Returning Thoughts

Searching for a Reverse Logistics Tipping Point

Reverse Logistics Magazine, July/Aug 2008

 

Building Bridges between Manufacturers and Retailer Reverse Logistics Teams

Scientists are obsessed with finding tipping points, the point where the next small change may suddenly change everything and change becomes unstoppable. In Reverse Logistics, most teams are working with very limited resources. Often the only change that can be made, is a small change. But can those small changes ever reach a tipping point that will significantly reduce your product returns and decrease your reverse logistics costs?

For the electronics industry, a good area of opportunity to focus these small changes can be through a closer relationship between the retailers and the manufacturers. Reverse Logistics has grown into a multi-billion dollar industry to handle open box items that “Did Not Meet Expectations,” where typically more than eighty five percent of returned items have no manufacturers defect. These returns are generated not just from the liberal retail return policies to promote happy consumers, but also from the manufactures’ willingness to accept a high return rate in their attempts to meet the challenge of providing new and often complex technologies to consumers.

How To Build Reverse Logistics Bridges between Manufacturers and Retailers

Returns are costly for the Retailer. Returns are also costly for the Manufacturer. Yet there are often many opportunities for the two parties to work together effectively to proactively reduce returns.

Tony Sciarrotta, the Director Returns Management at Philips Electronics has worked closely with retailers for many years and passed on his suggestions:

Better Information: Gather better data from customers about the Reason for Return. “Did Not Work,” is not a useful reason to help determine how the product can be improved, explained Sciarrotta.

Better, Faster Data: After the data is gathered, it needs to get transferred to the manufacturer quickly so it can be analyzed and actions determined.

Monitor Return Rates: daily or weekly reports by item, geography with a category average to compare will help the manufacturer make timely decisions.

Pre-Launch Checklist: a checklist of key items that can help reduce returns should be prepared and reviewed together. This list would include points such as: backward compatibility, correct connectors, or good feature lists on the packaging.

Staff Training Materials: good instructions and manuals for the retail staff on the product features, functions, proper care and handling so they can assist the customer to make an informed decision.

Feedback Action Mechanism: the manufacturer must have a good internal system to ensure the feedback and data analysis results from the retailer get turned into immediate action items to quickly make packaging, production, or design changes to avoid future returns.

Define your Criteria and Policies: work together ahead of a product launch to define what constitutes a return and under what conditions can a product be returned. Also determine how incomplete product with missing items will be credited. Up front discussion of issues and guidelines helps both parties assess and manage returned items.

Create your list of small changes to improve your Retailer –manufacturer relationships. Continually work with on the small changes with your limited resources and maybe you too will reach the Tipping Point and achieve some big Reverse Logistics changes.

Good Luck!

Learn and Share Reverse Logistics best practices, insights and strategies with Paul Rupnow at ReverseLogisticsProfessional.com