As many of you know, I recently authored a white paper titled Reverse Lifecycle Management: The Next Opportunity in Reverse Logistics. I received a lot of favorable comments from people who took the time to download and read the article. Thank’s so much . There were, or course, a few readers who expressed words of caution about the promise of the Reverse Life-cycle Management (RLM) concepts discussed in the paper. One person commented that an optimal RLM system based on best practices might be a good idea but without good project management and a willingness by the client to re-engineer some business processes the best solution can easily turn into a nightmare. Another person expressed concern about the quality of data being captured by the system. Their view was that a RLM solution may be world class but if it doesn’t collect that right data to improve operating effeciency and productivity or product performance, then it is useless.
Well, I couldn’t agree any stronger. Good project management and executive level buy-in are critical to a successful RLM implementation. I would say these components are important to any type of initiative that involves change. This is also true with respect to caputuring good, useful and reliable data as expressed by the old adage… “garbage in/garbage out”. RLM must consider the needs are all stakeholders, and that is an important distinction and decision that designers of a RLM solution need to take into account. Who are the stake-holders? Where do they fit in? What is their relationship? Where to they have an impact? These are are questions that must be answered when determining what type of data needs to be captured in the RLM solution.
One of the greatest benefits of RLM, and there are many, is that it provides a systemic platform for capturing, managing, analyzing and disseminating critical business intelligence necessary for optimizing an Reverse Logistics Operation regardless of the end-user's demographics (i.e., years in business, number of employees, market served, number of customers, type of business, etc.). Basically, RLM is a strategic framework for defining system functional requirements. Our view, which is supported by very extensive market research is that the current R.L. systemic infrastructures of most OEMs/3PSPs/Retailers/etc. are very fragmented and lack critical feature functionality for capturing critical data about the R.L. Supply Chain. Up until now, RL Supply Chain professionals have not had many available options for resolving systemic issues such as data accuracy, visibility, root cause analysis, etc. Instead, these professionals have had to either ignore the situation, create workarounds, or use brute force to resolve problems as they occurred. This in turn has had negative consequences on operating costs, personnel productivity, and the overall customer experience.
RLM is a new industry standard and will help entrenched management mitigate and avoid the above challenges by helping them to anticipate, plan, and monitor RL events. I hope you will see the value of the RLM concept. Please share with me you thoughts, comments, and criticisms so that we may continue to build awareness of the challenges and potential solutions to Reverse Life-cycle Management.
We thought you might be interested in reading an e-Book on the Secondary Market written by Bob Auray, president of Genco Marketplace. We have been working with Bob over the last several years to evaluate trends, opportunities, and dynamics in the Secondary Market (AKA The Liquidation Market). Bob's e-book educates the general consumer on the benefits of purchasing products from liquidators in the secondary market. We think the e-book does a great job in defining the structure and dynamics of the liquidation market. More importantly it provides consumers with guidance on how to purchase products in the secondary market and offers suggestions on what to look for when buying liquidated projects. Overall a very objective document that is also a fun read. Cudos to Bob and his marketing team.
We believe that one of the keys to success in the Asset Recovery & Liquidation Market is the ability to move products quickly from the retailers shelves directly to consumers in the secondary market. There are many intermediary players in the liquidation supply chain who expect to make money everytime the product is moved downstream. This status quo creates an environment of market ineffeciency and productivity bottlenecks. Products may sit on the shelf for extended periods of time at various stages in the channel;the longer it sits the more likely the price is expected to erode. Furthermore, multiple touch points in the channel create downward pressure on the price or Asset Recovery Rate that retailers and OEMs can expect to realize. Genco Marketplace's direct to consumer liquidation platform overcomes these challenges by creating market disintermediation. This in turn eliminates the middle man and helps improve the efffeciency and productivity of the asset recovery and liquidation process; a win-win for consumers and retailers/OEMs alike.
To read the e-Book click here:
The Best Kept Secret in Bargain Shopping
The Field Service Automation landscape looks very different than it did 25
years ago when I began my career. Back
then, the market was in its early growth stage. Today, the market is mature.
Field Service functionality can be found in different types of applications
which we categorize into ERP/CRM (e.g., SAP, Oracle, Microsoft Dynamics, etc.),
Integrated Service Management (i.e., Astea, Metrix, Vertical Solutions, Amdocs,
etc.), Field Mobility (e.g., Antennae Software, Agentek, etc.), Service Parts
Optimization (e.g., MCA, Servigistics/Click Commerce, Baxter, etc.), and Field
Service Optimization (i.e., Service Power, Click Software, TOA, etc.). Applications are available for purchase either
through an On Premise (i.e., License) or On Demand (e.g., SaaS) solution. As
such the decision making process is much more complex.
In the past, the business user had a very vocal voice in the selection of Commercial Off the Shelf Systems (COTS). Sure
the perspectives of technical and economic decision makers were considered but
now these participations have a greater role in placing constraints and/or
mandates on the types of systems that are purchased. The technical platform on which the field
service application is written is often more important as the feature
functionality of the application itself. The ability of this application to integrate
with other corporate systems is also extremely important consideration and
constraint. One thing which is continued
to remain certain is the applications will continue to evolve and new vendors
will continue to enter the market while others disappear.
Given all these complexities, we believe end-users can benefit from working
with an independent and objective third party advisor such as ourselves to help
define the solution, recommend a qualified vendor short list, and evaluate proposals. We believe our understanding of where this
market place has been and where is it heading, combined with our knowledge of
the current state of the art and vendor market is critical in helping clients
to select and implement solutions which meet the needs of today and the
requirements of the future.
In the next series of postings, we’d like to delve into Reverse Logistic ManagementSoftware (RLMS). This first post in an overall introduction to RLMS, while thenext will focus on specific functionality. Feel free to leave any questions inthe comment section.
The currentstate of the Reverse Logistic Management Software (RLMS) should be categorizedas an industry that is set for rapid growth while solidifying its viability byvalidating its approach to Reverse Logistic (RL) operations through automation.
Our currentanalysis of the RLMS State of the Art finds software applications to beflexible and durable solutions that can operate as standalone system or as partof an enterprise package. Evidence that companies are looking for RLMS to be integratedinto other systems was evident when the highest percentage of our respondentschose that to be the most important factor in selecting a RLMS vendor.Additionally, a very large number of respondents in an extensive survey weundertook reported that they used Enterprise Resource Planning (ERP) to managetheir company’s RL. Overall, RLMS’s inerrant flexibility permits customizationto meet precise requirements and gives a distinctive amount of control to theclient to meet their specific needs.
We perceive RLMSfunctionality as analogous to a family where the different applications arelike the individual family members that compose this nucleus. Just like familymembers, these applications share the same “genes,” or in our context, featurefunctionality that makes them very similar. At the same time, it is thevariance or combination of these functions that make each application uniqueand effective. This commonality shapes an almost predefined internal structureof RLMS that facilitates the interlinking or synchronization of variousapplications. This framework allows the optimization of the service chain.
We found thatalmost universally, all reverse logistics functions benefit from “real-time”visibility of selective logistical information. This is a pervasive featurethat enables and maximizes other functions. Benefits such as inventorymanagement, forecasting, recall auditing, return management, and others arecontingent on having an accurate and current picture of where a given asset ison the supply chain.
We see a definite trend of RLMSfunctions becoming more expansive and more encompassing. However, our researchshowed that there remain many functions, such as Liquidation Management, thatneed to be created and incorporated into current offerings or offered as astandalone application.
An important aspect of this blog, Reverse Logistics Today, is that we plan on sharing insiders information with industry professionals that read this blog. Some posts will be for novices and some will be for experts. This blog post is for the latter. In this vein, we'd like to share with you some of the insight we've gleaned from working with companies and learning about their misconceptions about Reverse Logistics.
Many companies we work with incorrectly envision reverse logistics to be simply the opposite of forward logistics. Therefore, we see an immediate need for potential RLMS end-users to understand the complex factors that make reverse logistic problems different from those faced by forward logistics. These factors include, but are not limited to:
a) The complex natures of product lifecycle- today, products rarely “die,” but have after-lives in a post-sales market. This means that manufacturers and retailers need to know how to deal with their products that end up on their doorstep.
b) The multitude of disposition options that exist-Dealing with a returned product is not as simple as throwing it in the trash. Many options exist, such as recycle, refurbish, and reuse.
c) Non-uniformity of product quality- There are many different tiers of returned product quality, from like-new to damaged, and these grades dictate what RL process is best for the product.
d) Complicated forecasting- It is extremely hard to forecast or predict RL trends and volume. Unlike forward logistics, RL flow is not dictated or controlled by the manufacturers or retailers initiatives.
These four points need to be explained to potential companies looking to venture into the profitable, and usually necessary, realm of Reverse Logistics.
The RLMS market is a largely undefined and untapped entity. Many industries see reverse logistics as un-glamorous and non-high tech. They therefore discount their inherent need for RLMS. In short, companies need to first understand what RLMS before they can know they need it. Therefore, potential customers have a need to understand the complexities and benefits of RLMS. Many industries are unaware of the different modalities and functions of RLMS and how dramatically RLMS can improve their business. Customer awareness can be raised through concise and simple definitions and models of RLMS. Factors that should shape this description of RLMS are:
1) Cost reduction- Explain both the money lost from poor reverse logistic practices and the revenue possible through proper reverse logistic practices controlled by RLMS.
2) Administration consolidation-Business’s that do practice RL are often doing so through heavy administrative allocation. Additionally, many companies are hesitant to enact RL practices because of concern of needing to adopt a large and costly administration. These companies need to understand that RLMS makes the majority of this infrastructure unnecessary by streamlining and automating critical functions.
3) Protected Income-Companies are often unaware of how much income is unprotected (i.e., at risk) because of seemingly uncontrollable factors that only come into effect after the product is on the market, such as returns and recalls. Companies need to understand that RLMS brings a large measure of control into their hands.
4) Liability protection-Many companies in diverse industries are susceptible and exposed to legal and regulatory action because from environmental and governmental regulations. RLMS allows companies to be up-to-date on regulations and also performs auditing functions that protect companies from investigations.
5) Resource reservation-Inventory, transportation assets, employee allocation, and other resources are wasted on improper RL practices. RLMS conserves and manages a company’s resources.
6) Time saving-Poor RL processes take too much time resulting in poor customer satisfaction and wasted money. RLMS streamlines and optimizes RL process time.
7) Customer Experience Improvement – OEMs and retailers can dramatically improve customer satisfaction through proper RLMS practices. Refined business practices, such as issuing proper credit for returns, fast turnaround on sending products back to customers, balanced books, and issuing replacements are some crucial and improved processes that are automated by RLMS.
These seven benefits of RLMS are crucial points that impact the deployment of new software solutions. Additionally, the size of the after-market for refurbished, returned, and other dimensions of the post-life of a product needs to be defined in able to establish the exact scope of RLMS automation required.
Earlier this year we released a major study which examined the State of the Art of Reverse Logistics Management Systems (RLMS). In the next several blog postings, we reference key learning’s from our study by looking at the challenges the industry faces with respect to bringing RLMS adoption to its full growth and development. Our analysis will highlight the most crucial problems as well as offer insight toward their solutions. In this blog we will focus specifically on how RLMS can effectively support and impact the efficiency of product returns.
Return management is perhaps the most “high profile” dimension of reverse logistics. However, a conclusive, standardized model of this service has yet to be created. In addition the progressive shortening of products’ forward life cycle, a built in and growing array of product obsolesces of products, high consumer demands, liberal return policies, and legal and cultural demands of environmental regulations, contribute to the difficulties of constructing such a model. The returns management model should incorporate the following eight dimensions into its system:
1. Workflow and business rules that process returns quickly from key channels in order to halt or decrease products value. The longer a product is out of the cycle the more its value decreases.
2. Ability to handle large volumes of returns with little advance knowledge of incoming amount of returns.
3. Accurate and current funnels of disposition points and their connecting branches.
4. Data entry points and reporting that enable real-time tracking of products through the supply chain. Visibility is paramount for both the company and the consumer.
5. Analytics to process data in order to inform tighter forecasting, gate keeping, and logistics management.
6. The ability to have flexibility is setting return policy, based on general trends and individual customer habits, through visibility, reporting, and tight BI.
7. Fraud protection against such scams as habitual returns and defense against free “renters”, i.e. customers who buy products with the intent to return them after functional use of them.
8. Accurate and immediate return entitlement validation facilitates customer satisfaction and also provides companies with accurate data for inventory, forecasting and logistical requirements.
Product returns have reached unprecedented heights especially when non-traditional retailing, such as catalog sale returns that can be as high as 20%, is factored into the total volume of global returns. Therefore, the re-evaluation of return management processes in order for companies and firms to run more efficient and cost-effective is necessary. Conversely, when returns are not properly managed, profits go unprotected; there are higher costs in processing returns, and missed opportunities for growth and development.