Reverse Logistics: The way into the future

Gailen Vick

Executive Directorwww.RLA.orgMay 29, 2013

Reverse Logistics: The way into the future

• To support third party service providers • To educate OEMs & Retailers on why they

need to outsource their RL• To enable Private Industry, Consultants,

Academics & Government Leaders to connect and share new ideas and opportunities

The Reverse Logistics Association was formed:

Reverse Logistics: The way into the future

To educate all industries about the Reverse Logistics processes which are common to all.

To produce events around the world where OEMs, ODMs, Branded and Retail companies receive information on RL support services.

What Is The RLA’s Mission?

Reverse Logistics: The way into the future

Where Does Reverse Logistics Fit?

CORPORATE IDENTITY CHANGE

•Customer Service (Helpdesk)•Depot Repair•Service Logistics (Field Service)

– Transportation/Warehousing– Spare Parts Management– RMA Management– Replacement Management

•End-of-life Manufacturing•Fulfillment Services•IT Process Management•Recycling•Refurbishment/Screening•Warranty Management•“B” Channel Management•Asset Management•Environmental Resources

•PCB Assembly•Box Assembly•Volume Manufacturing•Integration•Configuration•Final Testing•Distribution to Customer•Customer Fulfillment•Transportation

•Vendor Relations•Planning•ProcurementInventory Planning•Component Fabrication

•Design Development•Technology Roadmaps•ASIC Development•Mechanical Design•PCB Layout•Prototyping•New Product Introduction

Aftermarket Customer Services

Manufacturing & Distribution

Material Management

New ProductDevelopment

REVERSE LOGISTICSEND USER / CONSUMER

FORWARD LOGISTICS

Supply Chain - After Market Supply ChainPRODUCT LIFE CYCLE

• Sustainability

Reverse Logistics: The way into the future

How Do We Spread The Word?- RLmagazine.com• 51 Editions• WW Circulation of 90,000+

• Published Monthly• Weekly News Clippings

• DIGITAL – on all e-readers

kindle

Reverse Logistics: The way into the future

The RL Dilemma

di·lem·ma:

a difficult or persistent problem

Source: Merriam-Webster dictionary

Reverse Logistics: The way into the future

Reverse Logistics DilemmaEvery Company Has An RL Dilemma

• Obvious-Consumer Electronics, Computers, Automotive

• Not so obvious-Books, Apparel, Retail, Grocery, Software

• Practically invisible-Pharmaceuticals, Aerospace, Agriculture, Medical, Energy

Reverse Logistics: The way into the future

Companies don’t know they have a Dilemma!

Senior Management Frequently Unaware Of:- Size of RL operations- Cost of RL operations- Impact of RL operations on bottom line- Impact of RL operation on customer service- Impact of legislation on RL- Many line/staff managers don’t know RL Operations even exist

SEE THIS

MISS THIS

Reverse Logistics: The way into the future

How to Make a Difference

• Ownership within EnterpriseWho Owns the RL Function?

• Distributed across functions• “Hidden” in operations or customer service

• MeasurementTools to measure the performance of RL?

• Few, specialized software tools• Financially absorbed in other departmental budgets

Reverse Logistics: The way into the future

The RL Impact• Finance

What are the true costs / benefits to the organization?• I.E. Actual costs vs. retained asset value

• OperationsHow is RL affecting operational efficiency?• I.E. Quality improvements based on RL

• Sales & MarketingWhat is the effect of RL on sales?• I.E. Customer satisfaction, brand reputation,

remanufactured goods impacting prices

RL affects the bottom line

Reverse Logistics: The way into the future

Source: RLA Amsterdam Conference 2010, Keynote AddressRehman Mohammed, Cisco

Reverse Logistics: The way into the future

Sources: RLA Amsterdam Conference 2010, Keynote AddressRehman Mohammed, Cisco & Investor.cisco.com – FY 2009

(2.4% of FY’09 Net Saving)

FY’09 Net Income – $ 6.1 Billion GAAP

Reverse Logistics: The way into the future

What is the Impact to Mother Earth?• Environmental

• Are we a good corporate citizen?• Are we alienating clients?

• Governmental / Legislative• Are we meeting governmental requirements?• Are we open to legal action?

• E.g. RoHs, WEEE, SB 50• Bottom Line Cost

• 3% to 15% in every company

It all affects the bottom line

Reverse Logistics: The way into the future

After tax Profits;Are They Right?

% Returns TakeAway

From Bottom Line Profits

Product Production Cost

ReverseLogistics ITManagement

Results If You Manufacture 1 Million Units/Year

Revenue per Unit is $1 - $1,000,000 totalProfit per unit is 5% After Tax - $50,000 total

Average Return Rate is 10% - 100,000 total unitsReturns represent $100,000 in lost revenue – After returns your P&L shows a $50,000 LOSS!

Reverse Logistics recovers 80% of the returns - $80,000 to the company’s after tax profit

After Tax Profit with RL recovery - $30,000

So who is most important, the VP of Sales that took $50K from your company, or the Reverse Logistics professional that gave you a

Bottom Line - $30K After Tax Profit?

Reverse Logistics: The way into the future

Solution

The Chief Reverse Logistics Officer (CRLO) would:• Have authority to make changes on RL globally,

but day-to-day responsibility stays in the hands of each Department

• Monitor the P & L to develop a Virtual profit center• Acquire the necessary tools to support the finance

department and report effectively to the Executive Staff

Resolve The Dilemma

Create A “C” Level Position For RL Management

Reverse Logistics: The way into the future

Please hold your Questions