Archive for the ‘ Reverse Logistics ’ Category

Viva Las Vegas – Reverse Logistics Observations

Viva Reverse Logistics

The 7th annual Reverse Logistics Conference and Expo in Las Vegas held a lot of promise.  I expected to be blown away by the largest event of its kind in the world… and in many ways, I wasn’t disappointed (see my previous posts on my impressions of the conference itself).

It was very evident that there are some existing and emerging trends that will define our industry over the next few years.  Also, my discussions with other attendees exposed several challenges that will cause friction and create opportunities for those understanding the ramifications.

Observation number 1:  People still struggle to define Reverse Logistics

As I’ve discussed in previous posts, there is a lot of difficulty and debate surrounding the term “Reverse Logistics” and the definition.  In the opening address, Gailen Vick the CEO of the RLA, redefined the RLA’s definition to:

All activity associated with a product/service after the point of sale, the ultimate goal to optimize or make more efficient aftermarket activity, thus saving money and environmental resources.

Immediately after Gailen’s address Dr Dale S. Rogers proceeded to rubbish Gailen’s definition and I think that reflects the lively debate around the concept and terms.  Clearly, reverse logistics is NOT forward logistics in reverse.  There are many branches and alternative paths as products move from retailer to repairer or OEM (manufacturer) to recycler etc and often processes involve an element of forward logistics to return goods to the end user.

It’s not necessary for there to be 100% agreement about the terminology, but consistency would help the industry to progress.

Observation number 2:  It’s all about the Environment

A very powerful theme of the event was the importance of the environment and sustainability now.  State, federal and international law requires OEMs and retailers to take responsibility for the environmental impact of the goods they sell.  Unfortunately, each state has its own laws regarding this and in many cases the laws are contradictory and inconsistent.  Therefore, reverse logistics entities are having real difficulty in meeting their obligations in a practical manner.

Organisations are now scoring their partners on their environmental credentials.  Walmart evaluates potential suppliers with a score-sheet before purchasing any goods from them, and the last thing they want to hear from a supplier is “just throw away returned goods”.  When a new supplier comes on board, the reverse logistics division of Walmart has the right to veto the supply agreement if the returns process is not handled appropriately.

Observation number 3:  But it’s actually all about Cost Reductions

The economic environment has brought cost of reverse logistics into sharp relief.  Most organisations have rationalised their operations and outsourced work that is not considered to be “core operations”.  This has resulted in opportunities for reverse logistics participants, but has also resulted in scrutiny of RL providers to ensure that they are providing true value for money.

So we are seeing a market with lots of opportunity, but also a lot of risk to existing business.  There is also a lot of flux which, while exciting to be involved in, makes it very difficult for organisations to budget for and fund.

Despite the new environmental laws, economic factors are more of a driver than the environment for now.

Observation 4:  Retailers and Telcos wield the Power

In New Zealand we are starting to see some power plays between the retailers and the OEMs as far as reverse logistics is concerned.  In the US, the battle is over and the retailers and telco network providers have won.

In many cases retailers dictate the returns and service processes to the OEM.  Supply agreements specify the processes that the retailers want, and suppliers are expected to accept those terms if they want the business.  Retailers and telcos are consolidating all their returns then shipping them back to the suppliers with no customer or fault details.  This makes it difficult for the supplier to refuse the returns (they simply don’t have enough information about the reasons).

However, it’s not all bad news for the suppliers.  As long as they can meet the retailers’ requirements, they will have a market advantage quite separate from price.  In doing so they should be able to afford to resource their design and quality control departments in order to reduce the reverse logistics needs and thereby improve quality and profit.

Observation number 5:  Asset recovery is a big industry

Repair, refurbishing, stripping for parts, and recycling is big business in the US.  The secondary market (i.e. sales of secondhand and refurbished goods) is about 2.5% of the US economy so you can imagine there is a demand for companies that can consolidate and process high volumes of returned product.  I’m not sure how this applies to New Zealand as we don’t have a ready supply of cheap labour to perform the service like the do in Mexico or China, but it is important to perform asset recovery as close to the market as possible.

Observation number 6:  There was not much emphasis on the importance of Reverse Logistics in improving Sales or Customer Satisfaction

This was a surprise.  I expected a big push regarding the importance of using reverse logistics to enhance the customer experience and increase sales… but it appeared to be an aspect that was overlooked by many.  This aspect is a big element of the pitch for Service Plus.  Retailers and manufacturers who have efficient, transparent, and high quality repair and returns processing have a significant advantage when it comes to sales.  Service Plus helps retailers and suppliers to drive more visitors to their outlets and increase the sales opportunities.

Conclusion:  New Zealand and Australia have a very different reverse logistics market to the US and Europe

Our small, well educated population and unique consumer laws mean different services have been developed for the Australasian market.  In many ways, the services and systems offered here are better (better communication, higher quality repairs, faster turnaround) but at the same time we have a lot of catching up to do.

Europe and the US environmental laws are well ahead of ours so our sustainability measures require a lot of work.  The US also has the efficiencies of scale and cheap neighbouring workforces; allowing for very efficient reverse logistics processing.  We will have to come up with unique methods to overcome the disadvantages we have in those areas.

It’s going to be an interesting few years!


Zugara ZugSTAR

Zugara have just launched their ZugSTAR technology that looks very exciting.  Mostly concept stuff at this stage, although they have integrated the platform into their Webcam Social Shopper as a proof of concept.

Picture a web based video conferencing system similar to Skype*, but with the added functionality of being able to see one another’s “augmented” experience in real time.  With ZugSTAR, Augmented Reality becomes a technology that facilitates collaboration, and physical distance becomes less of a barrier.

The video above shows the potential of this technology.

So how does it apply to reverse logistics?  Well, off the top of my head I can see several applications, but you can probably think of many more (Feel free to add your suggestions in the comments):

  • Remote training of products that have yet to be released
  • Escalations and technical analysis where issues and resolutions can be developed and demonstrated
  • Packaging and freight spatial calculations
  • Remote diagnosis and support
  • Collaboration and planning
  • Remote sales pitches and presentations
  • Modelling and design of logistics infrastructure and facilities
  • Breakdown and assembly process instructions overlayed on the actual item (“remove this screw”, “apply glue here”)

These are just elements as they relate to one particular vertical market, but I see this concept having much more far reaching implications about the ways we work, learn, meet, and communicate (and play).   As these technologies develop I expect to see wide adoption.  Probably not within the next year, but maybe within 5 to 10.

Products like the iPad (when it gets cameras) and the Google tablet concept will make a perfect match with this sort of product.  Multi-touch, portability, location/attitude sensors, and mobile data are all very relevant.

What do you think?  Can you see a future that incorporates the sort of vision demonstrated in the video above… or do you consider this is a technology without a need?  Feel free to comment.

Guess the Apple Tablet [updated]

Is this what the Apple Tablet will look like?

Probably the most hotly anticipated new technology right now is the “Apple Tablet”.  The tech blogs and mainstream media are slathering with excitement about the next Apple game-changer.  Apple in its usual style have remained totally mum about the product so there are some wild ideas about the product and its features.

So I’ve decided to run a bit of a competition.  Who can best guess the features and specifications of the product (if it even exists)?

Use the comments to add your ideas.

What will it look like; what OS will it run; what will be its feature apps; what connectivity will it have; what type of display; what other feature do you think it will have; how will it be used?

And the big one… What will it be called?

The winner will be judged after the official launch (probably 27th January) by me and will get bragging rights for the next week.

[Update]  Check out Walt Mosspuppet’s review of the tablet… classic

Is Reverse Logistics the right name?

Jim Tompkins from Tomkins Associates has an interesting post regarding the terminology we use for services supply chain.

He makes the very good point that “Reverse Logistics” is often used to describe processes that are actually NOT the forward logistics process in reverse.  I suspect that this is one of the reasons that there is so little recognition and understanding of the concept.

When many folks see the term “service supply chain,” they automatically think “reverse logistics.” But lately, I have come to the conclusion that this is a case of bad terminology. For example, if you ask a child what reverse logistics is, he or she may say that it is logistics done in reverse.

But really, this is not the case. Product isn’t going in a backward direction – back up through the supply chain. It’s not like pressing rewind and seeing a product moving backward to its original state before it was created. On the contrary, it’s more like when you come to a fork in the road and have to decide which path to take.

The fork represents the place and time in the supply chain when a company has to decide what to do with

  • Servicing the products they have previously sold
  • Retrieving the products they previously sold
  • Retrieving inventory from the field – whether it’s returned, recalled, overstock, etc.

Service supply chains represent the options (or paths) for handling these product flows.

Unfortunately, I’d have to say that “service supply chain” is also not the most ideal terminology (although I struggle to come up with a better one).

Jim also goes on to discuss the challenges facing the services supply chain currently (especially in light of the economy).

  • The low degree of outsourcing being done in service supply chain functions;
  • Inadequate management involvement in the process;
  • Lack of sound forecasting techniques for service parts;
  • The amount of wasted effort in the company processes; and
  • Inefficient and ill-suited IT systems to manage service supply chain activities.

I would add that the effect of the routing of management staff has left the traditional decision-makers in this field either out of a job or powerless.  That will be the legacy of this era.

I’m dismayed at how “senior” NZ management of  international companies are unable (or afraid?) to make relatively minor decisions relating to our local market.

Having said that, the opportunities presented by this market far outweigh the threats as far as Service Plus is concerned.  Outsourcing to reduce costs, appointment of new partners, competitors closing down, etc are all working in our favour.

What do you think?  Is there a better term for “Reverse Logistics” or “Services Supply Chain”?  Are there smart ways to deal with the issues facing our industry?  Feel free to comment.

Australia announces new waste and recycling policy



Peter Garrett's recycling policy will be boon for the reverse logistics industry in Australia... not to mention environmentally revolutionary

Peter Garrett, the Australian Environment Minister has announced their new National Waste Policy, with specific focus on Televisions, Computers, and Tyres.


The policy includes a landmark scheme for recycling computers and televisions, with householders able to drop off used computers and TVs for recycling free of charge, Federal Environment Minister Peter Garrett announced today.

“Under the new product stewardship scheme, 80 per cent of all TVs and computers are expected to be recycled by 2021,” Mr Garrett said.

80% is an admirable target, and I feel it should be achievable with good industry participation.

The Minister said Australia produced 43,777,000 tonnes of waste in 2006-07 – a 31 per cent increase in five years – and with waste levels projected to continue to grow, national leadership in this critical issue was overdue.

“It has been 17 years since these issues were looked at in a national context and we now have a clear path for future action and a huge step up on existing efforts.”

The National Waste Policy sets out a comprehensive agenda for national coordinated action on waste across six key areas:

  • Taking Responsibility
  • Improving the Market
  • Pursuing Sustainability
  • Reducing Hazard and Risk
  • Tailoring Solutions
  • Providing the Evidence

“This is a fundamental shift in our approach to waste complementing broader action on climate change and sustainability. It will lead to less waste and better management of waste as a resource, to deliver economic, environmental and social benefits, while ensuring that we continue to manage waste in a safe and environmentally sound manner,” Mr Garrett said.

The Minister said the new approach had been developed in consultation and with the support of industry as well as key non-government organisations and he acknowledged their involvement and support in negotiating these crucial breakthroughs.

Computers & televisions

Mr Garrett said the first areas of waste targeted for action will be computers and televisions.

“Ministers today agreed to a groundbreaking product stewardship framework through which computers and televisions will be the first products regulated.”

In 2007-08, 16.8 million televisions, computers and computer products reached their end of life, with 84 per cent sent to landfill. Only 10 per cent were recycled.

“If Australia were to continue without any form of product stewardship scheme, projections suggest that approximately 44 million televisions and computers would be discarded in 2028.

“Backed by Commonwealth legislation, a new industry-run national collection and recycling scheme for this growing mountain of electronic waste will be up and running in or before 2011.

“This is a major development in one of our fastest growing areas of waste which sees for the first time computer and television manufacturers taking national responsibility for managing e-waste, and it will be done at minimal cost to consumers,” Mr Garrett said.

“The National Waste policy specifically provides for accreditation of industry led schemes, helping to strengthen the arm of industry leaders who want to drive action that sees manufacturers take responsibility for their products when they reach the end of their life.

It’s critical that any scheme involves industry organisations rather than simply forcing them – as I’ve mentioned in other articles, industry stands to benefit hugely from successful recycling schemes.  Government can simply serve to create a framework and standards.

“Computer and television importers and manufacturers are working with Government to take responsibility for their goods, from cradle to grave.”

The Government will provide support to the industry-led collection and recycling scheme by ensuring industry non-participants comply with the same standards as industry members voluntarily participating.

This will ensure that free-riders are unable to gain a financial advantage over those companies that willingly contribute to recycling their own products.

Under the new product stewardship framework there is provision for mandatory, voluntary and co-regulatory schemes. Industry and community organisations that run voluntary schemes will be able to gain accreditation so that the community knows that what they recycle through these schemes will be reused or recycled in an ethical and environmentally safe way.

Great stuff!

What do you think?  Should New Zealand implement a similar policy… or maybe piggyback off the Australian system?… or will industry seize on the benefits of recycling and avoid the necessity of legislation?

How recycling programs are evolving from cost reduction to environmental benefits


tv landfill

ModusLink PTS Aftermarket recycle components from TV sets to refurbish others

Mark Solomon from DC Velocity reports on ModusLink PTS Aftermarket; an organisation that recovers components from damaged television sets and uses them to refurbish other sets.


I’m not sure that I agree with Mark when he says companies have “formulated their recycling strategies with more thought to cost than to environmental impact”.  In my experience (within the technology industry), recycling has been seen as a significant expense.  IT companies have tended to view recycling as either something that is required by law, or as something to market as being a “good corporate citizen”.

However, Mark makes good points and his article is enlightening.

For the first time, companies are getting serious about the environmental implications of their recycling efforts—and with good reason. The right program can yield greater efficiencies, improved profitability, and the goodwill that comes with being seen as a good corporate citizen. The wrong approach can lead to higher costs, reduced productivity, increased legal exposure, and a tarnished image that takes years to overcome.

Organisations with honest and effective recycling programs are now being seen as leaders and are reaping the benefits from responsive customers.

By moving reusable parts into the recycling process at the proper time, companies can reclaim base metals and other components that can then be used for repair and refurbishment. This saves on the cost of buying new parts and is also good environmental practice, experts say. “Overall lower inventories decrease the impact of warehouse energy use and emissions, and bring back some value through reclamation of usable materials,” consultants Kevin Steele and Emily Rodriguez wrote in an article that appeared in Reverse Logistics magazine in the summer of 2008.

One of the concerns that manufacturers have with refurbishing equipment is that it erodes sales of their new products.  I will be interested to see how organisations combat this in coming years.  In particular, it may well be possible for companies to make more margin from the sales of refurbished equipment, than from new.  Additionally, refurbished equipment may be shipped off to developing companies where customers are more willing to accept “slightly soiled” product.  If that allows a lower price point, the manufacturer may penetrate the market whilst maintaining a strong mix of new product in developed markets… and give their green credentials a boost.

Faster Maintenance with Augmented Reality


Faster fix: A U.S. Marine technician wears an augmented-reality headset as he carries out a maintenance task inside an armored vehicle. Credit: Steven Henderson and Steven Feiner

This article in Technology Review is a very good example of the use of AR in a Reverse Logistics scenario.  It demonstrates a real world use with quantifiable benefits.

Columbia University researchers have developed an AR system that allows Marine mechanics to perform a maintenance routine in approximately half the time traditionally taken.

The Columbia researchers worked with mechanics from the U.S. Marine Corps to measure the benefits of using an AR headset when performing repairs to a light armored vehicle. Currently, Marine mechanics have to refer to a technical manual on a laptop while performing maintenance or repairs inside the vehicle, which has many electric, hydraulic, and mechanical components in a tight space.

A user wears a head-worn display, and the AR system provides assistance by showing 3-D arrows that point to a relevant component, text instructions, floating labels and warnings, and animated, 3-D models of the appropriate tools. An Android-powered G1 smartphone attached to the mechanic’s wrist provides touchscreen controls for cueing up the next sequence of instructions.

I’d love to see this being applied more widely in the technology repair industry.  Keeping abreast of all the designs and build methods of the equipment we repair is one of the biggest challenges for us at Service Plus.  AR systems could dramatically improve our performance and ensure consistent service levels.  Obviously, there are also significant benefits in developing countries.

A great video of the system here.