Irv Grossman | VP, Supply Chain Operations
Many companies think of reverse logistics as an inevitability of customer dissatisfaction. As a long-time practitioner of the subject, I like to think of the return of goods as an opportunity to dig deep to uncover critical data which could lead to a higher profit potential. A well-oiled reverse logistics process can lower working capital requirements, determine causes of poor quality, uncover potential fraud, and provide a wealth of customer information. And, of course, we cannot forget reverse logistics’ main charter which is sustainability and asset recovery.
Reverse Logistics is like Fresh Fish on a Dock
During a recent client visit, one of the project managers described their organization’s approach to reverse logistics as “managing fresh fish on a dock.” Since that meeting, the metaphor has resounded in my mind, and I’ve come to realize several similarities that make it all the more insightful. Here’s a few…
To the chagrin of chefs and restaurant patrons alike, the “catch of the day” is a mystery until it is delivered early that morning. In reverse logistics, the expected lack of consistent returns can be problematic. Prior to receipt of the return, poorly functioning reverse logistics operations have little or no visibility. Companies that get this right, however, use return visibility to overcome volume inconsistencies. Visibility to items in the return pipeline allows for a level of preplanning and allocation.
Critical Cycle Times
By their very nature, freshly-caught fish have a finite shelf life. With every passing moment, their value recedes and their aroma intensifies. Similarly, returned product needs to be repurposed with a sense of speed. Poorly functioning reverse logistics operations may prefer to store the product waiting for better recovery options. However, the reality is that without speed, secondary value recovery options are squandered, leaving obsolescence as the obvious (and worst) option.
Multiple Sales Channels
For both fish and repurposed returned product alike, it is essential to maximize potential sales opportunities. Fishermen often accomplish this by selling their goods to larger resellers, such as grocery retailers, in addition to using direct channels, such as restaurants and local farmers markets. Companies who sell repurposed products should also explore a variety of sales channels to similarly maximize their gains.
The net of reverse logistics is that returns should be managed with the same sense of urgency a fisherman would use to avoid excess inventory, maximize deployment, and minimize stench. But, here’s the good news: Reverse logistics isn’t a sink or swim situation. If you’re feeling caught up, drop me a line at email@example.com.
Irv Grossman is Vice President of Supply Chain Operations at Chainalytics where he is responsible for the delivery of services related to service supply chains, encompassing reverse logistics, after-sales service, and service-centric networks.