Enterprise software solutions are widespread, but not until recently have integrated, multi-function, end-to-end systems been available for global deployments in the Reverse Logistics industry. Many companies involved in Reverse Logistics management including the return of spare parts and/or distressed products have had to deal with a myriad of fragmented, disjointed, and disparate systems to collect, store, and manage key data related to Reverse Lifecycle processes and functions. In short, many firms miss opportunities or incur higher costs due to the lack of efficiency and service productivity in their reverse supply chains.

As the Aftermarket Service Industry continues to seek an enterprise solution to these challenges, the concept of a Reverse Lifecycle Management (RLM) system has emerged. The ideal RLM enables end-to-end integration of business functions and processes related to the Reverse Logistics Lifecycle (e.g., returns management, repair, warranty entitlement, warehouse management) as well as interfaces to other back-end systems such as CRM, supply chain planning systems and financial systems. In essence, a true definition of RLM is that it provides for real time visibility, tracking and control of labor, material, and data throughout the Reverse Lifecycle pipeline, from RMA issuance to end of life disposal and all activities in between.  In turn, these features ensure better utilization of assets and resources which are necessary for optimizing both financial and operational performance.

By implementing a state-of-the-art RLM solution, end-user organizations can realize a number of benefits, including, but not limited to:

  • Cost reduction through better utilization and planning of assets and resources.
  • Protected revenue and income recognized when companies better understand how much revenue and income associated with Aftermarket Service is at risk.
  • Liability protection as many companies in diverse industries are susceptible and exposed to legal and regulatory action due to environmental and governmental regulations.
  • Resource optimization by reducing inventory, transportation assets and employee allocation.
  • Productivity and efficiency gains by eliminating poor processes that take too much time resulting in wasted money.
  • Improved customer satisfaction through the implementation of self-monitoring reverse Lifecycle processes and systems.
  • Refined business practices such as issuing proper credit for returns, fast turnaround on sending products back to customers, balanced books, and issuing replacements.

These improvements in operational performance can be monetized directly in the form of cost savings, productivity gains, revenue gains, and improved cash flow. For example, cost reduction can be achieved through the avoidance of financial penalties associated with SLA non-compliance and increase income can be achieved through higher yield rates associated with depot repair.

There has been a growing recognition that Reverse Logistics Supply Chain and related Lifecycle represents a new frontier within many companies and industries for generating increased profits and revenue growth. Even among those companies who view Reverse Lifecycle Management as a cost center, there is acknowledgement that opportunities exist to reduce costs, improve productivity, and enhance the overall customer experience. Of course, deploying a Reverse Lifecycle Management system is absolutely necessary for manager Reverse Lifecycle operations as a profit center.  Whether your company operates Reverse Logistics operations as a cost center or profit center, it is apparent that Reverse Lifecycle operations must be managed strategically.

In summary, Reverse Lifecycle Management systems provide the ideal platform for overcoming critical systemic challenges facing many organizations, while producing a number of measurable benefits that have direct impact on bottom line profitability and customer satisfaction. Given the huge potential for cost savings, risk protection, and revenue gains, companies should seriously consider building a business case and ROI justification for investment in a Reverse Lifecycle Management solution.

Michael Blumberg
Author

President and CEO, Blumberg Advisory Group