RL Magazine
Edition 41
The Lion and the Mouse: A Reverse Logistics Story
by Jonathan Pine, Renova & Reverse Logistics Magazine

Return to Menu

Reverse Logistics Magazine and RLA President, Gailen Vick pay a visit to Renova Technology and speak with CEO and Founder, Jonathan Pine.

RLM: Thank you for the invitation to visit your facility. Could you give us a brief overview of your company?

JP: Absolutely. Renova Technology was founded in 1996 as a repair depot in support of remarketing companies. Over the past two decades we have become well known for our core competency: the component level repair and rework of complex and often proprietary circuit boards, along with a host of repair data collection and analytics. Though we are a comparatively small service provider, we work primarily for large OEMs who attribute importance to this data to drive down their TCO, and who wish to maintain transparency and our invisibility to their customers.

RLM: How do smaller reverse logistics service providers play an important role in today’s manufacturing industry?

JP: Well, I like to use the children’s tale “The Lion and the Mouse” to illustrate this. Large manufacturers - the Lions - have their focus on manufacturing, marketing, and distribution. But, like the Lion in the story, they can become “tied down” by a myriad of reverse logistics challenges. That is where the specialization and flexibility afforded by smaller enterprises in the reverse logistics industry, such as Renova, come to their aid. I know of RL programs comprised of several small RL providers, working together seamlessly. Also, providing services physically close to the OEM or their forward distribution hub is important as well.

RLM: I understand you support critical products for a major Fortune 500 manufacturer. How do smaller enterprises meet the KPI’s demanded by a large OEM?

JP: We truly strive to be efficient in all areas of the repair and reverse logistics cycle. By implementing various quality programs such as Lean Six Sigma, 5S, and Toyota Production Systems we can work in harmony with our customer’s processes. We also have our proprietary IT system which allows us to seamlessly integrate with those of our customers and their other vendors. This provides reporting flexibility that might take large enterprises years to develop. We focus on repairing down to the component level and tracking every component repaired or replaced and maintaining a serial-number specific history for every part number touched. This is the information that drives the analytics we use with our customers to be proactive, drive down their costs, and continually improve our processes and efficiencies.

RLM: Improving efficiencies in the supply chain is certainly a hot topic in the logistics industry. So is identifying areas to increase profit in aftermarket sales. How does your reverse logistics experience help in that regard?

JP: Again, it comes down the detail, breadth, and ultimate transparency of the information we gather from the returned products. It is a well known industry statistic that 30+ percent of returned items are no fault found. We report the disposition of every product that passes through our facility, whether it is repaired, scrapped, or no fault found. We were one of the first repair organizations to “open the kimono” so to speak, and share this information with the manufacturer. Frankly, that was an anxiety producing step. It could have been detrimental to our bottom line to admit that they were sending us products that did not need repair. However, because of our integrity and transparency, we were - and continue to be - awarded with more business and special projects. “Everything we do must begin, and end, with the customer.” I took that vision statement from a customer, and it works for us.

RLM: Yes, I can see how this information can benefit the manufacturer. Do you have any other examples of reverse logistic “mice” helping the “lion”?

JP: Studies by supply chain consultants such as Blumberg cite the importance of and increasing reliance upon smaller regional RL providers to address RL challenges that have been previously handled by the “big guys.” At a recent event in Atlanta, I heard the EVP of Global Solutions of a Major POS OEM herald the importance of “local sourcing.” I think geographical location plays an important role in reducing TCO. In response to this need, we currently operate a co-located facility with a major 3PL to support a major electronics manufacturer. We candidly refer to the program as “Renova- in-a-Box.” Our organization is responsible for the triage, disposition, technical repair, kitting, and repacking of the returned items. This process takes place in the larger operational facility of our partner, who handles the RMA, credit reconciliation, transportation, and warehousing. By co-locating these operations, we are able to drive down the customer’s total cost of ownership by decreasing transportation legs, administrative, and inventory costs, while increasing the velocity of return to market. This program is easily replicable, and we plan to open similar co-located facilities domestically and internationally, allowing our customers to benefit from local sourcing in the reverse supply chain.

RLM: You make a good point in regards to transportation and administrative costs. Do you have any other programs that help manufacturers in this regard?

JP: While we understand that a great deal of electronics manufacturing and often repair is outsourced and performed in low cost countries, the cost of labor is only a component of the equation. A major customer was burdened with transportation, administrative, and inventory costs incurred with the reverse logistics of certain products that are manufactured overseas. They approached us to design a solution to provide domestic repair for these products. The program involved partnering both with our customer and the CM. It has been up and running for over five years, and we have saved our customers millions of dollars as result of this program.

RLM: Outsourcing is certainly another topic that concerns manufacturers. As a third party repair provider, what are your thoughts on outsourcing?

JP: Well, excellent studies and articles have been published on the subject. Each organization has to decide if outsourcing a particular function makes sense for their situation. But, the value of outsourcing for large organizations has become more apparent. Again, like the Lion in our story, large enterprises cannot afford to be as nimble as the smaller, localized specialists in the reverse logistics process. The smaller organizations can adapt quickly and implement customized programs, and help with white glove projects, again freeing the Lion to focus on day to day objectives.

RLM: Well, you certainly have given us many examples of how smaller reverse logistics specialists come to the aid of the large manufacturers. Thank you for the tour.

JP: It has been a pleasure!

Return to Menu