Service in the Sharing Economy

share

The sharing economy is on the rise as more and more consumers conduct business transactions through platforms like Airbnb to find lodging and Uber for transportation services. These companies have experienced explosive growth in the last couple of years and their financial value is skyrocketing among the investor community.  Indeed, Airbnb’s valuation is at $25.5Billion in their attempt raise an additional $1.5 Billion in funding and Uber’s valuation of $50B is higher than 80% of the S & P 500 companies.

A sharing economy platform is one that leverages information to empower individuals and organizations with information that enables distribution, sharing and reuse of excess capacity in goods and services.

Sharing economy platforms take many different forms, including:

  • Product-service systems – privately owned goods that are shared or rented out via peer to peer market places.
  • Redistribution markets – pre-owned good are passed on from someone who does not want them to someone who does.
  • Collaborative lifestyles – people with similar needs and interests banding together to share and exchange less-tangible assets such as time, space, skills, and money.

 

I also think of a sharing economy platform as having a number of basic elements. First, it uses technology to create a peer to peer marketplace.  Second, they are “open” meaning anyone can exchange goods and services with anyone else.  Third, goods and services are available on demand.  Fourth, payment in full is often made only after the service is delivered in many sharing economy platforms. Fifth, fixed costs are converted into variable expense through the sharing of resources.

The success of Airbnb and Uber has not only led to the emergence of competitors in the lodging and transportation market but also the creation of sharing economy platforms in other industries.  “Uberized” has become a commonly used buzz word in the business world by industry analysts and thought leaders.  This word is often juxtaposed within the question… Is our industry the next to be Uberized?

To a large extent, High Tech Service & Support is far along the path to becoming Uberized. For example, product – service systems like Rolls Royce’s “power by the hour” form that basis of the “Servitization” trend which is gaining appeal in the High Tech Industry.   In addition, redistribution markets have existed for decades within our industry; just think about all the businesses in the IT, Telecom, and Medical Electronics industries that trade used and refurbished equipment.  Collaborative lifestyle solutions are provided through companies like Field Nation, Work Market, and PC-SOS that enable individual field service engineers and small businesses to become a contingent workforce for larger companies.

However, in many ways the High-Tech Service & Support Industry is not truly “Uberized”.  For example, the platforms/solutions I’ve identified above are not truly peer to peer.  They typically involve an intermediary or aggregator that manages the redistribution of products and services. Equipment owners (i.e., end-users) are not leasing or renting unused capacity to other users.  Second, some of these models are not truly open.  There is often a thorough vetting process involved in becoming a member or user of these platforms and solutions.  On the other hand, the on-demand, pay for performance, and conversion of fixed cost to variable expense elements of the sharing economy do exist today within the High-Tech Service & Support Industry

Regardless of where you think our industry is on the sharing economy spectrum there is certainly room for new innovation.   Now it is your turn.  I’d love to get you answer to this question…. Is our industry (i.e., field service, reverse logistics) the next to be Uberized? Please cite examples and share your thoughts on why or why not the sharing economy can work in our industry.  You can also feel free to schedule a strategy session if you have a great idea you’d like to vet or discuss with me in more depth.

The Five Most Important Trends Impacting the ITAD Market

Recycle

In my last blog post, I provided a high level summary of key findings from the recent market research study we conducted for Arrow Electronics on the topic of IT Asset Disposition Trends.   Now that I’ve piqued your interest, I thought I’d share five important data points from the survey results:

  1. 9 out of 10 companies in 2014 have a formal end-of-life ITAD strategy
  2. Nearly 2 out of 3 companies surveyed choose to have a 3rd party service provider manage their end-of-life assets
  3. The most important factors in selecting a 3rd party service provider are adoption of compliance standards, well documented chain of custody, and high quality reporting
  4. 95% of companies feel that R2 and/or e-Stewards are the most important environmental standards related to ITAD
  5. Nearly 9 out of 10 companies feel that R2 and e-Stewards should be combined into a single standard

 

These findings validate the fact the ITAD has gained increased attention among not only IT Managers but C-suite executives as well.  However, these findings reveal that most companies do not view ITAD as a core competency.  Instead they choose to outsource it to 3rd Party Service providers.  This explains the increased level of competition within the ITAD market as more and more companies enter this space.  It is not just start-up specialized ITAD vendors that are pursing this opportunity but well established IT Service providers and distributors like Arrow Electronics who view ITAD as a natural extension of their product and service offerings.

Given the large playing field of competitors, end-customers are becoming increasingly selective about who they choose to conduct business with.  Among the most important factors are compliance standards, documented chain of custody, and IT reporting and analytics.  It is interesting that while R2 and e-Stewards are perceived as the most important environmental standards, an overwhelming majority of end-customers believe that they should be combined into one, single standard. This suggests that these standards are used interchangeably by end-customers.  Possessing one or both of these industry standards is simply not enough for an ITAD service provider to differentiate itself in the marketplace. While many companies can lay claim to a well-documented chain of custody and superior reporting capabilities, we believe that its additional industry standards such as RIOS, ADISA, NIST, and knowledge of best practices to minimize risk, reduce waste, and maximize recovery values that set one ITAD vendor apart from one another.  If you haven’t read the Arrow IT Asset Disposition Trends Report, we suggest you obtain a copy, click here.    To discuss the implications of this report on your company or business, feel free to schedule a free 30-minute strategy session with us today.

A Strategic Analysis of ITAD Trends

ITAD

The data is now in from our large scale market survey conducted on behalf of Arrow Electronics on the subject of IT Asset Disposition (ITAD) trends.  The results validate a popularly held view among IT industry practitioners that ITAD considerations continue to be a top concern for all size companies.   In fact, knowledge of ITAD best practices continues to evolve and improve among C-suite and IT Executives.  However, as one might expect the issues and concerns between the two groups vary somewhat.

Our research also indicates that all companies, regardless of size, are more likely today than in the past to budget for the ITAD process.  In addition, corporations are becoming more aware of penalties arising from improper disposal of IT assets, which has led to an increased implementation of formal ITAD strategies.  While the most important factors for creating an ITAD strategy have remained the same over the last few years (data security concerns, commitment to “Green” business practices, and mitigating legal and financial risks), companies are far less likely to apply their ITAD strategy outside of North America.  It is also clear that companies who have developed a formal end-of-life ITAD strategy are far more likely to have an ITAD provider handle their IT assets when compared with companies who do not have a formal ITAD strategy.

Companies using a 3rd party service provider to manage their end-of-life IT assets are currently very satisfied with their providers.  When choosing these providers, ISO industry certifications are particularly important, with R2 and e-Stewards being the most important environmental standards.  Due to their equal level of importance and credibility, most companies feel that R2 and e-Stewards should be combined into one standard.

While most companies have a data security policy regarding their end-of-life assets, data security concerns are still prevalent.  Data security concerns are particularly high among companies with a formal ITAD strategy as well as companies who use 3rd party service providers.  Most companies use multiple tactics to alleviate data security concerns, which includes using 3rd party service providers.  However, with nearly 2 out of 3 companies selecting a method such as “Delete the file directory on the hard drive” which does not fully eliminate the potential for data security breaches, there remains some uncertainty as to which methods are truly effective.

With most companies adopting a BYOD policy that allows employees to bring at least one device to work, there has been a dramatic increase in the implementation of policies to ensure that company data on BYOD devices is secure during active use.  The vast majority of companies are also implementing policies to ensure that company data on BYOD devices is eradicated once those devices are no longer active on the company network.

Corporate social responsibility/sustainability has also become increasingly important, with approximately 93% of companies expected to have a program in place by the end of 2015.  Companies who currently have a corporate social responsibility/sustainability program in place typically report their program’s progress in their annual report and/or other forms of corporate communication, both public and private.

The cloud is having a significant impact on the purchase of IT assets, with a majority of companies purchasing more assets to support the cloud.  Some of these additional assets purchased likely include tablets, whose use continues to increase.  As a result, ITAD practices and policies will continue a critical topic among C-suite executives and ITAD Managers.

Details of our survey results can be found in the Arrow IT Asset Disposition Trends Report. To obtain a copy, click here.

How do you know if your price is right?

strategic service pricing

When was the last time you took a serious look at your company’s pricing strategy? I worked with a client last year who hadn’t made any significant changes to their pricing in almost 20 years.  While they made minor adjustments over the years to reflect competitive pressures, they never re-evaluated the basic assumptions and core calculations around their published price list.  They realized they might have a pricing problem when they noticed that they weren’t wining as many competitive bids. In addition, the bids they did win were not very profitable.

It might be time for your company to re-examine its pricing strategy if you find yourself in a similar situation.   Before you rush into a complete overhaul of your price book, it is important to have a clear objective of what you are trying to achieve with your pricing. Remember, pricing is a marketing function and marketing is all about perception so how you price your services will influence your outcomes in the market.  For example, your objective might be to take market share from a well-entrenched competitor.  Alternatively, it might be to avoid leaving money on the table. It might be to accelerate penetration into a new market or it might be to simply cover your costs and/or subsidize another part of your business.  It is very likely that the pricing will be different depending on which objective you choose. Once you have determined your objective you can start work on establishing your pricing strategy.   There are three (3) perspectives you need to consider when determining your optimal price.

  • Competitive Price: This is the price that your competitors charge. It is best if you can build or get access to a database on competitive pricing. This will help you understand what the highest, lowest, mean and median price points are within your market.
  • Market Perceptions: It is important that you have a good grasp of market price sensitivity.   You’ll want to understand at what point the price is perceived to be too cheap that quality is questionable, a bargain, getting expensive, or too expensive to afford. The answer will help you understand the optimal range at which you can price your services. One of the best ways to obtain this information is through survey research.
  • Your Price & Cost Structure: It is important that you consider your current cost when re-evaluating your price strategy. Obviously, you must know this if you are going to set prices high enough to cover your cost if that’s your objective. You’ll also have a better understanding of how much margin you can achieve under different price scenarios when you have this information at hand.

These perspectives provide the constraints you need to optimize your objective. For example, if your objective is to take market share from a competitor through a more aggressive price strategy, than you need to not only know where your current price is in relation to your competitor(s) but you’ll also need to know what price range the market (i.e., customers, prospects) perceives as optimal.  You may run the risk of pricing your service too low that the market perceives the price as too cheap to be of any value.  On the other hand, it may be difficult to win business by raising your price if the market already perceives your price as too expensive and your price point is already significantly higher than your closest competitor.  However, you can justify an increase if you are perceived as a bargain even if your price is higher than your closest competitor.

Hopefully, it is becoming clear to you why these perspectives are so important in establishing your pricing strategy.  Let’s get back to the client that I mentioned at the beginning of this post. I took them through a similar analysis and we were able to establish a new pricing strategy that has resulted in them winning more business at a higher margin. It was surprising to learn that they didn’t have to lower prices across the board to remain competitive. In fact, they could rationalize a price increase for some of their services and still remain competitive.

In summary, the key takeaways when it comes to  developing an optimal price strategy are 1) get clear about your desired outcome, 2) make sure you have the relevant data points you need to evaluate pricing alternatives, and 3) adopt an analytical approach. Think you might need to overhaul your pricing strategy?  Feel free to schedule a free consultation to discuss how we might be able to help.

“Pit Crew” Repair: Atul for Tablet Logistics

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Tablet repair isn’t exactly a matter of life and death. But if we acted like it were, would we be doing it better? If we studied organizations where failure means a lost racing title, a flaming car wreck, or a patient who didn’t pull through, would companies and consumers see more value from tablet sales?

When Atul Gawande addressed a class of graduating physicians in 2011, he told them to leave their ideal of an independent, omniscient doctor in the past, where it belongs. Medicine has grown too big for a single education, he said. The best results come from doctors and nurses who form “pit crews” – who distribute the inordinate time and expertise needed for complex treatments across a team of specialists. People aren’t cars, but when the professionals who fix both look totally different, something is probably amiss.

On it’s glossy face, a tablet doesn’t much resemble a human body, or the hurtling machine that carries one. But tablet repair has plenty in common with high-stakes maintenance, and should take cues from both medicine and car repair.

No pause button

In a NASCAR race, ten seconds of repair means a quarter-mile lead for the competitors. Market research suggests that this is a pretty good metaphor for the tablet industry. Quality might be king, but firms that lag in resale or refurbishment time tend to pay a hefty price. Getting intact tablets back in stock should be a priority on par with getting back in the race.

Integrate or disintegrate

To get back in the race, you need a pit crew. Tablets and cars may not defy one person’s skill or comprehension, but they defy one person’s ability to perform ten services at once. Unimpeded workflow often calls for small and interdependent teams that perform both testing and repair, ideally in the same workplace, and ideally in easy shipping distance from a large customer pool.

But such a team wouldn’t necessarily be integrated, only differentiated. It wouldn’t be a team at all without regular and responsive communication between testing and screening specialists. A growing body of data seconds our call for optimized front-end testing and screening. It wouldn’t do for pit crews to dismantle a working vehicle, before the driver tells them he was feeling lightheaded. Why should tablet repair be any different?

To date only one vendor has fully heeded our call. CTDI’s NightHawk Test System offers the industry standard for reliable and user-friendly functional testing, with assays of tablet connectivity, multimedia capabilities, battery, display, sensors, and system information. And with its front-loading tray system, NightHawk actually can perform ten tests at once. Responsiveness and integration don’t have to come at the cost of throughput. The most intelligent solutions are often the most inhuman.

Speaking of false dilemmas…

Don’t follow the money

Sometimes return on investment doesn’t just diminish – it takes a U-turn. The best hospitals in America are not just the most cost-effective, but among the cheapest. And some of the most expensive hospitals rank near the bottom in patient outcomes. It’s no coincidence that the CTDI NightHawk Test System offers one of the best values on the testing market. We have every reason to think that, by learning from CTDI’s example and applying our recommendations, countless vendors could follow their lead. Schedule a strategy session today to find out how.

 

A World Without Service


its-a-wonderful-life-sequel

Have the routines of reverse logistics and aftermarket service got you down? Have you started to lose hope? Are you poised at a bridge on Christmas Eve because dastardly Mr. Potter made off with your fortune — or because aftermarket service seems futile? Fear not: your guardian angel is here! Let us be Clarence to your George Bailey, and show you a world without aftermarket service and reverse logistics.

What’s that? You can’t find Zuzu’s petals? That’s because in this world, you and your colleagues in service and logistics never existed. It’s a seedy and backward place – one where products and profits both suffer, and where companies and customers regard each other with intense suspicion. See all those people trying to discreetly take apart brand new phones, tablets, and microwaves, doing their own testing right there in the store? They know there’s no warranty; if it’s broken, the customer has to fix it. Sure, sales are lower that way, but what’s the alternative? See all those stores in competitive and dynamic markets, who can offer warranties and still meet payroll? Neither do I.

Sure, a handful can afford warranties. But they are the last ones standing; they’re the big fish, who shoved their way to the last puddle as the market dried up. And even they’re not sure the warranty is worth it. The customer may like it, but without aftermarket support, even loyal customers may send back mint-condition goods. Or at least they look mint condition; without technical support or product screening you can’t be sure. And without repair, big companies have a painful dilemma: gamble with customer loyalty and resell anything that looks ok, or toss everything that comes back, and accept that ebbing profits may leave the company high and dry.

There is, of course, a way to have the worst of both worlds. With dirt cheap production, you can gamble with customer loyalty while still scrapping all returns. Those customers weren’t shaking and tapping their phones just because they can’t get a refund. In a market without an aftermarket, nearly all companies, big and small, warranty or no, are under heavy pressure to lower production costs, even if quality suffers. Have a warranty? Keep products uniform my shunning resale, and keep losses on return low by charging the same for cheaper products. No warranty? With such cautious consumers, high standards may yield little in the long run. As long as the item holds up before purchase, cheap production probably helps more than it hurts.

Don’t you see? You were the only thing standing between us and this bleak economic order, with its perverse incentives and its hostility to innovation. You alone lifted the dilemma between long-term and short-term profits, and gave businesses an incentive to prioritize quality without having to fear the whims of their customers. Aftermarket service and reverse logistics absorb the shocks and tugs of supply chains, so that manufacturers can stop worrying about survival, and start worrying about how to be the best. Now that the customer expects an ongoing relationship with the vendor, old acquaintance shouldn’t be forgot, and never brought to mind.

Schedule a strategy session today, and we’ll show you why countless service and logistics professionals think Blumberg Advisory Group has earned its wings.

Risks, Clues, and Monopoly: How to Play the Tablet Game

Go_board

 

Monopoly, Risk, checkers, chess, Scrabble, Clue, Battleship, backgammon, Go: many associate these words with long hours pleasantly wasted. But time spent playing games isn’t always wasted – and not just because there’s more to life than profit margins. We tend to think of games as structured procrastination, or at best a social crutch. But nearly all of them give us regular access to a precious yet fleeting insight: that our endeavors are bound by the hard and unforgiving facts of strategy. Anyone who has tried to bounce back from reckless investments in Monopoly, blunders in chess, or wishful thinking in Risk can attest that, in board games as in life, even the most spirited struggle can’t rise above a shoddy plan. Like all “play fighting” in the animal kingdom, playing games trains us to protect our soft spots and check our blind spots, giving us stress-free practice for the struggles that matter.

These lessons have not been lost on the reverse logistics field at large, or on the tablet industry in particular. In earlier posts, we touched on the broader tradeoffs and challenges confronting each. But all abstractions aside, supply chain and reverse logistic professionals place an unwavering premium on customer satisfaction. This year’s Benchmark Trend Report from Consumer Returns found that 48% of its respondents have “very close” collaboration with customer service professionals – the highest rate among seven professional categories. Customer service was the only category for which the “not close” collaboration rate was zero, in contrast to 38% for merchandise, 24% for transportation, and 17% for finance.

In the tablet industry, the commitment to customer satisfaction through fast and flawless replacement meets a high return rate and ample savings from resale. These three parameters define the strategic space of reverse logistics in the tablet industry, and that space is occupied by repair and testing. That’s not just our opinion: a cross-section of OEMs, retailers, and wireless carriers ranked “quality of repairs” and “commitment to quality metrics” as their top considerations in choosing a vendor. A firm’s success is closely coupled to its skill at those two games.

How do you play? Repair is a free-for-all, but here are some of the legal moves in testing:

Manual testing

Just what it sounds like; costly, error-prone, but often necessary as a last resort – like all the jobs that computers have yet to take.

Diagnostics testing

Automated and efficient, but usually specific to each device, operating system, or application programming interface. You don’t have to pick the lock, but you need to have the key.

Board level testing

Exploratory surgery for tablets, done in engineering mode. Often automated, but not always informative. Before your patient goes under the knife, try asking him what hurts.

Open unit testing

Open heart surgery; you need to break the tablet seal and remove the circuit board for “bed of nails” testing. It can get to the heart of the problem, but then the heart needs a new body.

Embedded diagnostics tests

Cheap but limited. Works within the hardware, so can’t find hardware-level defects. There must be a moral in that.

CTDI’s Nighthawk Test System

The best overall solution we’ve yet seen. Tests ten units simultaneously, keeping a steady rate with front-loading tablet trays. Nighthawk simulates the user’s tablet experience with checks on tablet connectivity, multimedia functionality, battery, touchscreen, buttons, LED, sensors, and system information.

If you want to learn more, read the full game manual here, or get in touch to schedule a strategy session. Reverse logistics for the tablet industry is no board game, but that doesn’t mean it can be fun.

 

A Blueprint for Big Data Logistics

New_York_Panorama_2013

 

How can big data help reverse logistics?

This is a little like asking “How can duct tape help in an emergency?” According to Blumberg’s Law of Big Data, the answer will be unique to every problem that calls for lots of data. No list of applications can hope to be comprehensive, and no generalization can provide detailed guidance for each case and industry. But that doesn’t mean that a list of generalizations isn’t worth making.

In our last post about big data, we told you that our job is to help you build bridges from the problems you have to the data you need. So let’s draw a map. The challenges found in reverse logistics form an organic whole…not unlike the neighborhoods of Manhattan. And some of those neighborhoods need bridges to the sprawling datasets and powerful analytics that have just recently emerged. Here we imagine a branch of commerce that never sleeps as a City that Never Sleeps, and connect the Big Apple to big data.

Brooklyn

Elegant, austere, mathematical, and once the only game in town, the study of service supply chains could reap huge dividends from big data. The quantitative tools of chaos, fluid dynamics, and traffic theory can be used to model the flow of goods and currency in forward, reverse, and their confluence. Where the conceptual framework of an Enterprise Resource Planning (ERP) or Supply Chain Management (SCM) system meets modern data collection and storage, there is an inviting playground for data scientists. Logistics experts from every specialty can now reach out and touch the crisp contours of service flow as they evolve minute-by-minute. With help from operations research, consultants can design safeguards against bottlenecking, turbulence, state transitions, and other logistical nightmares that can arrest normal service for days on end. Big data can also resolve long-term rate distributions with greater precision, allowing firms to make homeostatic adjustments and keep service delays within tolerance.

Triborough

Quality control in reverse logistics is a different animal. It’s not a true field like its manufacturing namesake, but the busy crossroads of a few nameless subfields. What unites them is the goal of recovering value on resale goods…at a lower cost than making them from scratch. Quality control in forward logistics has its hands full churning out a uniform, working product in the controlled conditions of a factory. If your products come from the messy world outside factory walls, you’re going to need more hands. Who can say exactly what an item may have been through before its warranty was up? Maybe a malicious eight year old took it apart, stole the hard drive, replaced it with its weight in dirt, and then lovingly reassembled the product before polishing the screen. The only way to quell such paranoia is to perform every test that the industry can offer – in other words, to replicate the US healthcare system on returned products. The name of the game is detecting tiny but consequential probabilities, and making testing protocols that reflect them. For that you’ll need lots of data.

GW

The science of long-distance shipping costs should take Manhattan’s longest bridge. When companies pay for shipping, they have created a thorny optimization problem, in which the cost of building and running maintenance centers offsets the cost of longer shipping distances…to a point. Both parameters are bound to evolve with the size and geographic distribution of consumers, and may be abruptly reset by the closure and creation of mailing routes. In the war rooms of service management, big data will provide plenty of actionable intelligence.

Queensboro

Like Manhattan and Long Island, forward and reverse logistics are too rarely integrated. Where auditing and other conventional probes fall short, product flow in forward and reverse supply chains can monitor product screening and satisfaction. Robust baseline measurements for the magnitudes and ratio of forward and reverse product flow can serve as a performance index for front-line screening. With enough data, deviations from baseline can be a real-time window to the effects of reorganization and new service protocols. Similar metrics could pave the way for a revealed preference analysis of product features.

Manhattan

The tension between customer satisfaction and short-term revenue calls for a subtle feat of engineering. If you match the rate of salvageable returns with the rate of resale, you eliminate free replacements, but at a greater risk of issuing faulty products. If your resale standards are uncompromising, resale may not cover replacement, and if a dynamic bottleneck forms at testing and repair, those may become sunk costs – insult to injury! Long-term, conditional rates revealed in big data analyses can control for these risks by setting a time range on testing and repair – lower bound to limit defects on resale, and upper bound(s) to keep repair congestion syndrome at bay.

Eager for details? Get in touch for a consultation, and we’ll see how seizing the data can make you an industry power broker.

 

Thou Shalt Not: Reverse Logistics Sins in the Tablet Industry

moses

 

“Moses then turned around and came down the mountain. He carried the two covenant tablets in his hands….When he got near the camp…he hurled the tablets down and shattered them in pieces at the foot of the mountain….The Lord said to Moses, ‘Cut two stone tablets like the first ones. I’ll write on these tablets the words that were on the first tablets, which you broke into pieces.'”

That’s right: Moses started reverse logistics for tablet repair. We doubt his CV needed it…

We also doubt he would recognize the field today. Tablets are a bit cheaper and have some new capabilities – though turning to sand, summoning angels, and melting faces are not (yet) among them. The market has also grown; archaeologists find it far simpler to locate modern tablets, and most tablets are, in fact, easier to have delivered if you don’t live on a mountaintop.

Above all, manufacturing firms are not almighty, and that’s what makes things interesting. Tablets don’t do well when hurled to the floor in anger, but inconveniently, most returned tablets have not been. Yet any manufacturer who plans to stay in business must swiftly process every tablet returned under the warranty, maintaining efficient product flow for resale, repair, and disposal options – to say nothing of replacement. And any manufacturer who plans to thrive must look under the humming hood of customer service, and check that the engine doesn’t waste fuel. The tablet industry has gone from zero to 60 in the blink of an eye, and shows no sign of slowing, but with that kind of speed comes unpredictability, and tablet repair is already associated with distinctive logistical problems.

Put simply, explosive growth means outgrowth. Take the scarcity of regional maintenance facilities. A behavioral economist might say that the cost associated with building them is more certain, tangible, and discrete than the cost of shipping without them – which is nonetheless higher. This may help account for an industry-wide failure to drive down aggregated shipping and facility costs, by investing in far-flung sites for cleaning, screening, and repair. What’s clear is that the customer base for tablets has outgrown the maintenance infrastructure, with expensive consequences.

Market size has also outgrown screening efficiency. The combination of high model turnover and overwhelming choice belies an immature market, and the result is a high return rate from “buyer’s remorse.” Many support organizations routinely incur avoidable costs from inefficient testing and repair, usually through a third party service provider (3PSP).

Weak front-line screening and diagnostics represent a third revenue sink. Though robust technical support boosts customer satisfaction and limits frivolous transit and testing costs, the tablet industry has been head-scratchingly slow to catch on. Industry standards that were ubiquitous in the “PC era” are still percolating. Until the tablet industry heeds the unwritten commandments of screening and diagnostics, it will be smitten again and again by its reverse logistics supply chain.

These inefficiencies are easier discussed than solved. You may even be tempted to smash your iPad in frustration, or to mail it to California so a 3PSP can check whether it’s been smashed. We recommend taking a few deep breaths, and tuning in to our upcoming posts from Blumberg Advisory Group on the tablet industry. We’ll give you our take on how companies everywhere can optimize forward and reverse logistics velocities, hold down costs, and face the future in top gear.

 

Reverse Logistics Sustainability 201: Green is Lean

As I mentioned in my previous post, the “Greenification” of Reverse Logistics is a critical opportunity. While going green traditionally was viewed as an expensive transition with little ROI, today the tides have turned quite a bit. Currently, green initiatives can be seen as wholly beneficial – saving time, money, and the environment in one fell swoop.

I want to discuss how implementing green processes in reverse logistics can in fact create a tighter, leaner, and more cost-effective reverse pathway. In fact, going green has tangible benefits for many key areas of the reverse logistics process, including the following three.

Returns Prevention and Reducing NFF

Studies indicate that consumers would rather do business with a “green” company, but that they aren’t willing to pay significantly more money for that benefit. As I mentioned in my previous post offering possible solutions for No Fault Found, one potential solution could be to improve the returns process by including the consumer more – something that is often neglected by retailers who would prefer to limit customer involvement as much as possible for fear of aggravating them and sacrificing customer satisfaction. I posited that a little disclosure might go a long way, tapping into consumers’ sympathies by indicating reasons why certain information was necessary.

The implementation of green initiatives is the perfect time to put those ideas into practice. Recall that consumers would rather do business with a company they perceive to be environmentally conscious. Customers are looking for businesses that are attempting to lessen their carbon footprint, and are sympathetic to the need to eliminate wasteful practices. Reduction of NFF returns is possible if there are consumer incentives involved in returns policies.Preventing returns has obvious benefits to the reverse supply chain, including lessening the burden of excess volume.

Logistics

Some of the ways businesses can optimize their reverse logistics pathways are actually the same ways to go green. Relocation of warehouses and repair depots can help significantly cut down on time spent in transport, fuel consumption, and carbon emissions. One centralized regional location can reduce fuel consumption, cutting costs while improving the impact on the environment.

Additional beneficial areas include customer satisfaction (locations closer to customers enable expedited service and returns) and improved turnaround time. Faster resolution to problems promotes customer satisfaction.

Repair, Reuse, or Liquidate

When an item is traveling along the inbound pathway, some major decisions need to be made. The OEM needs to consider the revenue potential of selling items as repaired or refurbished units or disassembling them for scrap.

Disassembling items can yield an abundance of usable parts, which can be saved to eliminate the time and money it takes to repair future distressed products. A good strategy must be implemented to address the usability of parts, forecast need for spare parts, and determine the necessary treatment for those parts to be used most efficiently.

Of course, this optimized efficiency of parts contributes to a lessening of eWaste. Discarding less useful parts immediately and saving the most useful ones helps to reduce the amount spent on finding the necessary parts for repairing/refurbishing later products. As an added benefit, lower parts inventory improves warehouse energy use and emissions.

Companies have a unique opportunity now to optimize their Reverse Logistics pathways. Supporting initiatives to “go green” means bringing new efficient practices and cost savings to a much-needed facet of business.

To learn innovative ways to optimize your Reverse Logistics pathway, talk with the experts at Blumberg Advisory Group.

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