Curtis Greve and Jerry Davis have been providing reverse logistics and liquidation services for over 25 years and they have written a book to help business people around the world make more money by improving their reverse logistics processes. Jerry and Curtis have captured key lessons learned about designing and running reverse logistics networks for companies such as Walmart, Target, Macy’s, Unilever, Dell, HP, Best Buy and many other Fortune 500 companies and third party service providers.
The goal of this book is to provide valuable insight to executives looking for ways to improve their return management capabilities and maximize profits on goods flowing through their reverse logistics pipeline. Whether you are thinking about buying reverse logistics software, negotiating better return agreements, improving return center operations, or updating your company’s customer returns policy, this book is for you. This book will explain reverse logistics best practices, current trends, future change drivers and much more. Like the title says, this is an executive’s guide to reverse logistics that will show you how to increase your company’s profits by managing returns.
In today’s economy every business executive is looking for ways to reduce costs and improve customer satisfaction. Most of the usual steps, like cutting payroll, reducing expenses, and negotiating better deals, have been exhausted. Business leaders are now looking for new ideas to achieve their goals.
In many organizations, reverse logistics is an area of untapped opportunity that can have a positive impact on both customers and earnings. It takes leadership and resources in order to take advantage of these opportunities but the payback can be significant. If you are new to the world of returns management, the question is “How do you find hidden profits in reverse logistics?”
“An Executive’s Guide To Reverse Logistics” has the answers. If you are a supply chain executive who needs to understand more about reverse logistics, or if you are a CEO or CFO looking for ways to reduce the financial impact of product recalls and customer returns, this book is for you.
“An Executive’s Guide To Reverse Logistics” is filled with explanations, facts, process flows, diagrams, tools, and best practices developed over the authors’ combined 40 years of hands-on experience. Simply put, this book is a roadmap that will help you find hidden profits by managing returns.
Hi-tech manufacturers are under growing cost pressure from rising costs of rare earth metals. Many of these metals you have heard of such as gold, silver, and platinum. Some of these metals most of our readers have never heard of such as palladium, ionium, gallium, and other “ums”, all of which are used in cell phone, TVs, and PCs. The reserves for many of these metals will be used up over the next 20 years. To add to the inflation risks, 97% of these metals come from China.
In addition to the dramatically rising costs of metals, manufacturers are also facing increased costs and potential liability from product disposal. There are 17 states that have laws on the books that outlaw throwing e-waste in their landfills. In addition to these 17 states there are a number of other states that have similar laws working their way through their legislatures. All of this is in an attempt to do something to reduce the 400 million units of e-waste that are landfilled every year in the US.
This can have a significant impact on electronic manufacturers. When states, such as Rhode Island, decide they want e-waste cleaned out of their landfills, they charge the manufacturers. To be clear, consumers threw these items in the landfill, not the manufacturer.
The question is what can a manufacturer do to control the rising costs of metals and reduce the risks of having to clean up a landfill after their customers have finished using their products? The answer is to rethink the manufacturing process by incorporating reverse logistics processes that harvest parts and recycle returns and end of life goods.
Some wonder if trying to develop these capabilities are worth it. We argue that it is not only worth it but the way of the future. Did you know that one ton of mobile phones has more gold in it than 17 tons of gold ore?
Think about this – According to the Electronic Takeback Coalition every year there are about 1.2 billion cell phones sold worldwide. At any one time there are over 4 billion mobile phones in use around the world. Assume that for every phone purchased there is one that is thrown away. That is 1.2 billion cell phones or about 200,000 pounds of waist created every year. If the manufacturers were to extract just the gold, silver, palladium and copper from just one ton, or 6,000 of these phones, the metals alone would be worth over $48,000. That’s about $8 of value per unit at 2011 metal prices.
If only 50% were recycled and used in the manufacturing process, mobile phone manufacturers would be reusing $4.8 billion dollars of gold, silver, palladium and copper. This doesn’t include a number of other rare earth metals that could also be extracted and reused. In addition, the manufacturers would also greatly reduce their carbon footprint and their risk of liability from their goods going to a landfill.
This is just one example of the impact the integrating reverse logistics into the manufacturing process could have for a manufacturer. The same is true and impact greater for PCs, TVs, and other hi-tech electronics. The only question is why aren’t the manufacturers adopting this? Now that is a great question. The answer is that manufacturers have to rethink how they source their materials and manufacturer their products.
Note to Apple, Nokia, Google, Sony, Samsung, and others – do the right thing…profitably.
In Reverse Logistics Podcast #13 – 4 Key Metrics in Reverse Logistics, Curtis Greve discusses the four critical metrics that a reverse logistics expert should monitor to ensure there return centers are operating efficiently and effectively.
There are two primary goals for every return center: 1. Maximize the net asset value of inventory flowing through the reverse logistics pipeline; 2. Process reverse logistics inventory at the lowest possible over all cost to the organization, while maximizing inventory recovery value.
Net asset value is the value of returned goods realized after being processed through a returns facility, less the cost of processing. In order to maximize net asset value, the reverse logistics leadership team should monitor a number of metrics. There are many activities that should be measured and monitored to ensure you are running a best-in-class operation. There are countless variations, the complexity of which is dependent upon the returns process, the inventory, and a number of critical business decisions such as brand protection, sustainability concerns, liquidation options and the like. Among the variations there are four critical metrics that you must pay very close attention to and they are:
- Thru Put
- Cost per Unit
- Yield Rate
- Recovery Rate
Before you start writing emails pointing out the need for quality, it should be said that quality is a given for each area of your operation and should be a part of every operation. In order to achieve your primary goals stated above and to achieve the desired results for each metric above, a high level of quality is required.
In this podcast, Curtis Greve will discuss each of these metrics and why they are important pulse points for every reverse logistics operation.
Reverse logistics is the part of the supply chain that is often outsourced to third party service providers (3PL’s). Many companies that have best-in-class supply chain functions outsource reverse logistics. If these industry leaders can run very complex global distribution networks, why don’t they operate their own return centers? For the last two decades, we have worked with Fortune 500 Companies who have outsourced their reverse logistics to 3PL’s and we have found they do so for one of three reasons:
- To get reverse logistics expertise quickly and with less risk
- To achieve greater flexibility and faster speed to market
- To create a protective barrier against outside forces and limit potential liabilities
Many companies outsource reverse logistics because they do not have the expertise within their management ranks to run the area, or they don’t want to use these resources on the function under consideration. Retailers, for example, want their top executives working on ways to improve traditional core supply chain functions, or store operations, or merchandising systems. Manufacturers want their top talent running manufacturing plants, working with customers, managing imports, managing parts or just about anything other than focusing on returns.
Reverse logistics is more often treated like the red headed stepchild of the supply chain. No one wants to deal with returns. When I first got involved with returns, Lee Scott, now retired Walmart CEO and then VP of Logistics had to promise me that I would not have to spend any more than two years running reverse logistics for Walmart before I would agree to take the position. That was over 25 years ago and for me it became a career. The point is that reverse logistics is outsourced because there is no internal expertise and/or the company is unwilling to invest in the team and technology needed to develop reverse logistics.
This is the main reason why retailers and manufacturers outsource their returns processing functions. A qualified 3PL can have a significant impact on a company simply because of their experience in returns. They can also help leap frog the competition by leveraging systems, liquidation networks, and by sharing best operations practices that will reduce the processing costs.
The key, however, is to outsource to a firm that is experienced and has a broad view of the issues. Many 3PL’s claim they “process returns”, few actually do and fewer still have any idea about what happens upstream or downstream from the actual returns processing function and how they must be coordinated to achieve maximum results.
When you are selecting a 3PL, it is important to do your homework and select a provider that has real experience providing reverse logistics services in your market. Can they help you improve the product flow upstream so you can process more efficiently and maximize the value of the returned assets downstream? Do they understand the impact of returns on customers, suppliers, stores, DC’s, and how they effect the financial well being of the company? Do they have existing operations repairing product that is similar to your returned items.
WARNING: Watch out for the 3PL who wants you to be the first. Often 3PL’s who repair phones will spin their experience and try to convince a TV manufacturer that they really can process, test and repair TV’s because they have been in the consumer electronics repair business for years. In reality, they have never fixed anything other than cell phones and they are looking for a customer to fund their technical development. Buyer be ware.
Lack of on point experience is often why companies outsource reverse logistics, but speed and flexibility also drive many to outsource. Companies outsource reverse supply chain functions not because they don’t have the leadership or experience but because they need a solution fast and going to a 3PL with the focus, motivation, experience, existing technology, capital resources and staff can get things up and running much faster than the company could do it on their own. A quality 3PL will be able to start up a new reverse logistics operations within six months. Most companies who decide to develop reverse logistics internally will take at least twice that long.
The third reason companies outsource supply chain functions, including reverse logistics, is to have a layer of protection and minimize their risk. Many companies outsource operations to avoid unwanted attention from labor unions. It is against the law for companies to fire employees who attempt to organize a labor union, however, a company can fire a 3PL and replace them with another if the 3PL doesn’t meet performance metrics. This is true even if the 3PL did not achieve it’s goals because of a strike or other union activities.
Companies also outsource to cap and control other risks and liabilities such as inventory shrinkage, workers compensation expenses, medical benefit costs and other “non-controllable” expenses. Companies protect themselves by either negotiating a fixed fee arrangement for multiple years or with some form of variable pricing. This enables companies to limit these risks by negotiating caps within their outsourcing agreement.
Outsourcing reverse logistics is often the best way to develop returns processing capabilities for many manufacturers and retailers. You will need to employ experienced resources to help select the 3PL and negotiate an acceptable contract. However, with in six months you will have a best-in-class reverse logistics process that maximizes the value of returned assets, with limited risks and controllable costs.
In this podcast Curtis Greve shares best management practices for peak returns season. During the first quarter, many retailers and manufacturers will receive 30% to 60% of their total annual returns volume. This is the critical time of year when reverse logistics managers can really add significant value to their company. With the seasonal spike in volumes in both customer returns and recalls, it is important for returns operations executives to focus their teams on the key areas of the reverse logistics process to ensure they maximize the value of assets flowing through the reverse logistics pipeline.
Many returns managers make the cardinal mistake of focusing all their time and attention on receiving product. While receiving is important, that is just the start. If management’s attention stops there, a cascade of issues will irrupt and a lot of money can be lost. In today’s podcast Curtis discusses three key areas that should be top priorities for every returns operations manager:
For over 25 years Curtis Greve and Jerry Davis have ran returns operations for manufacturers and retailers around the world. Listen to today’s podcast to learn critical management tips for peak returns season.
The Reverse Logistics Podcast
The Reverse Logistics Podcast
Reverse Logistics Podcast #11 – Future Trends in Reverse Logistics
This podcast is a recording of a presentation given by Curtis Greve to the DRS Customer Symposium on September 9, 2010. The subject of Curtis’ presentation covered four external drivers that will impact every reclamation center and reverse logistics process in the world between now and 2015.
This presentation was directed toward CPG manufacturers but the drivers behind the future changes in the reverse logistics ecosystem will impact every retailer and wholesaler as well.
The DRS Customer Symposium was a great event with a lot of take home value for all attendees. It was attended by over 40 manufacturers who are customers of DRS. For more information on this symposium or about DRS services and solutions visit DRSReturns.com.
The Reverse Logistics Podcast
UPS is launching a global ad campaign touting their global logistics capabilities. Their jingle for the campaign does a great job of explaining what logistics is and how it can benefit companies when done correctly. The next time my mom asks me what I do I think I will just play the new UPS Logistics jingle.
Well done UPS.
The Reverse Logistics Podcast
The most important question that an executive in charge of reverse logistics can ask about a new item is “What is the merchandise exit strategy?” It is easy for a company to get excited about a seasonal item or the newest widget in their product line, but it is important for them to think about the exit strategy. Just like an investor who is going to acquirer a company, manufacturers and retailers need to have a clear exit strategy for their goods.
In today’s podcast, Curtis Greve talks about how to develop an exit strategy for products and critical factors to consider when working within an organization to develop merchandise exit strategies. Whether it is a seasonal item that is part of a guaranteed sales agreement, an item with a limited life span like a computer or fashion item, or if it is an item that is coming to the end of it’s life and is going to become obsolete, having a well thought out exit strategy could significantly improve that item’s contribution to the bottom line.
The Reverse Logistics Podcast
In today’s Podcast Curtis Greve shares three tips that can help improve returns processing; improve relationships with key vendors, suppliers, and liquidators; and increase the bottom line contribution of your reverse logistics program.
Do you know how to eat an elephant? One spoonful at a time. Curtis will share his experiences and time tested best practices that will help you improve, one step at a time.
Like Alan Weiss says “If you improve 1% everyday, in 70 days you will be twice as good.” Here is three percent to help get you started.
The Reverse Logistics Podcast