There is no one model that defines the reverse logistics marketplace.
After attending a couple of conferences regarding reverse logistics, I have had time to gather some thoughts about the people I had the opportunity to talk to and the presentations I had the opportunity to attend. One thing is pretty clear: there is no one model that defines the reverse logistics marketplace. Further, the hot buttons in reverse logistics are really quite different from one market to the next.
Reverse logistics & retail
Retailers are interested in the development of third-party channels for returned goods and the management of excess inventory and waste. From a systems point of view, I heard that retailers view integration services and nimble software as the keys to success. Retailers have so many different systems to deal with that whatever reverse logistics systems have to talk to many different applications.
Reverse logistics & product companies
Product companies are interested in the basics such as return merchandise authorization (RMA), logistics, inventory, and repair. But the differences in their success are in small and subtle ways, including parts recovery services, multi-channel repair, component repair and waste mitigation. I’m struck by the fact that I didn’t hear much about the integration of field service with return services. Often these two business models are connected at the hip.
I attended sessions on mass storage returns where I heard that the greatest issues are around customer data security. At one time, product returns really just focused on authorization, managing these orders, receiving, and repair – if the product was repairable or refurbished capable product line – and inventory and shipping. These days, most buyers are focused on developing ancillary and complimentary systems, integration services, linkage to transport vendors, and management of channel partners. Parts recovery is a cost savings, and being able to sell repaired parts through ancillary channels has a big payback. Reducing NTFs is always a big hot-button issue.
RMA in retail versus product-based companies
There is a difference of opinion about how easy it is to raise an RMA in retail vs. in product-based companies or consumer electronics. I wouldn’t say they are diametrically opposed from a philosophic standpoint, but retailers clearly have much less resistance to their customers returning product or product defects.
I heard some content on warranty management and extended warranty, and perhaps it was just semantics, but putting return service in an entitlement system after warranty service is exhausted seems like a market opportunity that was not discussed in depth.
I think the trends are to make reverse logistics processes core to overall customer service, make the process as painless as possible for the customer, have adequate controls in place to mitigate cost, and make an operations platform that can easily integrate into other business systems, while enabling and automating the connections to vendors, partners, and channels. Eliminating touches and making the process as efficient as possible are what the buying community seems to be demanding.
Read more about reverse logistics.