Edition 50
Enhancing Sustainability Through Your Reverse Supply Chain
by Bill Angrick, Chairman and CEO, Liquidity Services, Inc.

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In this evolving market landscape where the drive to generate increasing revenue and cut costs is colliding with the pressure to advance efforts around Corporate Social Responsibility (CSR), many companies find themselves searching for innovative opportunities to meet this challenge. Emphasis from internal and external stakeholders and influencers on targeting a “triple bottom line” implies that corporations have to think about more than just profit, but factor people and the planet into their overall equation, in order to achieve success. Sustainability reporting is critical, particularly due to battles played out in the public around corporate “greenwashing” – implying that an initiative is only artificially beneficial to the environment. Sustainability initiatives have to be more than green; they must be measurable, while delivering value to the business. Companies striving to establish themselves as leaders through their CSR efforts have to dig deeper than they may have previously looked for effective solutions.

The reverse supply chain, often referred to as reverse logistics, is a place where companies can begin to build real sustainability into their operations, and create new revenue streams in the process. Here are the key questions to ask as your corporation looks to transform this area of the business:


How is your business currently managing its inventory and assets?

Whether you are a retailer, OEM, or a manufacturer of consumer packaged goods, you most likely have two kinds of assets moving through the reverse supply chain (1) consumer returned and overstock inventory and (2) end-of-life or idle assets and equipment. Both categories of assets are likely providing additional stress to your staff to manage, taking away time from your core business. The important questions to answer are (1) how are you are currently managing this flow of items and (2) is that process healthy for both your bottom line and for your sustainability objectives.

Most organizations have a process in place to manage the disposition of consumer returned inventory and overstock products. However, oftentimes this process is not only lacking in generating top financial return, but the products are also handled and shipped multiple times with little oversight into where the product ultimately ends up, which is often the landfill. The risk to the organization is deterioration of margin and brand value. To remove these risks, organizations should implement disposition methods that have greater transparency for how and where product is being resold, as well as clear processes for reducing the carbon footprint created in the movement of the products. For example, the Return-to-Vendor process is a prime area in which most retailers, manufacturers, and OEMs can streamline and consolidate the process through a trusted, full-service, third party vendor. In this manner, products are moved once, directly to the vendor, rather than multiple times to save time, shipping costs, and fuel. The right vendor will provide transparency into the sales process and will target a buyer base that intends to extend the useful life of the product through refurbishment and/or resale.


If you are a manufacturer or have assets and equipment to manage, utilization of an electronic asset management system can allow you to see all the assets your organization maintains and more easily redeploy idle assets to other areas of your company where they can be put to use. This important process will save the company from unnecessary expenditures and carbon output that would have been generated to produce that asset anew. Alternatively, if the asset is not in demand within your organization, you can resell the items through an online, specialized marketplace to create a new revenue stream, keep items from being disposed in a landfill, and return revenue while protecting your company’s brand.

Is your sustainability plan able to adapt in a swiftly-changing technology landscape?

While many companies are coming up with promising solutions for the sustainability conundrum, from green fleet vehicles to installing lighting systems that conserve electricity, many of these ideas are cost-intensive, and as technology changes, will have to continue to adapt. Taking a deeper look at how your organization is addressing sustainability in every area of your operation, will provide your management team with insight on how to better implement changes that can adapt with technology cycles. As a retailer, utilizing a streamlined process that shifts returned and overstock inventory into online marketplaces, rather than disposing of them in traditional ways, will provide you with a self-sustaining, green process that will easily adapt through technology shifts. Over the next several years, consumers and businesses alike will only continue to rely more on online resources to purchase goods and assets. In taking the steps to incorporate smart reverse logistics now, your organization will gain an enhanced sustainability initiative that will continue to magnify positive environmental impact and value in the future. By expanding this type of system to include assets through a digital asset management system, you will be provided with a full view of the asset’s lifecycle with an easy option to resell assets online- a green process that nets you higher recovery on the value of the item, acclimates to your needs over time, and allows you to easily share successes internally to reinforce adoption of sustainable business practices.


How is your business currently measuring overall sustainability?

Your company may currently promote itself as sustainable, with fragmented data to back up the claim, or you may have a fully developed sustainability annual report. However you currently look at your measuring your environmental impact, it’s critical to search for opportunities to examine how your organization can better measure and improve your sustainability efforts. One of the common data points include is carbon offsets, which are typically measured by decrease in waste streams, paper reduction, decrease in fuel trips, decrease in energy consumption, and other variables. These metrics can provide important insight, particularly as you measure your triple bottom line, year-over-year. All of these areas will be impacted through smart business practices around reverse logistics as both transportation and waste disposal outputs will be reduced. In addition, the carbon utilized to create new items is conserved through the resale of existing inventory and assets. For example, more than 3,000 manufacturing sites around the globe are utilizing AssetZone, a web-based tool, to manage and redeploy surplus and idle assets. One leading consumer packaged goods manufacturer utilizes the tool to manage the sale of hundreds of their fleet across North America; producing green for the bottom line and for the planet.

Conclusion

In order for companies to sustain their competitive edge, it’s essential to consider adoption of green, innovative business practices in their reverse supply chain. Redeploying your assets internally or reselling assets or surplus inventory online may not have been your first thought when it comes to sustainability. However, if you connect with a reputable online marketplace and utilize a digital tool to manage assets, you can tap into global buyer demand and increase the value recovered. In addition, by keeping those surplus assets out of landfills, your organization is exercising environmental stewardship in a measureable and meaningful way.
RLM
Bill Angrick co-founded Liquidity Services, Inc. and has served as the Chairman of the Board of Directors and Chief Executive Officer of Liquidity Services since January 2000. Mr. Angrick holds an M.B.A. from the Kellogg Graduate School of Management at Northwestern University and a B.B.A. with honors from the University of Notre Dame. He earned his CPA certificate in 1990.For information on Liquidity Services, visit Liquidityservicesinc.com

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