The simple act of returning products, parts and subcomponents back into inventory involves multiple steps and business entities—from the customer to your service organization, supply chain, receiving departments, subcontractors and even a repair depot operation. Not all software has the functionality to effectively manage reverse logistics which risks potential lost revenue, missed service-level agreements and unhappy customers.
I’ve outlined three common reverse logistics pain points. If you’re encountering any of these in your daily operations, then it’s time to ask some serious questions about your business practices and your supporting software.
YOUR RETURNS OPERATIONS CROSS MULTIPLE TOUCHPOINTS
The reverse logistics process involves multiple stakeholders and the software used to manage this value chain should encompass all key players.
The customer service department generally authorizes the service and repair work through the call center—or increasingly customer portals, chatbots or social media. The service advisor may also have to check inventory for a replacement part, which might require contacting purchasing or even manufacturing or supply chain departments to source or build a replacement part.
When a replacement part is due for shipment, the customer service representative will check inventory availability. If it involves a defective product received for repair, repair managers and logistics will be engaged to receive and route the defective item for repair.
Each of these scenarios has a specific procedure. Clear communication, beginning with the task of defining processes and ensuring that the correct business process is followed, with fit for purpose workflow, is very difficult without enterprise reverse logistics and repair software.
YOU HAVE A REVERSE LOGISTICS ELEMENT TIED TO FIELD-SERVICE OPERATIONS
It gets even more complicated when there is a field service component to the reverse logistics process.
The field service process alone includes multiple reverse logistics steps. The technician replaces a component in an installed piece of equipment at the customer site and replaces it with a part out of his truck inventory. The field technician will need complete visibility of whether the part is under warranty or if the customer is entitled to special pricing as a result of a contractual commitment. Without an integrated end to end service platform, you would be relying on a technician to communicate with separate field service, reverse logistics, warranty management, contracts and installed base systems to get the answers he or she needs.
There needs to be a seamless way to track whether or not the part is going to be repaired, who owns the item as it enters the reverse logistics process, whether the part, or repair is billable, and then the part must be tied with a return materials authorization (RMA) through the original field service order.
CONTRACTORS CARRY OUT FIELD SERVICE WORK ON YOUR BEHALF
Many service organizations have a mixed employment method – for example, a person could be an employee or a self-employed contractor. It is common to use subcontractors for specific tasks or in times of peak demand, and these subcontractors introduce several new variables into a reverse logistics process.
First, in order to delegate tasks to a subcontractor, you need to establish their availability and ensure they have the parts and expertise needed for the job. The contractor should provide a not-to-exceed cost figure, receive a purchase order and perform the work. But what if the subcontractor removes a part from a customer’s equipment for return? This is where things can get very complicated. If they replace part A with part B, what happens to part A? The subcontractor may send an invoice and want to get paid for the part they used out of their inventory. Often you will not release payment without receipt of the defective part.
Reverse logistics software needs to account for multiple subcontractor types, and reimbursement policies to manage the complex situations caused by sub-contracting. Sometimes you may bill the customer directly for the replacement part while other times you bill the subcontractor if they are purchasing a unit for one consumed out of their own inventory.
GO FORWARDS, NOT BACK
If you haven’t already, it’s time to make reverse logistics a service priority. It’s also time to assess your enterprise software support to help manage complexity, minimize expenditure and keep your organization moving in the right direction. To find out more about overcoming reverse logistics challenges download this IFS whitepaper.
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