Global Logistics and Supply Chain Strategies - April 2008 - (Page 12)

Companies Know Reverse Logistics Important, But Are Unhappy with Their Own Performance A recent survey of 1,000 executives in the service arena finds a high level of awareness about the importance of efficient reverse logistics programs. But that doesn’t mean that companies are doing a particularly good job in that area. In the survey, conducted by the Aberdeen Group and Choice Logistics, 61 percent of respondents said they considered the reverse logistics function to be either “extremely” or “very” important to their companies’ bottom lines and future growth. Yet the same percentage said they were “not” or remarketing, and 44 percent in basic reverse logistics. So how can companies improve their reverse logistics abilities? “Think big picture,” Long said. Companies should view the service supply chain and traditional logistics as integrated processes. They should work to tear down functional walls, both within and without the organization, and embrace information systems that allow for the smooth flow of demand data. They should identify their core competencies and outsource processes that don’t meet that definition. And they should “measure, measure, measure.” Every relevant Aberdeen survey has found that at least 30 percent of laggards can’t even tell whether they are measuring key performance indicators. Finally, Long urged the appointment of a “champion for change” in service management. “Find a champion,” he said, “or become one yourself.” Visit www.aberdeen.com. Canon Exec Calls for Centralization of Reverse Logistics Processes to Boost Customer Service Here’s a statistic that might come as a surprise: 60 percent of the cameras returned by consumers to Canon U.S.A. Inc. are in “pristine condition,” according to Joseph Warren, vice president and general manager of customer support operations. And nearly all the remaining units have been damaged by customer abuse. But that doesn’t relieve Canon from the responsibility of managing the reverse logistics process and keeping customers happy. In fact, the company has taken dramatic steps over the past decade to improve its abilities. In 1994, it established its first product returns center. At the time, reverse logistics was “beginning to gain recognition and respect, but was still considered disagreeable,” Warren said at the Reverse Logistics Association conference in Las Vegas. “It was out of sight, out of mind.” Warren proceeded to centralize Canon’s return operations at a location in Chicago. Profitability was foremost, but he was also expected to reduce returns. He achieved the latter goal by gathering information on product quality and sending it to manufacturing executives in Japan. Most recently, Canon achieved ISO 9000 and 14001 quality certification at the returns facility, where it carries out refurbishing, remarketing, disposition recycling, return exchanges, failure analyses and call center activities. “Reverse logistics has become more than just managing returns,” Warren said. “Value is created from a comprehensive reverse logistics program.” He quoted a 2007 Aberdeen study which found that reverse logistics accounts for nearly 1 percent of U.S. gross domestic product. And the cost of processing a return can be two to three times that of shipping the same item originally, he said. Still, he finds that many have yet to grasp the importance of reverse logistics. “There’s little evidence that companies understand the true cost of managing returns,” Warren said. Visit www.usa.canon.com. “somewhat not” satisfied with their own performance in managing reverse logistics, according to Micky Long, Aberdeen’s research director for strategic service management. The function was considered most critical in the aerospace and defense, high-tech and medical device industries, he said, speaking at the annual conference of the Reverse Logistics Association in Las Vegas. The top “pressure points,” according to Long, were customer satisfaction, overall profitability, costs, inventory management and stockout avoidance, and competition. The last category relates to a company’s ability to differentiate itself through good reverse logistics management. Still, industry leaders are finding ways to improve their reverse logistics programs. The number-one best practice, Long said, is the appointment of a higher-level executive in charge of the process. Other tips include integration of the service function with product design, marketing and sales, and aggressive cost control. The rewards are substantial; best-in-class performers show a fivefold advantage over “average” companies in recapturing initial product value through reverse logistics, he said. In addition, Aberdeen has been tracking a surge in companies’ reliance on outsourcing aspects of reverse logistics. The firm has seen a 60-percent rise in the outsourcing of parts logistics, 50 percent in product repair and 12 APRIL 2008 http://www.aberdeen.com http://www.usa.canon.com

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Global Logistics and Supply Chain Strategies - April 2008 Contents Editorial GL & SCS Exclusive Fast Forward Up Front Cover Story: Continuing to Add Ever More to Their Offerings, 3PLs Are - At Your Service Over the Long Haul Opinion: Freight Audit Bill Can't Show All Mistakes that Hurt the Bottom Line Opinion: The ‘Good-Freight’ and ‘Bad-Freight’ Trucking Customers Industry Voices

Global Logistics and Supply Chain Strategies - April 2008

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