In a previous article we introduced reverse logistics through definitions and questioned its usefulness in business transactions. Today I would like to introduce four reverse logistics issues and show how all four can be solved though the use of system software.
Reverse logistics is a poorly understood field in the overall supply chain. Perhaps, this is because it is a relatively new discipline. But one that needs a quick learning curve. Many of the leading issues can be solved through the use of technology. These problems include the following:
Tracking of warranty and routing status
Handling of dealers and contractors
Driving efficiency in repair process
Tracking value: In normal logistics, that is a finished product shipped to customer, cost is a simple number. What happens when a technician is sent to replace an item at a customer site and he swaps out a good product for a bad one? If the technician sends back the defective item for repair what is the value? It is not worth the original full price nor is it worth zero as the company might be able to change a component and move it to the parts supply inventory. The software that handles reverse logistics must be able to all this into account and track the unit based upon the new cost.
Tracking warranty & routing status: Sometimes an item may be under warranty from your supplier. In some cases these warranties can be shorter or longer than the warranty that you offer the customer. The reverse logistics software can track these secondary warranties back to the third party and produce claims for the service provided. A company with a robust system can claim millions in warranty reimbursements from their supplier that previously would have been lost.
Dealers & Contractors: The concept of reverse logistics becomes even cloudier when there are third parties involved such as contractors, subcontractors and distributors involved. If the distributor purchases a sub-assembly they might turn it into their own product or sell it directly to the customer. In taking this course of action they might send back boxes of these repairable components to the manufacturer. Sound reverse logistics software will take into account the quality of the business relationship – rules can be set up to send replacement parts upon notification of parts return through a return material authorization. When the replacement parts are sent the system needs to be able to track the returning parts. Keeping track of reverse logistics between trading partners on a manual basis is an unworkable task. The ability to track these transactions has a direct bearing on the financial well being of company.
Driving efficiency in repair process: A short video can be provided to the engineer. Through visuals a company can demonstrate how a component is built, disassembled, and perform preventative maintenance. Thus, we can employ someone not as skilled on the product, and through the use of visualization tools, can actually work on the item.
Business requirements for reverse logistics are multifaceted. Additionally, can change as relationships with customers, contractors and distributors change over time. A vigorous software system should solve challenges stemming from quality information, tracking and monitoring repairs and repairs of sub assemblies. With the right software all of these issues can be overcome to allow the company to concentrate on profitability.