Reverse logistics is a hidden gem for organizations looking for the best ways to cut costs while improving the customer experience.
The field service process is full of intricate components and supply chains that make up a service lifecycle and at the end, hopefully, a satisfied customer. But just as first-time-fix doesn’t get nearly the attention and focus it deserves as an essential field service KPI, reverse logistics processes get put on the back burner as well.
The Reverse Logistics Process
Reverse logistics refers to the process after the sale that we usually don’t think about – the travel from the point of consumption (having been in the hands of the customer) back to the point of origin (OEM or distributor). An effective reverse logistics process ensures that this flow of products (inventory, raw goods, or any other term used to define generally low complexity consumer assets) is optimally managed and automated in order to recapture the greatest value and reduce associated costs.
While most field service management solutions focus primarily on the scheduling and dispatch components of field delivery, a complex, multi-functional service organization needs automation and optimization across all aspects of their business that involve customer touch points. Returns are a basic, accepted part of dealing with a consumer. Whether being handled by the consumer directly (shipping back to you, your warehouse, or a supplier), or by a field service technician, the chain of events that takes place when a return happens can be a huge money saver, or money pit for a service organization. Many leading edge companies are now turning in return service into a revenue generating service offering.
It turns out that about 80% of the value of most field inventories return at least once annually. It also turns out that approximately 30% – 40% of all returns to repair depot are perfectly good parts. This is due to the fact that service engineers are increasingly utilizing parts as diagnostic tools, particularly in a pull and replace maintenance philosophy (Blumberg).
Interesting Facts Revealed
Last week, IFS’s Enterprise Service Management product evangelist, Tom DeVroy, recorded a webinar on Reverse Logistics, hosted by Field Technologies. He revealed an even more interesting fact about return service. When done right, return service is actually LESS expensive than sending a field tech out to the field. Even when it is revenue producing, it is still costly to send a physical technician to a job site – the cost of the tech’s time, the travel costs, the equipment costs, and more.
But in order to see the cost savings of an efficient reverse logistics process, you need to have the right technology in place. Optimized reverse logistics, like that offered by IFS Field Service Management, allows you to manage multiple parts and product transactions, from RMAs (return material authorizations, to FRUs (field replacement units), and more. Your reverse logistics software should also allow you to manage complex distribution networks, set up routing rules to handle returns through multiple depots and locations, and handle large volumes of returns with barcode-enabling and product references.
The service industry is a highly competitive one, and organizations are constantly looking for the best ways to cut costs while improving the customer experience. Reverse logistics is a hidden gem when it comes to driving this initiative. To learn more about ensuring you have an effective and efficient reverse logistics processes set up at your organization, watch the recorded webinar or download our whitepaper on reverse logistics.