Returning Thoughts: Key Performance Indicators Used by Philips to Manage Reverse Logistics

by Paul Rupnow, Reverse Logistics Professional

Reverse Logistics Magazine, Jan/Feb 2008

As reverse logistics evolves within your company, you will want to start developing or improving the Key Performance Indicators (KPIs) used to measure and monitor the performance of your Returns Management and Reverse Logistics. To help develop KPIs, Tony Sciarrotta shared some of his insights and important KPIs he uses as the Director of Returns Management at Philips Consumer Electronics, North America.

Tony brings a great deal of experience and industry expertise to the Reverse Logistics requirements for Philips, its supply chain partners and its returns processing partners. "Gate keeping, Product Data and Asset Recovery are three of the key areas I monitor closely," says Sciarrotta as he outlined some of the KPIs he uses to help manage each of these areas.

Gate Keeping

Philips works closely with its Retail partners to monitor and manage returns. To do this, Philips shares and reviews regular reports with the retailers to outline the data related to recent product returns. These reports help everyone work together in order to reduce returns and become critical in the arrangements that Philips negotiates with its retail partners.

Philips also monitors statistics about the condition of the returning goods upon arrival. "Flat Panel TV's can be very expensive if they are not handled properly in the return process." Working with Retail partners to avoid damage is of major importance.

Discrepancies are also an area monitored closely to ensure that all returning units have been authorized. Recently, Philips has been experiencing very few discrepancies.

Product Data

Philips outsources its Reverse Logistics processing and repair. The Philips team works closely with its Reverse Logistics partners to monitor No Trouble Found, Repair with Parts, Repair without Parts and the Scrap levels. This important data is forwarded to manufacturing and to the product design groups. "Consumer electronics products are becoming more and more complex. If a product is experiencing a high "No Trouble Found" rate, the data is sent to manufacturing to seek product or user experience improvements to reduce the return rate"

Asset Recovery

"We always try to achieve the highest asset recovery rate possible" says Sciarrotta. To monitor this, Philips tracks the Asset Recovery rate. Also tracked are returned goods that are sold "as is" and the returned goods that are sold with a warranty. In addition, Philips tracks the performance of the refurbished products to ensure quality standards are maintained.

Improve Your KPIs

Gate keep to ensure only authorized returns are handled. . Obtain good product data to find out why goods are being returned. Get the highest Asset Recovery rate possible. These are the three key areas and some of the related Reverse Logistics Key Performance Indicators that Tony Sciarrotta uses at Philips to help organize, monitor and manage product returns. Use his insights to get started with improvements to your KPIs.

Good Luck!

Paul Rupnow shares Reverse Logistics best practices, insights and strategies at ReverseLogisticsProfessional.com