What Goes Around Comes Around
Case Study: A major telecommunications equipment manufacturer had all the right processes within the reverse logistics cycle, but the loop was never closed
A multi-billion dollar telecommunications manufacturer had RMA returns, repair returns, obsolete inventory returns, surplus inventory returns, rebate returns, and company internal returns. This equipment came from end-users, warehouses, offices, customer service centers, and field support vehicles. Once it all arrived at several locations, it was sorted and shipped out to repair vendors, refurbishment vendors, resale vendors, scrap processors, hazardous material processors. Transportation, inventory management, and processing costs made this very cost prohibitive, and difficult to manage and track.
3PSP specialists evaluated every process within the reverse supply chain and found many of these processes to be very good as an individual process but very expensive because of movement and handling. The diagnosis was that these loops needed to be closed and the current process model needed to be redesigned.
Returns come in all flavors. They typically represent products that have had many manufacturers, vintages, incomplete or not in original packaging, and require an experienced labor in product identification. Many products are not correctly identified when the manifest is done, and this creates a challenging task when performing inventory verification.
3PRL implemented a returns process that made inventory identification and verification more accurate. A “triage” sorting process was set up whereby incoming equipment was staged in a non-comingled area, sorted into major sortation categories, inventoried by product name, number, condition, and triage determination. The manifest was compared to the actual inventory and a discrepancy report was electronically sent to the sending organization for reconciliation.
Triaged repairable, refurbish, and reusable went off to areas within the complex that processed these categories. Triaged scrap, parts collection, and environmental went off to areas within the complex that processed these categories. Triaged “as-is” reusable, new reusable, and redeployable went off to areas within the complex that processed these categories.
Studies were performed on ever process within the loop to determine in-house process feasibility. Studies were performed on dominant products to determine cost to enhance feasibility. Mapping was conducted to measure the best cost for external vendor movement.
In the end a $300,000 per month scrap and resale revenue stream became an $800,000 per month revenue stream, and every loop in the reverse supply chain was closed and accounted for.