Edition 54
Returning Thoughts - Making a Better Financial Case to Improve Your Reverse Logistics
by Paul Rupnow, Director, Reverse Logistics Systems, Andlor Logistics Systems Inc.

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High demand for refurbished goods, better processing partners and higher recapture values are providing new profit opportunities for returned goods at consumer product companies. It may be time to review your Reverse Logistics methods or return allowance contracts with your retailers, since there may be an opportunity to generate significant profit from your product returns. Presenting a case to your management team to improve your reverse logistics can be a challenge, but including detailed financial calculations will always help your presentation and capture support from your management team.

The Reverse Logistics Association Consumer Products committee hosted a webinar recently featuring a Returns Saving Calculator spreadsheet from their recent article, “Finance is from Mars and Reverse Logistics is from Venus ‘How we can talk to each other’”. The presentation by Tony Sciarrotta of Reverse It Sales & Consulting and Paul Rupnow of Andlor Logistics Systems Inc. detailed how to complete an in-depth financial analysis of your existing returns scenario and potential future returns program scenarios. “We utilized this spreadsheet and article in our presentation to our management team to get approval to launch our new returns program” says Kathy Murphy, the Senior Sales Operations Manager at Jarden Consumer Solutions.

In many cases, manufacturers in the Consumer Products industry utilize a Returns Allowance with Retailers to avoid returns processing or they may just utilize an immediate liquidation or scrapping of returns. This analysis tool can help you compare your existing method with a new Asset Recovery model where the returns of certain goods may be inspected, graded and possibly prepared for resale based on the returned condition of the unit. One manufacturer in the webinar has reported success with this type of program for products with a resale value to the consumer as low as $20 in the secondary market (with a retail selling price for the refurbished item that is very close to the primary market suggested retail price for new goods, since many of the refurbished returned goods are in “like new” condition).

“The spreadsheet and article are great tools to help you assemble the financial information necessary to understand your costs and your profit opportunities” explained Sciarrotta in the webinar. “We have received very positive feedback from reverse logistics people at small and large companies who have utilized this spreadsheet and article to build their analysis and make detailed, professional cases to their management teams.”

You can download the spreadsheet, the article, or listen to the webinar from Wed, Jul 24, 2013, at RLA.org at the Consumer Products Committee page.

Good Luck!
Paul Rupnow - Director, Reverse Logistics Systems, Andlor Logistics Systems Inc.
Editor - Reverse Logistics Professional Report
Business Insights and Strategies for Managing Product Returns

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