. As the song says, ‘the futures so bright I gatta wear shades…’

101

100

10-

1

102

104

106

108

Number of chip components

Feature size (microns)

101

0

101

2

101

8

101

4

101

6

10-

2

10-

3

Classical Age

Historical Trend

SIA Roadmap

2010

CMOS

199

5

2000

2005

1970

198

0

1990

Roadmap for Electronic Devices

4o

K

Quantum Age

77o

K

295o

K

Quantum State Switch

Horst D. Simon Lawrence Berkeley National Laboratory

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Register now www.RLAshows.org48 Reverse Logistics Magazine • Edition 26 Edition 26 • Reverse Logistics Magazine 49www.RLmagazine.com www.RLmagazine.com

• Higher information bandwidth• Augmented reality • Less Expensive

Most of these are pretty obvious as to the benefits but let me expand on just one-Augmented Reality. For any technology to move forward it needs to be more than superior, it needs to be new, cool and capture the buyers’ imagination. Augmented Reality is technology that is way cool. AR overlays many differing kinds of information onto what the user perceives (I encourage you to search more on the web concerning this technology). For example in a fighter jet the weapon system overlays targeting information onto the visual image. In my future state phone-based eyeglasses, the overlay might well be the name of who I am looking at. Or a review and discount coupon of the product I am looking at on a shelf. Or has I walk down the street, I would be sending facial recognition data to the police regarding people I see or come into contact with. Can you imagine the instant background check of the salesman selling you a car while the conversation is going on? I think all that solves the cool barrier. But you say we do not have the technology or even battery systems to do this-right? This may

well be somewhat true however the technology would be based on LCDs because of the optical path proximity to the eye. Transmissive LCDs use less energy than current backlight displays and what backlight that may be needed would be much smaller and the display is the largest power hog on current cellphones. Also, we have wireless recharging solutions today, eliminating the need for bulky connectors. The energy efficient ARM and other RISC type processors are really already fast enough for these type of processing. The only reason I think we do not have this technology yet is the conceptual control framework for the interface. But there are already many patents being filed by major players that at least indicate companies are already thinking in this direction. If I have thought about this someone else is clearing working on it.

Consider two more data points. IBM is championing the affect we are all experiencing today because there are now 1B transistors per human on earth. That is roughly 1.3 “Intel Core I7” chips per person and that is today’s reality. Then bear in mind the chart below from Dr. Simon Horst, Associate Laboratory Director at Lawrence Berkeley National Laboratory.

We are on the cusp of a sea change in computational power. When we break over to widespread use of quantum computing the bit will become the qubits and instead of binary states we will have a quantum superposition of 4 states. This advance computing power will bring integrated technology that supports very high informational throughput, direct to the individual. This connection and interface will be far more than transformational or disruptive this will be super-revolutionary in the affect and outcome. Personally I do not think all of the change will be good. But it is coming nonetheless and at a blinding speed. As the song says, ‘the futures so bright I gatta wear shades…’

L. Bryant Underwood is Director, Supply Chain for Elbit Systems of America, a leading provider of high

performance products and system solutions focusing on the defense, homeland security, commercial aviation and medical instrumentation markets.

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RLM


As your Reverse Logistics processing operations grow, so will your need to manage your warehouse. Selecting software for a Warehouse Management System (a WMS) to efficiently and effectively manage your warehouse for a Reverse Logistics operation will not be an easy task. Fortunately, the warehouse industry is quite mature and has many long proven standards for receiving, putting away, storing, handling, picking and shipping products within a warehouse. Unfortunately, handling products through the Reverse Logistics cycle will present many challenges to standard WMS software.

Third Party Logistics WMS SoftwareThe first question you need to ask is the type of WMS you will require. There are many single company WMS systems that are stand alone or part of an existing ERP or accounting system. However, if you are servicing multiple clients as a third party service provider, you may want to consider a third party logistics 3PL WMS. The 3PL WMS not only provides standard WMS features, it also includes the ability to track and manage inventory for many clients at one time. Additionally, a 3PL WMS will include the ability to track and bill for activity or services performed for your clients while you manage their inventory. Reverse logistics service providers need to understand and capture the revenue opportunities from tracking, managing and billing for the warehouse services they are performing while handling, storing and processing client reverse logistics inventory.

invenTory challenges

In a manufacturing or forward logistics operation, parts are assembled to create finished goods. The WMS is typically managing finished goods moving around the warehouse. In a Reverse Logistics operation, the same part number can be in many different states. In one reverse logistics warehouse, many units of the same part number “123” can be finished goods A stock, refurbished B stock or C stock (packaged or unpackaged), it can be defective, in repair or work in progress, or even scrap. A normal WMS needs to have a solution for handling these different states, so that you are not in a state of confusion.Additionally, most forward logistics warehouses are moving many quantities of the same item at one time. (e.g. a pallet full of packaged finished goods of part number 123), whereas in a reverse logistics warehouse, items are often moved around the warehouse as single unit, often without finished goods box packaging. The WMS must be provide the ability and work with the warehouse equipment, tools and methods so the warehouse staff can quickly label, store, find, track and handle the units individually or in larger quantities.

receiv ing challenges

Perhaps the biggest challenge for a WMS in a Reverse Logistics operation will be in the area of receiving. While most WMS systems have some functionality to handle receiving issues such as product identification, item condition, labeling and discrepancies, the sheer volume of a Reverse Logistics returns

receiving operation where every item must be individually handled, assessed, sorted, labeled and put away according to a myriad of rules, will typically be out of the scope of most WMS abilities. Care must be taken when assessing receiving abilities or you will experience huge productivity issues.

choose your reverse logisT ics wms wisely

In your excitement of finally being able to better organize your warehouse, make sure you really do take the time to consider the full impact of the special needs that your Reverse Logistics operation will have for your new WMS warehouse management system.

Your WMS is an integral part of your operations and the right selection will give you a cutting edge in the Reverse Supply Chain. Choose wisely.

Good Luck!Paul Rupnoww w w .

ReverseLogisticsProfessional.com

RLM

www.ReverseLogisticsProfessional.com

Returning ThoughtsSelecting WMS software for your Reverse Logistics Operations

Documents

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