The Reverse Logistics Dilemma

Report
Reverse Logistics: The way into the future
Gailen Vick
Executive Director
www.RLA.org
May 29, 2013
Reverse Logistics: The way into the future
The Reverse Logistics Association was formed:
•
•
•
To support third party service providers
To educate OEMs & Retailers on why they
need to outsource their RL
To enable Private Industry, Consultants,
Academics & Government Leaders to connect
and share new ideas and opportunities
Reverse Logistics: The way into the future
What Is The RLA’s Mission?
To educate all industries about the Reverse
Logistics processes which are common to all.
To produce events around the world where
OEMs, ODMs, Branded and Retail companies
receive information on RL support services.
Reverse Logistics: The way into the future
Where Does Reverse Logistics Fit?
Supply Chain - After Market Supply Chain
PRODUCT LIFE CYCLE
CORPORATE IDENTITY
CHANGE
FORWARD
LOGISTICS
New Product
Development
Material
Management
•Design
Development
•Technology
Roadmaps
•ASIC Development
•Mechanical Design
•PCB Layout
•Prototyping
•New Product
Introduction
•Vendor Relations
•Planning
•Procurement
Inventory Planning
•Component
Fabrication
REVERSE LOGISTICS
Manufacturing
& Distribution
•PCB Assembly
•Box Assembly
•Volume
Manufacturing
•Integration
•Configuration
•Final Testing
•Distribution to
Customer
•Customer
Fulfillment
•Transportation
E
N
D
U
S
E
R
/
C
O
N
S
U
M
E
R
Aftermarket Customer
Services
•Customer Service (Helpdesk)
•Depot Repair
•Service Logistics (Field Service)
– Transportation/Warehousing
– Spare Parts Management
– RMA Management
– Replacement Management
•End-of-life Manufacturing
•Fulfillment Services
•IT Process Management
•Recycling
•Refurbishment/Screening
•Warranty Management
•“B” Channel Management
•Asset Management
•Environmental Resources
• Sustainability
Reverse Logistics: The way into the future
How Do We Spread The Word?
- RLmagazine.com
• 51 Editions
• WW Circulation of 90,000+
• Published Monthly
• Weekly News Clippings
kindle
•
DIGITAL – on all
e-readers
Reverse Logistics: The way into the future
The RL Dilemma
di·lem·ma:
a difficult or persistent
problem
Source: Merriam-Webster dictionary
Reverse Logistics: The way into the future
Reverse Logistics Dilemma
Every Company Has An RL Dilemma
• ObviousConsumer Electronics, Computers,
Automotive
• Not so obviousBooks, Apparel, Retail, Grocery, Software
• Practically invisiblePharmaceuticals, Aerospace, Agriculture,
Medical, Energy
Reverse Logistics: The way into the future
Companies don’t know they have a Dilemma!
SEE THIS
MISS THIS
Senior Management Frequently Unaware Of:
- Size of RL operations
- Cost of RL operations
- Impact of RL operations on bottom line
- Impact of RL operation on customer service
- Impact of legislation on RL
- Many line/staff managers don’t know RL Operations even exist
Reverse Logistics: The way into the future
How to Make a Difference
• Ownership within Enterprise
Who Owns the RL Function?
• Distributed across functions
• “Hidden” in operations or customer service
• Measurement
Tools to measure the performance of RL?
• Few, specialized software tools
• Financially absorbed in other departmental budgets
Reverse Logistics: The way into the future
•
The RL Impact
RL affects the bottom line
Finance
What are the true costs / benefits to the organization?
•
I.E. Actual costs vs. retained asset value
•
Operations
How is RL affecting operational efficiency?
•
I.E. Quality improvements based on RL
•
Sales & Marketing
What is the effect of RL on sales?
•
I.E. Customer satisfaction, brand reputation,
remanufactured goods impacting prices
Reverse Logistics: The way into the future
Source: RLA Amsterdam Conference 2010, Keynote Address
Rehman Mohammed, Cisco
Reverse Logistics: The way into the future
(2.4% of FY’09 Net Saving)
FY’09 Net
Income –
$ 6.1 Billion
GAAP
Sources: RLA Amsterdam Conference 2010, Keynote Address
Rehman Mohammed, Cisco & Investor.cisco.com – FY 2009
Reverse Logistics: The way into the future
What is the Impact to Mother Earth?
• Environmental It all affects the bottom line
• Are we a good corporate citizen?
• Are we alienating clients?
• Governmental / Legislative
• Are we meeting governmental requirements?
• Are we open to legal action?
• E.g. RoHs, WEEE, SB 50
• Bottom Line Cost
• 3% to 15% in every company
Reverse Logistics: The way into the future
Results
If You Manufacture 1 Million Units/Year
Revenue per Unit is $1 - $1,000,000 total
Profit per unit is 5% After Tax - $50,000 total
After tax Profits;
Are They Right?
Product Production
Cost
Average Return Rate is 10% - 100,000 total units
Returns represent $100,000 in lost revenue –
After returns your P&L shows a $50,000 LOSS!
Reverse Logistics recovers 80% of the returns $80,000 to the company’s after tax profit
% Returns Take Reverse
Logistics IT
Away
Management
From Bottom
Line Profits
After Tax Profit with RL recovery - $30,000
So who is most important, the VP of Sales that took $50K from your
company, or the Reverse Logistics professional that gave you a
Bottom Line - $30K After Tax Profit?
Reverse Logistics: The way into the future
Solution
Create A “C” Level Position For RL Management
The Chief Reverse Logistics Officer (CRLO) would:
• Have authority to make changes on RL globally,
but day-to-day responsibility stays in the hands of each
Department
• Monitor the P & L to develop a Virtual profit
center
• Acquire the necessary tools to support the finance
department and report effectively to the Executive Staff
Resolve The Dilemma
Reverse Logistics: The way into the future
Please
hold your
Questions

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