Edition 55
Clear Procedures, Strategic Communication, and Consistent Decision Making Lead to Success in Returns Management Programs
by Jennifer Bilodeau, Independent Author, Independent

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The landscape of business is changing from a micro-managed, proprietary organization to one that is more collaborative, transparent, and relationship oriented. Some of the changes in the landscape of business management has been to create collaborate work environments and benchmark performance based on the individual contributions and goals achieved rather than measuring those employees against each other. Businesses are moving towards a more collaborative environment sharing information to improve their profitability and efficiency across the entire supply chain with business partners, customers, distributors, and other key stakeholders.

Sales professionals have been working in an advisory capacity using leveraging relationships to increase revenues. Companies are developing relationships with their employees, striving to increase productivity in the workplace. Employers have implemented flexible hours, relaxed the social media police, and have provided opportunities for employees to own their job allowing creativity rather than micro-management. “In your organization, you’re better off giving employees challenging assignments and standing back than managing them like assembly-line workers” (Ryan, 2010). In a reverse logistics program, the collaborative environment encouraging creativity and dedication will lead to success. Employees need to feel trusted and comfortable with coordination and collaboration within their company and be empowered to brainstorm developing creative solutions to achieve objectives. This will provide organizational confidence that will serve well as those employees collaborate with other supply chain partners. “Inter-firm coordination and collaboration is almost impossible if not preceded by intra-firm coordination through information sharing” (Olorunniwo, et al, 2010, p.456). Relationships and information sharing with business partners demonstrate commitment. The culture of ownership and trust derived from collaboration throughout the reverse logistics program can be nurtured offering mutual benefits for long term business growth.

“A supply chain is a complex network that consists of suppliers, manufacturers, distributors, retailers, and end customers, working together to convert raw materials to work-in-process inventory to final products” (Olorunniwo, et al, 2010, p. 454). Consider what happens to a return throughout the reverse logistics process and the impact returns may have on each partner across the supply chain. Products sold to the retailer that are defective will impact the number of returns the retailer must manage. Furthermore, it is often the retailer that will be negatively impacted by customer dissatisfaction and consumer complaints for selling a faulty product. The capabilities are available and utilized to share information in a collaborative environment to manage returns or recalls with an eye towards continuous improvements to reduce or eliminate returns. “Firms must develop reverse logistics related capabilities: handling return operations, managing information technology (IT), sharing information, and collaborating with partners” (Olorunniwo, et al, 2010, p. 454)

Organizations must develop a well-constructed reverse logistics plan, ensuring they prepared to launch the operation integrating it into the corporation by educating staff and establishing expectations with partners in the supply chain. Best Buy’s “BuyBack” program was pre-maturely launched and lessons can be learned from their failed reverse logistics program. The program encouraged consumers to pay an up-front fee to return merchandise for credit to upgrade their electronics. There were several significant issues that led to financial losses that included poor relationships with their vendors, poor communication with customers, a lack of communication and consistency at the point of sale and point of return.

Marketing purchased a multi-million dollar ad during the Super Bowl to launch the program when the information technology was not in place. The company contracted to a third party, TechForward, who was contracted to finish developing the software for the program. This was quick fix relationship where Best Buy rescinded on business agreements. “TechForward sued Best Buy for stealing proprietary software two months into the project where a jury awarded the firm $22 million in damages” (Phelps, 2012). Media coverage surrounding the lawsuit damaged Best Buy’s reputation in the eyes of the consumer, therefore, the company had very little room for forgiveness as they worked out the details of the buy back program with process improvements.


The price point of the pre-paid plan was not a good value to consumers unless they were returning and buying new electronic products every six months. Consumer complaints illustrated the program was customer unfriendly as the value of return reduced if it was not returned with all parts or instruction manuals in the box. The program did not educate consumers on restrictions, terms, or a condition, leaving the impression the program before its termination, was predatory. “The buyback program is custom designed to squeeze money out of the laziest gadget-obsessed people, and a scam to keep you a customer by giving cash back in the form of Best Buy gift cards” (Van Camp, 2011).

Employees were not educated to advise consumers, and there was no consistency in determining condition of the item to gage the amount the consumer should receive. One consumer published a report describing how customer service pointed them to the store for problem resolution and the store pointed them back to the customer service number. “The store and customer service hotline really need to collaborate their information” (Ang, 2010). Reports mounted from many consumers negatively impacting the retailer.

The lesson learned is to develop a well-constructed plan that is consistent throughout the supply chain to develop ongoing trust and collaboration with internal and external stakeholders. For a returns program to be successful, service from one location to another must consistent. A system to automate decision making, especially at a retail level where high employee turnover presents new sets of challenges. It is extremely difficult to train retail staff to make consistent decisions and communicate the same information throughout their footprint. Once the returns are handled consistently, it is much easier to effectively manage those returns and meet objectives. Clear communications both internally and externally within an organization with only serve to strengthen relationships, bring new perspective, and new value to the company.

There are some areas where a company may feel information is proprietary, and others who may wish to release information in stages as the relationship, commitment and trust grows into a mutually beneficial long-term partnership. “Results show that information sharing leads to greater collaboration in Reverse Logistics and directly [by itself] leads to greater revere logistics performance” (Olorunniwo, et al, 2010, p. 460).

Collaboration and communication throughout the supply chain must be strategized and management must consider how the reverse logistics program will improve the customer experience. “Whether a company establishing a reverse supply chain will have to work towards educating customers and establishing new points of contact with them, make decisions which activities to outsource or manage internally, while keeping costs to a minimum and discovering innovative ways to recover value” (Guide, et al, 2001, p.25).

REFERENCES

DeBrito, M. P. (2003). Introduction. In Managing reverse logistics or reversing logistics management (pp. 17-37). Rotterdam: Erasmus University.

Dutton, G. (2010, July 4). Reverse Logistics: Money Tree or Money Pit? Retrieved May 17, 2013, from http://www.worldtradewt100.com/articles/reverse-logistics-money-tree-or-money-pit

Meyer, D. (2011, October 7). In supply chain logistics management, there’s a reverse gear – and it’s green: Part 1 [Web log post]. Retrieved May 17, 2013, from http://valuestream2009.wordpress.com/2010/10/07/in-supply-chain-logistics-management-there%E2%80%99s-a-reverse-gear-and-its-green-part-1/

Nylund, S. (2012). Reverse logistics and green logistics (Unpublished master’s thesis, 2012). Vaasan Ammattikorkeakoulu Vasa Yrkeshogskola University of Applied Sciences. Retrieved May 16, 2013, from https://publications.theseus.fi/bitstream/handle/10024/46993/Reverse%20Logistics%20and%20green%20logistics.pdf?sequence=1

O’Connell, A. (2007, November). Improve your return on returns [Editorial]. Harvard Business Review, 30-34. Retrieved May 19, 2013.

Peterson, A. J. (2005). An examination of reverse logistics factors impacting the 463-L pallet program. Manuscript submitted for publication, Air Force Institute of Technology, Wright-Patterson Air Force Base. Retrieved May 17, 2013, from http://www.dtic.mil/cgi-bin/GetTRDoc?AD=ADA437509

Rodrigue, J., Slack, B., & Contois, C. (n.d.). Green Logistics. Green Logistics. Retrieved May 14, 2013, from http://people.hofstra.edu/geotrans/eng/ch8en/appl8en/ch8a4en.html

Rogers, D. S., & Tibben-Lembke, R. S. (1998). Going backwards: Reverse logistics trends and practices. Reno, NV: Reverse Logistics Executive Council.

Steele, K., & Rodriguez, E. (2008, July/August). Reverse Logistics – Turning Green to Gold. Reverse Logistics Magazine. Retrieved May 16, 2013, from http://www.rlmagazine.com/edition12p28.php
RLM
Jennifer Bilodeau, a Reverse Logistics specialist, formerly supported the Department of the Defense in day to day management of both inbound (return) and outbound distribution of goods throughout the command. She was recognized for exemplary performance throughout the base relocation effort working with internal/external stakeholders managing multiple projects assessing tangible goods for movement to new facilities, acquiring replacement items, as well as recapturing value from left behind products. In this role she oversaw reverse logistics operations including repair and warrantees, secondary markets, deconstruction and re-utilization of parts, as well as final disposition instructions.

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