Returns and reverse logistics

Challenge

A storied PC manufacturer, which had ‘written the book’ on fast direct delivery of built-to-order personal computers, sought assistance to radically improve its returns and reverse logistics. The company believed returns from the field could be processed more rapidly and cost-effectively. Our client executive also harbored the dream of returning deficient PCs directly from the field to the relevant component manufacturer.

Approach

• We mapped existing returns authorization and reverse logistics processes, as actually practiced.
• Identified detailed costs by activity, from customer shipment, to triage, repair and reintroduction into finished goods inventory.
• Then eliminated redundant steps and outsourced repair and logistics work to specialists.

Results

• While we were unable to achieve the ‘Holy Grail’ of direct returns to component suppliers, as the client could not identify the original supplier with each part number, we were nevertheless able to deliver substantial gains.
• Delivered cost savings of $19M annually
  • $12M/year from a new business model for handling returns.
  • $7M/year in finished goods inventory reduction and freight savings.
• Achieved through partial direct-to-vendor returns, reduced inter-site transport, outsourced testing and reduced staff and facility requirements.