High Tech Reverse Logistics: A Potential Cost Cutting Avenue
To put in simple terms, Reverse Logistics is the flow of Returned goods by the customer to a state where the product is disposed of, repaired, recycled or internally consumed. And because of the strict norms pertaining to disposition of goods in the high tech sector, this is a very strategic area.
Typically companies recycle most of the returned goods as part of the Value Recovery Model. But there is a huge cost involved here as there has to be a proper disposition process for parts which can harm the environment. Also, there is a high risk of these products making it to the grey market eroding the parent company’s competitive advantage.
A potential solution to this problem is consuming the parts for internal use after the necessary repairs. This reduces the additional cost of recycling the product. Also this saves additional money in terms of deploying a brand new product for internal use.
Some of the prominent high tech companies have been able to exploit this opportunity in a big way and have gone ahead with internally using the returned products over an elongated period.
If you are spending a lot of money in recycling your returned goods, internal consumption is a thought worth thinking over.
Comments
Once thought of as a non-value adding activity, recycling and reuse is certainly catching up, not just in the high tech and electronics area but in general,all manufacturers are looking at optimizing their overall 'Reverse Logistics (RL)' process.
There are two different strategies that organizations can adopt -
1. Inhouse RL: The entire RL process is handled by the manufacturing organization internally.
2. Outsourced RL: There are companies that specialize in providing RL services. They take care of transportation, storage and disposition of the returned products.
Whatever strategy the manufacturer adopts, automation plays an important role in reducing the cycle time of the entire process and hence the overall cost. Automation also helps gain better visibility into the overall returns process as it enables 'real-time' tracking thereby improving asset recovery and customer service.
Posted by: Samiksha Hariharan | November 19, 2008 04:00 AM