Edition 59
Reverse Logistics Talk
by Jennifer Bilodeau, Reverse Logistics Specialist, Independent

Return to Menu


Banks (2002) published an article in Army Logistician discussing the initial military applications of reverse logistics, defining the study of reverse logistics, and offers insight on where to improve operations. This study can easily identify areas where commercial business can look to identify additional process improvements in managing returns.

The Department of the Army launched a Reverse Logistics Process Action Team (RLPAT) who was tasked with measuring velocity management (VM) and defining process methodologies for define, measure, and improve (DMI) initiatives.

The initial progress was compared to skeet shooting, constantly aiming at a moving target. This was a fair assessment as the variables of reverse logistics are constantly changing whether it occurs through associated costs, environmental regulations, or consumer demand. The military was primarily focused on reducing the time for requisition approvals, order wait times, and shipping time. Reverse logistics is often overlooked because the savings are not necessarily visible. United Parcel Service concurs with Banks in that “reverse logistics is one of the most overlooked elements of the complete operations cycle” (Greves, et al, u.d., p.2).



Military defined the beginning of the reverse logistics cycle at the point of property turn in, however it was more difficult to define where the reverse cycle ends. There were many factors identified such as the Army reutilization program and maintenance. The list could be expanded to include warrantee management and does not consider contractor furnished equipment paid for under government contract and the decisions to be made for the government to take possession of the equipment for disposition or have the contracting agency manage disposal.

Some of the challenges Banks discussed surrounded a data disconnect between various military inventory and financial databases. It was specifically discussed that Unit Level Logistics (ULL), Standard Army Maintenance Systems (SAMS), and Standard Army Retail Supply Systems (SARS) do not communicate with each other. There are also disconnects in data management between quartermaster, ordinance, and transportation. The article Banks published provides insight into the necessity for a cohesive inventory control; system. Another specific data inconsistency issue surrounds Total Asset Visibility (TAV) which tracks RFID items as it moves from point to point throughout the shipping process. The item is also entered into the Logistics Support Activity data center (LOGSA) which does not use RFID tag numbers, but document ID numbers creating confusion when trying to access records.

Despite the difficulties associated with disconnected data, the RLPAT was able to improve predictability, reliability, and visibility in the supply chain. The most significant improvement was the ability to plan for maintenance and rapier rather than react to an issue. Shipment tracking was improved through the use of RFID technology, although logisticians were utilizing multiple data sources to track that item. UPS also concurs that it is more cost effective to predict and control the return process. “Knowing what is returned and where it ends up will make it easier for companies to deal with regulatory issues and evaluate returned stock for possible secondary sales channels” ( Greves, et al, u.d., p.5). By strategically planning military returns, they ability to plan for maintenance and reissue to the unit, or plan to have the item enter the army reutilization program prior to final disposition. It is important to recognize that multiple disconnected databases and information sharing may play a role to secure the supply chain in military operations, however, it would be an additional unnecessary cost in most commercial applications.



Looking to identify the hidden costs associated with reverse logistics will help quantify potential savings, identify opportunities to improve data collection, and manage that data. The many different systems that challenge the Department of the Army in developing reverse logistics operations mirrors many of the issues commercial businesses face across the supply chain. A commercial company many have control over integration of the supply chain within their organization, but the real challenge in returns management lies with the collaboration of managing those returns with customers and vendors outside their organization that may be utilizing different platforms.

In a recent conversation with Mr. Chi, a Director of Returns Management for Samsung, and Mr. Owens a Director of Sales, we discussed top challenges they face in returns management. Mr. Chi indicated Samsung had a 2.8% return ratio based on total sales which is extremely low for the industry. Many of the significant problems they face are in two area. The primary reason for return is the product does not meet customer expectations. Samsung had identified that they need to educate retailers and have a more hands on approach to make sure the customer is buying the product they want. Samsung entered into an agreement with Best Buy to have Samsung product specialists in their retail stores. “Samsung sees the boutiques as an opportunity to educate shoppers about its products and sell some of its less-well-known gadgets,” one of the company’s marketing executives told The Wall Street Journal. And on Best Buy’s side, “the new departments are part of Chief Executive Hubert Joly’s effort to focus the stores on fast-selling products and strengthen relationships with key vendors.” (Maxfield, 2013). Some feel this was decision made to develop a stronger retail presence to compete against Apple or Microsoft stores that have specialists on site to help consumers with product information or support. Data automation could provide a significant platform for educating consumers at the point of sale by providing key pre-sales information to avoid the likelihood of return. The second issue faced by Samsung was identified at the retail level where their customer is seeking credit for 100 returned units, but only 80 returned units arrive. This is a sensitive area because the product is lost across the platforms. Samsung’s challenge is to sell the return management process to the customer. Mr. Chi discussed that the process for managing returns quickly and efficiently is in place, but is often not utilized outside their organization. Collaboration and getting the “buy in” from their customers is a significant challenge. Finding an automated solution to manage returns, expedite credits, and show the customer the hidden costs that they could be saving would positively impact and further reduce their returns percentage.



The conclusion of Banks study of military supply chain management systems became automated to bring instant savings by identifying overall financial savings of repair verses buy new, and encouraged the military to continue work to maximize logistics efforts. As we can extrapolate from commercial business, the most significant challenge and opportunity to reduce return costs will come from consistent and streamlined data management. Automating processes and will help maintain continuity in the decision making process throughout the supply chain. It will take collaborate relationships and cooperation from supply chain partners to achieve optimal results.

References



Banks, R. (2002). Defining and improving reverse logistics. Army Logistician, 34(3), 3-5. Retrieved from http://search.proquest.com/docview/197283733?accountid=8289

Chi, and Owens. Personal interview. 27 Nov. 2013.

Greve, C., & Davis, J. (n.d.). Recovering lost profits by improving reverse logistics (Tech.). Retrieved April 3, 2013, from UPS website: http://www.ups.com/media/en/Reverse_Logistics_wp.pdf

Maxfield, John. “Will Best Buy’s Horrible Customer Service Sink Samsung?” Will Best Buy’s Horrible Customer Service Sink Samsung? Motley Fool, 6 Apr. 2013. Web. 29 Nov. 2013. .

Reece, John, and Lee Norman. “The Six Hidden Costs of Reverse Logistics.” Inbound Logistics. N.p., Dec. 2006. Web. 29 Nov. 2013. .
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 inventory management, inventory audits, loss investigations, repair and warranties, secondary markets, deconstruction and re-utilization of parts, as well as final disposition instructions.
Jennifer returned to academics with the closure of Fort Monmouth completing a specialized degree in Reverse Logistics and achieving multiple academic honors from American Military University (AMU). Jennifer has professionally published various articles in several trade journals including Developing Defendable Recall Management Plans with Supply Chain Asia (May/June, 2013) as well as a monthly contributor to Reverse Logistics Magazine.
Jennifer currently sits on the Reverse Logistics Association Committees on Training and Certification, Corporate Responsibility, and Sustainability and Environmental Management. She freelances taking on a wide range of projects in areas of organizational management, call center management, inventory control, procurement, and risk management educating businesses on how to utilize reverse logistics strategies effectively to reduce costs and increase profitability.

Return to Menu