RL Magazine
Edition 44
Returning Thoughts: Key Performance Indicators (KPI’s) for better Reverse Logistics Operation Management
by Paul Rupnow

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Learning how other Reverse Logistics professionals manage their operations is a great way to assist you to continuously improve your operations. The June 2012 Amsterdam Reverse Logistics Association conference featured a number of excellent presentations and case studies. Many of these presentations included KPIs, Key Performance Indicators that are helpful in monitoring and measuring performance. Sony Mobile and Sprague Europe provided insights into their Reverse Logistics KPIs that you may find helpful to your operations.

“Reduce Return Volume” once the “returns” arrive is a challenging area that can benefit from the use of KPIs, says Herman Goemans, Managing Director/Co-Owner of Sprague Europe, a repair service provider for Tape Storage equipment. Goemans recommends that special attention needs to be placed on the “First Returns” of a new product or product line. Quick KPI reporting on these first returns is extremely useful and valuable. “Don’t wait until all details and measurements are available, they can be expanded later. The indicators are already a good basis to start the analysis”. Some important KPIs at this stage are: % returns/shipped, NPF No Problem Found, DOA Dead On Arrival, package unopened, and Defect Pareto. Use the early KPIs to “aggressively drive improvements” by working with the involved functions of Sales and Marketing, Product Design, Manufacturing, Service Operations, Logistics or Repair.

Sony Mobile utilizes third party operations management to provide speed and quality in both Logistics and Repair, while keeping Warranty Cost under tight control and Customer Satisfaction in mind. Dominik Schnoor, Global Customer Services at Sony Mobile Communications has achieved continuous success over the last eight quarters by working with his repair partner on agreed SLA Service Level Agreements that include a Scorecard of essential KPIs. Sony’s partner KPIs are:

  • Repair Turn Around Time and Accuracy
  • Bounce Rate (repeat returns)
  • Scrap Rate
  • Excessive Escalation Rate
  • Spare Parts Consumption
  • Claim Age

Performance exceeding or not meeting the agreed levels results in a bonus or penalty. Regular meetings with their partner help monitor, manage, define SLA’s and continuously improve the returns process. These KPI’s have helped Sony continuously reduce warranty costs.

Over the last several years, Reverse Logistics operations have become much better at collecting data. Utilizing KPIs to analyze and highlight the data will help you improve your Reverse Logistics Operations. Gathering and learning how others use KPIs will assist you to assemble, refine and continuously improve the KPIs that help you monitor and manage your Reverse Logistics operations.

Good Luck!


Paul Rupnow - Director, Reverse Logistics Systems, Andlor Logistics Systems Inc.

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