Any company taking a serious look at reverse supply chain will quickly realize that it’s a lot more than a plug-and-play with forward logistics thrown into reverse. The simple truth is that it doesn’t work that way. As you begin to uncover the complexities of reverse logistics, it can look like a costly endeavor. Once you’ve acknowledged the value to be derived, the next step is understanding how to implement a solid, cost-effective program that actually generates the desired value.
In this fourth installment of my blogs on creating value from the reverse supply chain, I’ll share five areas of focus that are key investments required for success in a reverse logistics program.
1. Data and Benchmarks
Data insight may be the most important investment you make in your supply chain. Before you can strategize a program, you have to have full visibility into what’s going on. It’s essential to have good data that reflect every aspect of returns, product life cycle, product availability, movement, process and cost.
With the right analytics applied to your data, you can formulate an ROI-focused prioritization strategy. One of the most valuable uses of good data and analytics is benchmarking. Insight doesn’t have to be limited to an internally focused lens; comparison to industry standards and any competitor data you can obtain can help broaden the impact of utilizing data to gain competitive advantage. Data can power your audit capabilities and can be a catalyst for ongoing improvement initiatives, process optimization and ultimately, improved profitability.
2. Technology and Analytical Tools
You want the best tools for the best results. It’s difficult to say the numbers don’t lie if your numbers don’t make sense. The most effective analytical tools give you visibility into operational performance, with tracking and reporting capability that helps you to:
- Monitor and track performance to see the value added or lost at each point in the process
- Combine data from multiple sources
- Drive improvement and optimization
- See issues more quickly and enable root-cause analysis
- Predict, plan and prioritize
- Manage multi-channel challenges
- Benchmark for competitive analysis
For supply chain optimization to work, you have to have the right information to guide decisions. Reporting should be defined by specific business rules and give you the information needed to monitor, track and act. In an economy marked by evolving omni-channel activity, short-cycle consumer demand and growing secondary markets, you need to know your options and have information available that illuminates clear direction.
Reporting should have real-time and near real-time capability. This helps you to confirm improvement opportunities, monitor optimization efforts in progress and make adjustments as needed. Real-time visibility allows you to see changes in time to act as issues arise or respond effectively with demand-driven adjustments.
As you work toward supply chain optimization, keeping your eye on the ball is essential. That means having your eyes wide open. Giving the right attention to your data capabilities, who’s working the issues, the tools they use, who’s giving input and what information you generate will make all the difference in what you get out of investing in returning value from your reverse supply chain.
The strongest solutions come through collaboration, both internally and externally. Your supply chain, forward or reverse, does not end at your door. Viewing your supply chain as one end-to-end continuum is a strong source of real value, and strong, open relationships can make a big difference in results.
To gain full advantage from reverse supply chain assessment, facilitate ongoing supply-chain focused conversations between merchandising, store operations, distribution, vendors and wholesalers, and the industry at large. They all affect your supply chain performance and each brings a different perspective that can generate improvement opportunities. Besides, any area within or affected by supply can also be the source of problems. It just makes sense to have them all at the table contributing input that can have value across the board.
This means you need to be a silo-buster. In the complex world of supply chain, silos are the enemy – a process that affects so many aspects of a company’s performance shouldn’t have its stakeholders not paying attention to each other. Unfortunately, it’s all too common. Get everyone in the same conversation, working together to identify opportunities that are likely to benefit them all.
Finally, make sure you have the right people for the job of supply chain analysis. Good analysts understand analytical and quantitative methods to assess, predict and improve supply chain processes. You need people with the skills and experience to develop studies, collect data, understand and identify performance issues and make recommendations on effective solutions for waste reduction, process optimization and increased profit.
Ideally, you’ll have analysts with a broad enough base of experience to recognize issues and opportunities for improvements. They should be able to design periodic performance reporting that helps you monitor for fluctuations, seasonal variations, or issues that may be specific to channels, vendors or other trade partners. It’s easy to focus on utilizing your most experienced people, but it’s also important to remember that getting to the point of gaining competitive advantage in reverse logistics will also require some degree of intuition for connecting the dots, as well as creative thinking for developing new approaches and optimization strategies that will put you ahead of the competition.
Where else should companies invest to find value in the reverse supply chain? Let me know by commenting below.