Reverse Logistics 101

exploring the What, Why, Where, When, How and Who of Aftermarket Service and Support
Mark Millar
mark@markmillar.com
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Mark Millar MBA, PMHKLA, FCILT, GAICD

Managing Partner, M Power Associates
Mark Millar leverages over 25 years of global business experience to develop and deliver enlightening keynote speeches, and to provide Consulting, Education and Advisory services that create value for clients by improving the performance of their logistics and supply chain activities in China and the Asia Pacific region. Acknowledged as an industry thought leader, clients have engaged Mark as Speaker, Moderator, Master of Ceremonies or Conference Chairman at more than 200 functions in 17 countries. Mark serves on the advisory board of several leading organisations and his industry contributions have been recognised with a number of accolades, including being named in the Who's Who of Power Players in Supply Chain Management in China", the Pros-to-Know Thought Leaders in Supply Chain and as One of the most Progressive People in World Logistics. Contact him at mark@markmillar.com

mark@markmillar.com
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Reverse Logistics 101 What, Why, Where, When, How and Who?

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Reverse Logistics many terms - whats the common theme?

Reverse Logistics
Retrogistics

Service Parts Logistics

After-Sales-Support

Spare Parts Logistics

Returns

After Market
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Forward Logistics

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Reverse Logistics

Returns Centre

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SCOR Model Supply Chain Operations Reference Model

Returns: Processes associated with returning or receiving returned products, for any reason
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Reverse Logistics Defined - is the process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal
The process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption (back) to the point of origin for the purpose of recapturing value or proper disposal

Source: University of Nevada, Reno, Center for Logistics Management

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How is Reverse Logistics Different . . . . . .

Forward Logistics
Product quality uniform Disposition options clear Routing of product unambiguous Forward distribution costs more easily understandable Pricing of product uniform Inventory management consistent Product life cycle manageable Financial Management issues clearer Negotiation between parties more straightforward Type of customer easy to identify and market to Visibility of process more transparent
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Reverse Logistics
Product quality not uniform Disposition not clear Routing of product ambiguous Reverse costs less understandable Pricing of product not uniform Inventory management not consistent Product lifecycle less manageable Financial Management issues unclear Negotiation less straightforward Type of customer difficult to identify and market to Visibility of process less transparent
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Source: Dr. Dale S. Rogers, Center for Logistics Management, University of Nevada, Reverse Logistics Executive Council. Livonia, MI

Terminology - Alphabet Soup

RSP
RSO

RL
FSE

RTV
NFF

3PL
LSP

PUDO RMA
WMS
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MRO

LLP
OOW

RTD
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Reverse Logistics Repairs and Returns

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Key Characteristics of Reverse Supply Chains

Timing

Customer Specific

Uncertainty of Supply Value Improving Flexibility

Multi-party Coordination
Source: Blumberg Advisory Group

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Reverse Logistics 101 What, Why, Where, When, How and Who?

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Reverse Logistics Growth Drivers?

Market Trends

Business Incentives

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Lucrative Aftermarket
customers will spend 5 to 20 times the initial sales price on subsequent services and consumables
After Sales Services
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
24% 45% 76% 55%

Initial Product Sale

Revenue
Source: AMR Research

Profit
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Growing Market for multiple Service Providers - for 3PL and Captive (Call Centers, Repairs, etc)

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Business Factors driving Reverse Logistics

1. Manufacturing returns 2. Commercial returns 3. Product recalls 4. Warranty returns 5. Service returns 6. End-of-use returns 7. End-of-life returns
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Increasing Pressure on Reverse Logistics

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Reverse Logistics 101 What, Why, Where, When, How and Who?

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Where All types of products and Sectors Typical percentage Returns by Product Type
Magazine Publishing Greeting Cards Book Publishers CD ROMs Computer Manufacturers Electronic Distributors Book Distributors Pharmaceuticals Mass Merchandisers Printers Auto Parts Consumer Electronics
0% 6% 5% 10% 20% 30% 40% 50% 60% 8% 15% 15% 20% 20% 20% 25% 30% 30% 50%

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Reverse Logistics Where Particularly Complex in some Sectors 1 2 3

Automotive

High Tech

Medical Equipment

Source: M Power Associates

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Reverse Logistics Complex Applications Two primary application groups

Enterprise

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Enterprise Applications - often mission critical

Office Computer Systems

Hospital Equipment

ATM Banking Network

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Telecommunications
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Consumer Applications all pervasive

Notebook

Camera

Blackberry

MP3Player

Mobile Phone

Tablet
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Reverse Logistics 101 What, Why, Where, When, How and Who?

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Reverse Logistics 101 What, Why, Where, When, How and Who?

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Reverse Logistics Three Phase Work Flow

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Reverse Logistics Key Elements of After Market Service

1. 2. 3. 4. 5. 6. Transaction Processing (RMA) Customer Contact Centre, Warranty Validation Returns Processing Advance Replacement, Swap, Repair & Return Reverse Logistics Inbound & Outbound Returns Dispositioning & Diagnostics Screen & Test, NDF / NFF, RTV (Warranty) Repackage, Refurbish Technical Repair (Outsourced) Asset Recovery De-Kit, Spare Parts Recovery, Recycle, Disposal
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Returns

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Why products get returned - reasons given by customers for product returns
25%

20%

Could the forward supply chain prevent some of these returns?

15%

10%

5%

0%

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Return Activities - in-sourced and outsourced

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Reverse Logistics - Technology Intensive

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Integrated Reverse Logistics System

- incorporate Call Centre, Repair and Logistics Operations

Integrated Systems

Source: Kewill Systems

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Reverse Logistics Service Parts Logistics Flows, behind the scenes

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Reverse Logistics 101 What, Why, Where, When, How and Who?

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Multiple Service Providers 3PL, EMS, RSP, FSE, BPO, Call Centres

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Reverse Logistics 101 What, Why, Where, When, How and Who?

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Sevens Steps Checklist to Successful reverse Logistics Operations 1 2 3 4

Centralize Returns Operations

Appoint Leader

Develop Business Processes

Link Business Processes

Gather Accurate Data

Ensure Real-time Visibility

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No Firefighting
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Appendices
For the additional slides from the appendices, please send your contact details to me at mark@markmillar.com Mark Millar
mark@markmillar.com
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