Reverse Logistics Association Celebrating it's 10 Year

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Reverse Logistics Association Celebrating it's 10 Year

After the RLA Conference & Expo in Amsterdam I made my way over to Moroccofor a few days of vacation. While in Marrakesh I toured the tanneries. Tanneries arewhere they treat animal skins to prepare them for leather craft.After an adventure to find the tanneries through the twisting and turning souks ofMarrakesh we finally found them. A young man that works there was nice enough toshow us around and explain the process. First, to soften the skin, they soak them ina bath of pigeon droppings. That’s right, I saidpigeon droppings. The chemicals in it have anacidic natural softening agent. This also makesthe product last longer as it is not treated with harsh chemicals. I asked“how do you collect to droppings”? We were told that the tribal womenof the Atlas Mountains collect it and there is a great trade route throughthe mountains for this. In exchange for the pigeon droppings the tribesget paid handsomely with sugar, rice or spices, which are hard to comeby in the rural areas of the Atlas Mountains.After soaking for days the skins are put in baths of henna for brown color,mint for green, indigo for blue, poppie flowers for red and saffron foryellow. All these products are also acquired by trade. The Tanneries haveno bi-product. Meat goes to the butcher market, wool and fur goes to thetextile market and other parts are used for handicrafts, building materialsand animal feed.10th Annual RLA Conference and Expo Las Vegas 2013America’s Premiere Reverse Logistics EventFebruary 11-14, 2013Over 150 Exhibitors and Sponsors – 1,500 RLProfessionals Representing 700 CompaniesThe Tanneries have a very strong odor but our guide gave us sprigs of mintto hold under our noses to ease the pain. At the end of the tour we tossed ourmint sprigs into some goat hide that was soaking in for green purses that willbe made in a few days after drying.Most tanneries are run by families, some large families have butchers, artistsand farmers thus everyone in the family will profit from the entire process withabsolutely no waste.Happy Travels!Lyndsey Turner, Editor • Editor@RLA.orgOUR MISSIONOur mission is to educateand inform ReverseLogistics professionalsaround the world. RLAfocuses on the reverse logisticsprocesses across all industries.No matter the industry — HighTech, Consumer Electronics,Automotive, Medical/Pharmaceutical, Food andBeverage, Apparel, or other— our goal is to provideRL process knowledge to allindustries. We want to educateeveryone about the ReverseLogistics processes that arecommon to all industries and tobe a catalyst for innovation indeveloping and implementingnew RL processes. We havebeen and will continue toprovide our services to theindustry at a moderate price.Managing the latestinformation inservices such asrepair, customer service,parts management, end-oflifemanufacturing, servicelogistics, field service, returnsprocessing and order fulfillment(just to name a few) can bea little intimidating, to saythe least. Yet that is exactlywhat the Reverse LogisticsAssociation provides throughour membership services.We serve manufacturers andretailers in a variety of settingswhile offering ongoing updateson market trends, research,mergers and acquisitionsand potential outsourcingopportunities to 3PSPs. We havegained the attention of 3PLs likeFedEx, DHL, USPS and UPS.3PSPs like Teleplan, Foxconn,Flextronics, Canon, Sonyand Jabil, along with smallandmedium-sized serviceproviders have found thatRLA resources help advertisetheir services to a regional andglobal audience. OEMs likeMicrosoft, HP, RIM, and Sony,along with Retailers like Wal-Mart, Canadian Tire, Tesco andBest Buy all participate at ourevents. Through RLA Events,RLA Connect services and ourpublications – RL Magazineand the Weekly News Clippingsemail – we help OEMs, ODMs,Branded and Retail companiesfind service partners andsolutions providers that werepreviously unknown to them.Make plans now to join us for the 10th Annual Reverse LogisticsConference and Expo on February 11-14, 2013 at the Rio Hoteland Casino.Monday offers pre-conference workshops and the conferenceindustry reports. Tuesday is the keynote address, followed bysessions presented by RL professionals, leading academics fromover 150 individuals.The Expo where 3PSPs will showcase their RL services andsolutions.If you are a Reverse Logistics professional – don’t miss this event!


Reverse Logistics associationMessage from the Publisher10 Year Anniversary!Our staff just returned from the RLA Conference & Expo in Amsterdam. Businesswas conducted and exchanged, the weather was great for June and Amsterdam waslovely as always, the canal cruise was the best ever! I want to thank our Exhibitorsand Sponsors.It is hard to believe that the Reverse Logistics Association was founded 10 years ago.Here are the concepts and solutions that was noted in the original business plan;THE CONCEPTReverse Logistics Association will … offer cost-effective research… and reduces the marketing cost forThird Party Service Providers (3PSP). Additionally, RLA will become a stabilizing force in the industry byencouraging large and small service providers to discuss joint ventures, mergers and acquisitions.1. …Manufacturers need to be informed about the technology breakthroughs that are occurring…..2. Third Party Service Providers are looking for a way to reduce their marketing overhead……3. ….RLA well access 3PSPs… through our online surveys and match it to our Retail & Manufacturerdatabase in order to determine the future needs……. As the RL Process matures, RLA should play aninstrumental role in…..helping company leaders gather information on Reverse Logistics.RLA will develop a…clearinghouse of information available to those companies that join….THE SOLUTIONS1. RLA’s first product will be a complete database of the worldwide Third Party Service Providers thatperform…repair and support services.2. RLA and will author a quarterly newsletter of the latest events, trends, industry changes and businesschanges…….3. RLA will develop….a for news clipping service. The clippingservice will focused on repair services in the reverse logisticsindustry. The homepages of most service providers will be monitoredon a daily basis along with clippings from any press announcements4. Once a year, RLA will host a Trade Conference to gatherprofessional from the Service Providers and the Retail &Manufacturing Companies to one location. Service Providerswill be able to present their products … in a cordial environment.Both Service Providers and Retail and Manufactures will presentpresentations on the subjects of reverse logistics.As the founder, I believe that we have met and exceeded our goals…What the next 10 years holds for RLA and our members is a mystery,but it will be a bumpy, but exciting ride!Gailen Vick -Founder & Executive Directorwww.RLA.orgReverse Logistics associationBoard of AdvisorsA Board of Advisors comprised of industry experts has been set up to monitor and assist the ReverseLogistics Association management team in making informed decisions. Advisors include:Christopher Gant –FedExChris Gant is Director forFedEx Supply Chain Sales.He is responsible for allbusiness development strategyand execution for boththe FedEx SupplyChain Systems and FedExEmerging Products Sales teams.A 20-year veteran of transportation, logisticsand electronic commerce, Chris has extensiveexpertise in the development and delivery ofcomplex supply chain solutions for some ofthe world’s largest corporations inclusive ofboth Forward and Reverse Logistics. He beganhis career with FedEx Ground (formerly RPS)in 1989 as an operations coordinator beforejoining the company’s sales team in 1991. Hequickly rose through the sales leadership ranks,holding the posts of area sales manager, districtsales manager and senior national accountmanager for FedEx Ground.Edwin Heslinga –MicrosoftEdwin is currently Directorof Reverse LogisticsPrograms and Policies forMicrosoft Devices. In his positionEdwin is responsiblefor development and enforcement of policiessurrounding returns and all related costs to thereturns and is also involved in the CustomerSatisfaction Continuous Improvement Council.Working with Microsoft Call Center and theMicrosoft Manufacturing Operations Edwin isdriving the improvement of consumer satisfactionthrough agent assisted support and on-linesupport while managing the costs.Prior to working for Microsoft Edwin workedfor Jabil Global Services as the Director ofIT Solutions, where he worked with variousteams on the proposal and implementation ofreversed logistics services for various companiesat the Jabil factories around the world.Charles Johnston –Home DepotCharles Johnston isDirector of Repair andReturns at The HomeDepot Chuck was withWAL-MART for the past14 years and his responsibilities includeReturns, Imports, Exports, Tires and Printingand Mailing Distribution.Hartmut Liebel – JabilGlobal ServicesHartmut Liebel was namedPresident, Jabil GlobalServices (JGS), in October2004. He joined Jabil as Executive VicePresident in July 2002 and was named ChiefOperating Officer in October 2003.Troy Kubat - WalmartTroy is now the Directorof Logistics Engineering-Grocery at Walmart havingworked is way upfrom Director, LogisticsOperations, IndustrialEngineering Manager at Walmart - InternationalDivision and Japan Expatriate - LogisticsOperations Lead at Walmart - InternationalDivisionA strong Logistics professional with a deepunderstanding of the Retail operation andmarket place. Extensive Distribution Center(DC)/Transportation operations experienceand vast International Logistics operationsexperience focusing on growth, integrations,strategic planning, innovation, and processimprovements.Ian Rusher - CiscoSystems20 Years within SupplyChain Operations, of whichthe last 15 Years have beenspent in reverse Logistics.Previous experience running3Com EMEA Warranty/Service RepairOperations, Responsible for both Internal and3rd party repair operational performance andEngineering support. Moved the operationsfrom a predominantly In-House business toa total outsourced operational model. Last3 Years at Cisco within Supply Chain FieldOperations, setting up the EMEA non Servicereturns and Cost Avoidance Operations withinthe Netherlands. Responsible direct forEMEA Freight and Warehouse Operations.During the last 2 years has successfully setup Operational infrastructure to support theTeams Global Revenue targets.Bernie Schaeffer –MotorolaBernie Schaeffer is corporatevice president of PostSales Support for MotorolaMobility. His global organizationis responsible for providingboth in- and out-of-warranty repairservices to both consumers and carriers, providesconsumer support services through callcenter, web access and on-device solutions, isthe fulfillment engine for value-added services,manages asset recovery on equipment returnsand is the source of information on productfield reliability.Doug Schmitt – DellDoug Schmitt serves as VP ofDell’s Global Field Deliveryorganization with internationalresponsibility for globalbreak/fix field engineers,same day service delivery,spare parts depots, parts planning, service logistics,repair, reverse logistics and Dell’s globalcommand centers. In addition to Doug’s roleas VP Global Field Delivery he has responsibilityfor Americas Support Services. Previously,Doug held executive and senior managementpositions in service and finance at Dell, Inc.Doug came to Dell in 1997 from SequentComputer Systems where he held varioussenior level finance positions. Before Sequent,Doug worked in the banking sector.Tony Sciarrotta –Philips ConsumerElectronicsTony is Senior Manager of AssetRecovery at Philips ConsumerElectronics North America.In this position, Tony leadsreturns reduction and entitlement initiatives formainstream consumer electronics, and is alsocurrently concerned with further driving theimplementation of electronic registration forPhilips products at leading retailers. Workingwith Philips Sales, Service, Marketing, andthe Philips Business Excellence Group, Tonyis helping drive several teams to improvethe consumer experience and subsequentlyreduce the high rates of products returnedwith no defect found.Susan Wackerman– Hewlett-PackardCompanySusan Wackerman is currentlya Sr. OperationsManager in the AmericasSupply Chain for HP’s Imaging and PrintingGroup. In her position, Susan is responsiblefor the Recycling Operations for HP Americasand the Returns Operations / Remarketingfor HP Americas Imaging and Printing Group.This includes supply chain development, reverselogistics, disposition and processing, refurbishment,resale, channel management. ForRecycling Operations her product responsibilitiescover all HP product categories includinginkjet and laser printing, digital imaging, supplies,scanners, shared printing, PCs, notebooks,desktops, servers.Complete biographies of Advisory BoardMembers are available from the RLA siteat: www.ReverseLogisticsAssociation.org/company_advisory.php


worstthing thatcan go wrong with onlineshopping. The very processof buying online requiresthe consumer to display agreat deal more trust in theretailer than is necessarywhen shopping on the HighSt. In an online transaction,the money is exchangedbefore the goods are in hand.To break that trust withflawed delivery is regardedas totally unacceptable.The challenge for onlineretailers is to achievethis end-to-end serviceconsistency. Great careand attention is givento the look and feelof a website – themore visualelementof theonlines h o p p i n gexperience. The same levelof care and attention – ofpride in the brand – must alsobe applied to the ‘hidden’fulfillment operation. Anappealing, intuitive firstimpression may attractcustom, but it is robust andfailsafe order fulfillment thatwill encourage customers toreturn.Unfortunately, currentstandards fall some wayshort of this ideal.Almost a quarter (21%)of consumers reportthat more thanone in ten of theironline shoppingexperiences are letdown by something goingwrong. As previous resultsshow, those companiesgetting it consistently wrongwill quickly feel the sting ofconsumer defection.There can be no excuse.Expertise and technologyexists – at every budgetarylevel– to automate order fulfillmentand to drive efficiencyand value throughout thedelivery chain.Another interesting issueemerges from the findings.Nearly two-thirds (61%)of consumers are reluctantto purchase goods fromoverseas shopping websites.Clearly, consumers feel thatany problems with deliveryand service are exacerbated ifthe retail company is situatedabroad. This presents a realchallenge for businesseswishing to expand their salesfootprint and only consistentservice and fulfillmentConversely, managingdelivery performance well– as part of the total onlineshopping experience – canencourage greater spend.14 Reverse Logistics Digital Magazine • Digital Edition 40 www.RLmagazine.com Digital Edition 40 • Reverse Logistics Magazine 15www.RLmagazine.com


excellence will assuage anydoubts.Those getting it right cancertainly steal a march oncompetitors. If internationaldelivery is an option,businesses must clearly statetheir delivery terms andensure the processes are inplace to meet expectations.Customer testimonials canhelp, short quotes fromsatisfied consumers that helpto dispel any doubts andconcerns from potential newcustomers.shopping delivery wrong,and your business will sufferas a result. Just two mistakescan be enough to persuadea customer to defect to acompetitor.These errors are nothappening in isolation.Nearly a quarter of the UK’sonline shopping populationexperience online shoppingproblems over ten percent ofthe time.The most savvy businessesare seeking the adviceof expert providers whohave the knowledge andthe technology to managethe entire order processingand delivery function. Thebenefits of developing anintuitive and problem-freeend-to-end online shoppingexperience are evident –87% of consumers willincrease the amount of onlinepurchasing they do if theexperience is consistentlygood.Online shopping is set forcontinued, healthy growth inthe UK. It is those businessesthat pay attention to the‘hidden’ function of orderprocessing and delivery thatstand to benefit most fromthis still buoyant market.Those slow to addressdelivery standards willquickly lose out.RLMUp to 3-15%of your bottom linemay be under attack.Paul Galpinhas workedwithin theExpress andMail industryfor over16 years holding seniormanagement roles for thelast 10 years. Having gainedexperience working forvarious companies, in Jan2009 Paul played a key partin the establishment of P2PMailing and assumed therole of Managing Director.A Third Party Logisticssolutions provider, P2Phas quickly developed asignificant presence andenviable reputation forproviding innovative andflexible solutions to theE-commerce sector withrevenues in excess of £11mand projected growth inexcess of 50%, forgingsuccessful partnerships thatinclude many large MailOrder businesses.Time to deliverThe survey results couldnot be clearer. Get onlineTo learn more visit: www.RLA.org16 Reverse Logistics Digital Magazine • Digital Edition 40 www.RLmagazine.com www.RLmagazine.comDigital Edition 40 • Reverse Logistics Magazine 17


What is the Reverse Logistics Association?At this year’s RLA Conference & Expo in Las Vegas you may have noticed a televisioncrew roaming around. The crew was there to capture response to the conferenceand make a video that displayed the essence of the Reverse Logistics Association.They were also filming segments for a new video series in RL Digital magazine calledRLA Rewound. As you view it, you may see some familiar faces. A big thank you toeveryone who took time out from their busy conference schedule to stop and talkwith our reporter. We hope you will share the video with friends and colleaguesas you introduce them to the association and explain what we do and how we cansupport them. Stay tuned, because we may be talking to you for the next series ofvideos for RLA Rewound.www.RLA.org • www.RLAshows.org • www.RLmagazine.comReverse Logistics AssociationFocus CommitteesFOCUS COMMITTEESCorporate Social ResponsibilityChairperson - Brian F. Eddy,SubCon Industries• Christopher Fabian, ProfessionalService Solutions, LLC• Wes Stott, DEX• Liz Walker, Image MicrosystemsExtended WarrantiesChairperson - Needed• Charles Chappell, Genco ATC• Mohan Kumar D, HP• John Duffy, Assurant Solutions• Michelle Gross T-Mobile• Edwin Heslinga, Microsoft• Amit Mahajan, XCaliberTechnologies• David Novak, Assurant Solutions• Ann Rodriguez, Avnet• Martin Walsh, Test TechnologyInc• Bryan Warner, Forse Inc• Paula Whittington, LifetimeService CenterSoftware SolutionsChairperson - Leonard Schneeman,DEXCo-Chairperson - Paul Rupnow,Andlor Logistics Systems Inc• Michael Ayon, Avnet• Michael Blumberg, BlumbergAssociates• M. Brian Carter, SAP Labs• Cynthia Cheak, Dell Inc• Haozhe Chen, University ofOklahoma• Matt Domachowski, GENCOATC• Curtis Greve, Greve Davis• Bob Leeds, Kewill• Jeffrey Reed, InFonte• John Rinehart, Intel• Lee Sacco, Oracle• Seshagiri Singaraju, SunMicrosystems• Bryan Warner, Forse Inc• Matt Winger, KewillSpare Parts ManagementChairperson - Needed• John Baehr, KLA-TencorCorporation• Dan Gardner, ATC Logistics &Electronics• Herman Goemans, SpragueMagnetics Europe.• Edward Higgins, MasterWorksInternational Inc.• Amit Mahajan, XCaliberTechnologies• Derek Scott, Canon Europa N.V.• John Weatherup, HewlettPackardStandardsChairperson -Ron Lembke,University of NevadaCo-Chairperson - Ken Jacobsen,Connexus• Haozhe Chen, East CarolinaUniversity• Beth Foster, United StatesPostal Service• Jeffrey Reed, InFonte• Paul Rupnow, Andlor LogisticsSystems Inc• Jeremy Vick, EntercomsSustainability and EnvironmentalManagementCo-Chairperson - Raymond Glynn,Cavalry Sales and MarketingCo-Chairperson -Paul Gettings,Supply Chain Executive• Rachel Blackwood, ROUND2• Gina Chiarella, WeRecycle!, Inc.• Robert Gallagher, ImageMicrosystems• Cintia Gates, Dell Inc• Robert German, RochesterInstitute of Technology• Chris Kahl, Cinco ElectronicRecycling• Joe Walden, University ofKansasREGIONAL FOCUSAPACChairperson - Stephen Barnett,Repair Group LimitedCo-Chairperson - Jason Juretic,eBuilder• Sanjeev Kakar, IntarvoTechnologies Ltd• Brian Noone, Infinet ServiceSolutions Pty Ltd• John Wilson, Infoteam OceaniaBrazilChairperson - Paulo Gomes,Flextronics Global ServicesCo-Chairperson - Melissa SilvaBrazil Postal Service• Djalma Barbosa, Dell Inc• Carlos Chiu, Pegatron Computerdo Brasil• Henrique Domingues, FATECGuarulhos• Paulo Gomes, Flextronics GlobalServices• Luciana Lacerda, HP• OSVALDO NOBUO, UPS• Andre Luiz Pereira, FUMECUniversity• Douglas Piagentini, TelefônicaTransportes e Logistica Ltda• Chadad Rodrigues, universidadecamilo castelo branco• Giovana Salvatore, Fatec• Nathalia Santos, FATECGuarulhos• Marcio Silva, Philips• Melissa Silva, Brazil PostalService• Katelynn Weber, ProcessWeaverCanadaChairperson - Craig Stevens,ReturntraxCo-Chairperson - Wayne Burgess,ReturnTrax• Molly Zito, AvnetChinaChairperson - Haozhe Chen, Ph.D.,East Carolina University• Glenn A Norem, eePartsEMEAChairperson - Ian Towell, TescoCo-Chair - Jeroen Weers, SpringGlobal MailCo-Chair - Derek Scott, CanonEuropa N.V.• Herman Goemans, SpragueMagnetics Europe.• Sanjeev Kakar, IntarvoTechnologies Ltd• Bob Leeds, Kewill• Ake Nylen, eBuilder• Ian Rusher, Cisco Systems• Howard Strowman, WamEurope LtdIndiaChairperson - Sanjeev Kakar,Intarvo Technologies Ltd• Ian Rusher, Cisco Systems


Here is a quick example using 100 containers filled per day as an example:When you’re ready tofurther develop your top talentWhen you’re ready toinvest in your organization’s futureYou are ready forAmerican Public UniversityAmerican Public University is ready to help your teamsucceed. We’re a nationally recognized university withbachelor’s and master’s degrees for transportation andlogistics professionals — completely online. So youremployees can take classes on their own time. Andpeople are taking notice. 99% of employers surveyedwould hire one of our graduates again.*When you’re ready,visit StudyatAPU.com/rl*APUS Alumni Employer Survey, March 2006-September 2010We want you to make a fully informed decision about the university that’sright for you. For more about our graduation rates, the median debt ofstudents who completed each program, and other important information,visit www.apus.edu/disclosure.is in current containers, and the“dwell time” at customer sites.Dwell time is the total amountof time a container is “out there”being used, waiting to be usedor waiting to be shipped back.Both of these factors could tie upreusable containers and impactthe quantity of containers neededto support a reusable system. Theanswers to these questions willhelp you determine the numberof reusable containers you willneed.Figure 1 is a quick example using100 containers filled per day asan example:In this simple example, the totalnumber of days the returnablecontainer takes to get from fillpoint back to fill point (one use)is 20 days. You can look at it asif the containers turn 18.25 timesper year (365 days / 20 days). Tosupport this example of using100 containers a day, your systemneeds 1,825 reusable containers,on average. Of course you haveto allow for variance within thesupply chain over time and adjustthe number accordingly.Next, move on to a fiscalreview. Document the cost topurchase, set up, tape and labelyour expendable packaging.How many pallets are you usingand what is their cost? Howmuch space does your currentpackaging and pallets require?How much labor is needed tobreak down and prepare theboxes for a landfill? Includetransportation and disposal costsas well as all costs involved inhandling current packaging andthe damage cost due to packagingfailure..Map future supply chainwith reusablesNow it is time to put all the datayou have gathered to:• Design and select potentialreusable containers• Design new supply chainmodels• Do economic modelingBefore you begin to designa future supply chain thatincorporates reusables, revisityour objectives. By clearlymapping your current state in theearlier exercise, you identified theareas in the supply chain that areimpacting your objective, suchas opportunities to reduce cost.Now, step back and take a broadview of the changes you couldmake to meet your objectives.This is the fun part of the task,the “what if?” exercise. Forexample, what if you went froma handheld container to a tray?Or put more or less product intoa different type of box? What ifyour container was display ready?Don’t limit yourselfto thinking merelyabout replacing anexisting box witha similar size andshape reusable.Think how youcan changecurrent packagingconfiguration toimprove the costand processes in thesupply chain.Location of reusable container per useNumber of daysWaiting to be filled at your facility 2Filled and put into storage at your facility 2Transit to customer’s DC 1At customer’s DC 3Transit from customer’s DC to their store 1At store with product in the container 3Waiting at store to be returned to DC 3Transit to DC 1At DC being accumulated for return 2Transit to your starting point 1At your facility, container being cleaned etc 1Total number of “dwell” days in this example 20Also take intoaccountInallthisthatsimple example, the total number of days the returnable container takes to get from fipoint back to fill point (one use) is 20 days. You can look at it as if the containers turn 18.25good data youtimes per year (365 dayscollected earlierNow / 20 apply days). your To support “what this if?” example your supply of using chain 100 includes containers third a dayyour system needs 1,825about the physical requirements approachreusabletocontainers,the overall existingon average.parties.Of course you have to allow forvariance within the supply chain over time and adjust the number accordingly.of the container. After weighing supply chain. What wouldthese factors, start researching happen if you changed a part ofNext, move on to a fiscal review. Document the cost to purchase, Quality set assurance up, tape and and label youexisting reusable expendable packaging packaging. and theHowprocess?manyWhatpalletsif youarechangedyou using transportation and what is their staff cost? must How be muchtry some space out. Include does your potential current the packaging way the and product pallets is placed require? brought How much in labor because, is needed unlike to breakvendors in down your decision and prepare making; the boxes into the for packaging? a landfill? Review Include the transportation expendable and packaging, disposal reusable costs as wellthey can all provide costs involved considerable in handling containers current you packaging are considering and the packaging damage cost comes due to back. packaging This failuexperience. If you cannot find to gauge their impact on internalchange in process will impactan existing container that might processes. Will they improvetransportation and qualitymeet your Map needs, future ask supply your chain ergonomics with reusables and worker safety?standards for the packaging.supplier to develop a prototype. Will they work on your existingReusable containers will need toNow it is time to put all the conveyor data you system? have These gathered are just to:be cleaned, repaired and handled Design and select a few potential examples reusable of the containers types ofAfter you have selected aand made ready for reuse. You Design new supply questions chain you models will need to askpotential container, put it throughmight need to create new services Do economic modeling yourself.a process we call a “pack out”.or facilities as well.In the pack Before out, you you begin put to the design a future supply chain that incorporates reusables, revisit yourcontainer objectives. through some By clearly initial mapping In this stage, your you current must state also in map the Earlier, earlier exercise, you documented you identified your the arpaces in the supply chain. Place out your new processes for reversetransportation processes and itsyour product into the container logistics. At this planning phase,associated costs. Now considerand gauge how well it fits and its be sure to include your qualitythe impact that reusables wouldorientation. Place the container assurance and transportationhave in this area. Reusablesinto different parts of your teams as well as any outsidegenerally weigh more thansupply chain like conveyors and parties that contribute to yourexpendables, however, you mightfilling machines and consider its supply chain. Of course, if youfind that the containers cube outbenefits and limitations. have a closed loop system, this isbefore they weigh out and fewerall much easier to manage than if22 Reverse Logistics Digital Magazine • Digital Edition 40 www.RLmagazine.com Digital Edition 40 • Reverse Logistics Magazine 23www.RLmagazine.com


trucks will be required. Or youmight actually get more of yourproduct on each outbound truck.On the return trip, the emptycontainers will weigh less and, ifyou chose a collapsible container,will take up less space. But youstill need to get them back soyou need to calculate the reverselogistic costs.Also consider how you will trackand trace your reusables. The costof tracking, as well as the costof lost reusables, is importantto your financial model. Withina closed loop, the loss rate isvery low. However, if your loopincludes multiple third parties,your loss rate likely will behigher. Determine whether it ismore cost efficient to absorb theloss or spend more on trackingsystems to minimize the lossnumber.As you design your reverselogistics, consider whether youcan manage these services inhouse or whether it would bebetter to outsource them. Cost isonly one part of the equation inthis decision. Equally importantis the ability and willingness ofyour company and staff to takeon this new area of services, andwhether it is cost effective tosupply your own labor.Now that you have identifiedpotential containers, mappedout the necessary changes inprocesses including reverselogistics and documented currentand future costs, it is time tocreate an economic model.To help you conduct an initialassessment and cost benefitanalysis, the RPA has created aneconomic calculator availableat http://reusables.org/library/calculators. Using this tool, youwill enter purchase price, dwelltime, number of turns, returnlogistics and other inputs youhave gathered to come up witha total cost per use for reusablesversus expendable packaging.While this model is at a highlevel, it will give you insights onhow to build a cost model specificto your needs.During this calculation, you willalso weigh whether to purchasereusables outright, or enter intoa capital or operating lease, andwhether to use a third party, likeTosca, for your reusable program.To help you consider and weighthese important decisions points,the RPA has created an in-depthpresentation on the topic. Youcan read it at http://reusables.org/fundmentals-of-reusablepackaging.Now it is time to combine allyour input and develop somepossible future-looking models.As you do so, weigh the tradeoffsin costs and process times, makesome refinements and design asolid model for testing a futurestate using reusablesTest and refine newmodelAssuming that your economicmodel supported the premisethat reusables will decreaseyour costs in some way – eitherthrough labor savings, decreasedproduct damage, or overall cost- it is now time to run a pilotwith your selected container andnew processes. During the pilot,you are testing your inputs andassumptions used in your model.,This is also the opportunity to seein real time how well your newcontainer works. The pilot phaseis necessary for unearthing anyissues you might have missed.If there is a glitch, you mighthave to make a change in yourprocess or container selectionand then initiate a new pilot. Itis not uncommon to go throughtwo or three pilots to get the rightsystemDuring the pilot, pay specialattention to these potentialpitfalls:• Not considering a supplychain’s true cycle time• Not having enough packagingfor peak production volumesIndustry EventsRLA Conference & Expo SingaporeSeptember 25 - 27, 2012Click Here• Inability to accommodateindustry standards forcleaning, especially food andbeverage• Paying premium freightfor lack of container fleetvisibility• Loss and damage ratesIn my experience, these are issuesthat are sometimes overlookedand later create significantproblems during a rollout.Once you have confirmed thatyour container choice and newprocesses are successful andwill indeed meet your originalobjective, it is time to undergofull scale implementation.Prepare for successfulImplementationOnly minimal modificationswere made to your supply chainCES - Las VegasJanuary 8-11, 2013Click Hereduring the pilot. During therollout, however, significantadjustments are made. Possiblyyou are replacing or adjustingfilling machinery or conveyors, oradjusting pallet quantities to suitthe new container. This processis time consuming, but take thetime to do it well and thoroughly.At this stage, an overlooked issuecould result in lost productiontime or sales.The alignment of your people andprocesses are even more criticalthan the physical changes to theplant. Policies and proceduresfor the new supply chain andhandling of reusables need to bedocumented and shared before therollout. The RPA is developingan article that will detail the pathto successful alignment, but Iwill touch on the highlights here.RLA Conference & Expo Las VegasFebruary 11-14, 2013Click Here24 Reverse Logistics Digital Magazine • Digital Edition 40 www.RLmagazine.com Digital Edition 40 • Reverse Logistics Magazine 25www.RLmagazine.com


First, the importance of trainingand communication cannot beunderstated. Handling reusablesrequires a new mindset. Thecontainer will be re-used multipletimes. It needs to be handleddifferently than an expendable,and it must be used only for itsintended purpose. If employeesare mishandling reusables,running through them with aforklift for example, this willdrive up your costs.Some companies fail initially atthe implementation stage becausethey have not provided enoughemployee training. Remember toinclude employees and suppliersand whoever else touches thereusable and sends it back. Youmight have new services andfacilities for cleaning and repairif you are managing these tasksin house. Tracking also willbe a new function even if alogistics provider is managingyour reusables. Take care totrain workers on every shift andconsider providing videos andposters to reinforce key points.Monitor the supply chain veryclosely at the beginning andmake modifications or providecorrective training as needed.Logistics providers and reusablecontainer pooling companiescan give you guidance on waysto ensure a successful rolloutif you don’t have the resourcesinternally.Preparing for the implementationof reusables is a complex process,but the benefits will provide longterm and lasting benefits. Andthere are many other companiesthat have been through theprocess already and are willingto share best practices. TheReusable Packaging Associationwebsite at www.reusables.org isa great place to start.Andrew DeWitt is SeniorBusiness Analyst at TOSCA Ltd.and a member of the ReusablePackaging Association. DeWittstarted working in the reusablecontainer business in 1994 atMenasha Corp. where he helpedcreate the startup MenashaServices Division as a service andproduct development consultantfor managing returnablecontainers. Menasha Serviceswas later rolled into another unitof Menasha - Orbis Corporation.In 2002, DeWitt came to ToscaLtd. as Director of New BusinessDevelopment. Over time, his roleevolved from direct sales into abusiness analysis role where hehelps create solutions for thesales team.Prior to his start in the reusablesworld, DeWitt was Director ofTransportation for Oshkosh TruckCorp. and held management rolesin domestic and internationallogistics and customer serviceat Sheaffer Eaton Corp. and theParker Pen Corp.RLMDeWitt earneda MBA fromthe Universityof WisconsinW h i t e w a t e r ,and a BA inHistory fromthe University of WisconsinOshkosh. DeWitt has taughtOperations Research andManagement courses atUniversity of Wisconsin Oshkoshand Marion College.Read the PressCEVA Renews Contract With NokiaSiemens Networks12 June 2012-CEVA Logistics, oneof the world’s leading supply chainmanagement companies, has renewed amulti year contract with Nokia SiemensNetworks, world specialist in mobilebroadband, to manage their global aftersales and reverse logistics operations.CLICK HEREReverse Logistics Company Pvt Ltdenters into an agreement with AcerIndia12 June 2012-Reverse LogisticsCompany Pvt ltd, a provider ofcomprehensive reverse logisticssolutions has joined hands with Acer tomanage their returns. This agreementwill allow Acer to increase customersatisfaction, reduce costs, and increasemargins by managing returns in asystematic way. CLICK HERENew York City Residents Drop off388,000 Pounds of E-Waste duringSpring 2012 SAFE Disposal Events12 June 2012-Sims Recycling Solutions,the global leader in electronics reuse andrecycling, wants to thank the thousandsof New York City residents whoparticipated in the single-day SAFE(Solvents, Automotive, Flammablesand Electronics) disposal events heldin the city’s five boroughs in Apriland May. Sims Recycling Solutions,the New York City Department ofSanitation’s (DSNY) Bureau of WastePrevention, Reuse and Recycling(BWPRR) were able to collect around388,000 pounds of electronic waste as apart of an effort to provide communitymembers with an easy way to properlydispose of household hazardous waste.CLICK HERETopp Solutions ImplementsServiceCentral for ServiceManagement Solution11 June 2012-A leader in wireless devicelogistics and remanufacturing, ToppSolutions implements ServiceCentralsoftware for end-to-end service andrepair management. CLICK HEREIngram Micro Expands DistributionRelationship With ScalaSanta Ana, CA—11 June 2012—Ingram Micro Inc. today announceda new U.S. distribution relationshipwith leading global provider of digitalsignage solutions Scala Inc. CLICKHEREWhat Gets Measured: “OnResults”and “OnProces”” in Service SupplyChain Optimization11 June 2012-In the race to win newmarkets, a Company’s Service SupplyChain (SSC) can make a strategicdifference. SSC can make or break anew product rollout. CLICK HERETechnology Conservation Group, Inc.Announces Launch of New WebsiteLecanto, FL—7 June 2012—Technology Conservation Group, Inc.,an electronics recycling and assetmanagement company headquarteredin Lecanto, FL announced today thelaunch of a new and improved websiteat www.tcgrecycling.com. Withenhanced search capabilities and a newlook and feel, TCG’s website presentsthe visitor with the company’s serviceofferings in an informative and easy-tonavigateformat. CLICK HERERyder Chosen for 2012 Supply &Demand Chain Executive 100Miami, FL—7 June 2012—RyderSystem, Inc., a leader in transportationand supply chain management solutions,today announced it has been chosenfor the 2012 Supply & Demand ChainExecutive 100, an awards program bySupply & Demand Chain Executivemagazine that features the year’s “100Great Supply Chain Projects.”CLICK HERENew Chairman Takes Helm of BestBuy Board of DirectorsMinneapolis, MN—7 June 2012—Theboard of directors of Best Buy Co.,Inc. today announced the appointmentof Hatim A. Tyabji as chairman of theCompany, effective immediately. Mr.Tyabji, currently Chairman of the AuditCommittee, has served as a directorsince 1998. CLICK HERECelestica Recognizes Suppliers WithIts 2011 Total Cost of OwnershipSupplier AwardsToronto, Canada—7 June 2012—Celestica Inc., a global leader in thedelivery of end-to-end product lifecyclesolutions, today announced the winnersof its 2011 Total Cost of Ownership(TCOOTM) Supplier Awards.The awards honour suppliers whoprovide the best TCOO performanceto Celestica and its customers bydemonstrating excellence in quality,delivery, technology, service, pricingand flexibility. CLICK HEREUPS Appoints Canavan President ofUPS Asia PacificSingapore—7 June 2012—UPS hasappointed Brendan Canavan, a 31-year UPS veteran, as its new presidentof the UPS Asia Pacific Region withresponsibility for more than 40 countriesand territories throughout Asia.CLICK HEREImproving Returns Presents BiggestOpportunity for Retailers Wishingto Increase Online ShoppingSatisfactionReston, VA & Atlanta, GA—4 June2012—While 86 percent of consumersare satisfied with the overall experienceof shopping online, retailers still havesignificant opportunity to improvecustomer satisfaction and theircompetitive position by making theprocess of returning or exchangingitems easier, a new study shows.CLICK HERE26 Reverse Logistics Digital Magazine • Digital Edition 40 www.RLmagazine.com Digital Edition 40 • Reverse Logistics Magazine 27www.RLmagazine.com


Reverse Logistics Coference & ExpoAmsterdam, 2012 RECAPSuccess at EMEA’s largestReverse Logistics event!Keynote Address:Neil Ashworth,Operations and Development DirectorHow to Collaborate to Maximize Revenue from Reverse LogitisticsReverse Logistics Associationheld its Conference & Expo June19th-21st in Amsterdam, TheNetherlands at the MovenpickCity Center. The event wasa success with over 140registered participantsand over 70 companies.Companies like Dell,DHL, Tesco, Philips,Nokia, RIM, Coca-Cola, and Juniper wererepresented at the event.There was a great exchangeof ideas, challenges, and issues inthe reverse logistics industry.Canal Dinner CruiseSponsored by:The event opened with a preconferenceworkshops and eveningreception on Tuesday, June 19th,followed by the Welcome Addressby RLA VP Jeremy Vick and akeynote address by Neil Ashworthof Tesco on Wednesday. Industryspecific issues were discussed inthe afternoon and all day Thursdayin conference sessions and paneldiscussions. Wednesday afternoonregistrants enjoyed a Pervaciosponsored Canal Cruise. Thursdayconcluded with closing remarks byRLA Executive Director Gailen Vickand a “Lucky Draw.”We had a great event, and as always,thank those that attended. We lookforward to Amsterdam 2013.Jaap Hazewinkel- Service PartsPlanning ManagerEuropeDerek Scott -European PartsTechnical SupportSupervisorIan Towell -National ReturnsManagerCharlie OShaughnessy -Global ReturnsManagerTimmy O’Dwyer -Service ProgramsManager EuropeanService LogisticJeroen Weers -Global ProductMarketing ManagerThank You to OurExhibitors & Sponsors


articleThe challenges and opportunities for mobilephone After-Sales in 2012Part 2 – Device Manufacturersby David Cope, MGH ConsultingNever before has therebeen so much change inthe mobile phone market.Market share numbers overthe last five years havechanged massively withsome household names nowstruggling for survival, whilstother new entrants struggleto keep pace with sales. Addto this the rapid change inthe device portfolio and theresult is turmoil in the After-Sales service landscape.Centralised exchange / repairmodels from RIM, Appleand HTC have changedthe landscape further. Thisarticle explores the effect ofthese dramatic changes andthe challenges they bringto device manufacturers inAfter-Sales.This article is the secondof three which review themobile phone After-Salesmarket, challenges andopportunities, from threeperspectives. The first article,found in Edition 37, focussedfrom the perspective of theMobile Phone Operators,MVNOs and Retail. Thissecond article considersthe device manufacturer’sperspective. The third articlewill focus on repair and thirdparty logistics organisations.Costs and costdriversManufacturers haveoften seen After-Salesas a necessary evil, theunfortunate by productof successful sales andmarketing. In manyorganisations the head ofAfter-Sales or repair doesnot sit on the board, butreports into Supply Chainor even Finance. If we wereto draw a comparison withthe IT industry we wouldexpect to see this changeover time. As After-Sales inthe mobile industry movesfrom base warranty intorevenue generating services,we would expect After-Salesto be increasingly seen as acore focus for manufacturers.Today, device manufacturerstend to focus on After-Sales when sales drop andthe real cost of supportingthe warranty populationbecomes evident. The currentmarket turmoil means thatmany manufacturers arenow taking a keen interest intheir After-Sales operationsand there is a willingnessto question their end to endAfter-Sales strategies.That said, the mobile After-Sales market has matured.area the focus it deserves.Supportability(how easy is it to self helpor support remotely)Pushing warranty costs back up the Supply Chain is common practice in IT, but almost unheard ofthe mobile market, somewhat surprising given the convergence of product in terms of functionalityand increasingly price. Often organisations have the failure data and material analysis they needthrough their warranty control system and material return centres, but they fail to leverage the valuthis data with the sub-component manufacturers. As the costs of components such as LCDscontinues to drive up the Average Unit Price of devices, so we expect to see the leading After-Saleoperations engage with sub-component manufacturers. With the high level of damage on mobilephones this needs to cover both the opportunities for sub-component rework as well as warrantyreclaim.Over the last 10 yearsmanufacturers have focussedon controlling their After-Sales costs and much of thefraud, prolific in the mid2000’s, has been eliminated.Most manufacturers haverobust warranty claimmanagement tools andreasonable control overmaterial usage.Reliability (howoften it breaks or isperceived to not work)Once an organisation has putthe basic warranty controlsin place;• Centralised / semiautomated warrantyvalidation,• Proof of device repair,• Coupled or semi-coupledRepairability(how easy it is to repair)material flows (controlledby a Material ReturnCentre),• Fraud detection andmanagement,then the focus on cost controlneeds to shift elsewhere.Increasingly, we are seeing manufacturers taking more interest in repair avoidance. Having realisthe costs of putting large volumes of No Fault Found devices through an expensive reverse supplychain, there is increasing focus on customer self help through the web and retail and in some areaincreasing collaboration with operators and retailers. Software / Firmware Over The Air is alsoincreasing and thereby reducing the number of software faults seen in repair centres, but there arevery few signs of this moving into in-device diagnostics and proactive device support. Increasinglymanufacturers are also looking at how social networking can be fully utilised in both reactive andproactive support.R e l i a b i l i t y ,supportability andrepairabilityIt goes without saying that thebiggest driver of After-Salescosts for a manufactureris product failure rateand therefore the greatestopportunity to drive downcosts is to focus on designfor reliability, supportabilityand repairability.30 Reverse Logistics Digital Magazine • Digital Edition 40 www.RLmagazine.com Digital Edition 40 • Reverse Logistics Magazine 31www.RLmagazine.com


centralisedand Nokia, Samsung andHTC reducing the number ofservice partners.Each service model has itsstrengths and weaknessesin both costs as shownabove and in terms ofbusiness customer service.The traditional model ofAuthorised Service Partnerswas easy for operators andretailers to manage with thefinancial responsibility forwarranty being managedbetween the OEM and theASP. The level of customerservice (TAT, Exchange,Loan, OOW costs etc.)was managed between theOperator / Retailer and theASP.The more centralisedmodel takes away muchof the Operator / Retailersability to shape the levelof customer service. TheTAT is typically set bythe manufacturer, asare OOW costs. AsOperators & Retailershave had to deal withservice models from sucha broad spectrum it hasprogressively raised thequestion as to what theirlevel of involvement shouldbe. As with most othertechnology sectors thewarranty support is pushedback to the manufacturercompletely and the endcustomer receives the level ofservice that the manufacturerdelivers. Over time, if this ispoor, it impacts on their saleand market share.Future modelThe drivers for change needto be considered in turn.These are;1. Increasing opportunityto drive down returnvolumes through selfhelp, web support andretail support – resultingin a reduction in overallvolume2. Mixed manufacturerservice models foroperators & retailers todeal with – resulting inthe end of a single pointsolution3. Increasing devicecomplexity and highentry costs for boardcomponent level repair4. Increasing need formanufacturers to engagewith sub-componentsuppliersThis leads logically to a modelwhere the manufacturerstake greater responsibilityfor repair and the Operators& Retailers interface withthe manufacturers through a4PL. This model is depictedin Figure 4. Taking each areain turn;Front end supportAlthough it has been slow incoming customer self helpthrough multiple channels isnow a reality. We see greatercoordination between devicemanufacturers and repaircompanies as the need growsfor both multi-vendor as wellas manufacturer specificsolutions. FOTA is the firststep in proactive supportbut over the next few yearswe expect to see far greaterin-device diagnostics and a34 Reverse Logistics Digital Magazine • Digital Edition 40 www.RLmagazine.comInterested in Networking?RLA Seminars are one-day events held around the world thatbring RL professionals together to address specific industrytopics pertinent to OEMs, Retailers, and 3PSPs. The highlightof these events is a facility tour showcasing efficient return,repair and services operations from industry leaders such asBest Buy, HP, Walmart, Motorola and Dell.Upcoming RLA seminar:Bentonville, ArkansasFacility Tour: Walmart Returns Facilitywww.rltshows.comFacility Tour Sponsored By:


greater use of remote devicesupport.Operator and retailfront endThere is an increasingfocus on customer valueadded services, with a walkout working approach onupgrades and both freeof charge and chargeableservices. Logically theseare expanding into remedialafter sales services withFuture modelSW flashing in retail andincreasingly the screeningout of NFFs. There is alsogrowth in retail support withreturns of avoidance a single point centres solutionsupporting the front end infiltering out NFFs.Distribution networkGiven the retail coverage inmost countries of Retailers& Operators it is logical thatthis is the primary network forAfter-Sales as it offers a lowcost rapid Turn Around Timesolution. With the utilisationof the Operator & Retailerfront end and distributionnetwork we envisage thathandling fees for this frontend activity will continue tobe the industry norm.The drivers for change need to be considered in turn. These are;4PLAlready many traditionalrepair companies findthemselves in a pseudo 4PLtype role. The percentageof repairs they conducthas dropped rapidly andthe front end managementof their customer’s end toend service delivery hasincreased, as has their needto manage the manufacturerrepair solution. One ofthe key questions in theindustry today is who willfulfil this role long term andwhether there is a place forthe “player-manager” eitherfrom a 3PL or from a repaircompany. Ultimately thesuccessful organisation has1. Increasing opportunity to drive down return volumes through self help, web support and retailsupport – resulting in a reduction in overall volume2. Mixed manufacturer service models for operators & retailers to deal with – resulting in the end3. Increasing device complexity and high entry costs for board component level repair4. Increasing need for manufacturers to engage with sub-component suppliersFigure This leads 4: logically manufacturers to a model where take the manufacturers greater responsibility take greater responsibility for for repair and the theOperators & Retailers & Retailers interface with interface the manufacturers with the through manufacturers a 4PL. This model through is depicted a below; 4PLFRONT ENDSUPPORTCustomer self help.Reactive &proactive support.Manufacturer /Operator / Retailersupport sitesFront endOPERATOR &RETAILER FRONTENDSW resolution andhow to supportDISTRIBUTIONNETWORKOperator & retailerdistributionnetwork4PLMANAGEMENTProduct screening,OOW billlingprocesses,technical callcentres, swap poolmanagement,vendormanagementREPAIRManufacturermanaged repairsolution. Localisedhigh volumecentralised lowvolume / L3Back endREWORKSub componentrework / reclaimto show clearly the ability toadd value to their customerand in doing so the abilityto select service partners,without bias, across a widerange of services, from callcentre technical support, torepair. The full 4PL role withstock ownership and higherlevels of risk will, mostprobably take some time todevelop. However, there iscertainly a developing 4PLrole with increasing levels ofrisk / reward payment.RepairWith manufacturers takingan increasing role for bothin-warranty and out ofwarranty repair there is agrowing responsibility todeliver a consistent highquality service to theirRetailers & Operators andto finance swap stock whenthings go wrong. With thisincreased responsibility andpotential cost we envisagethe manufacturers increasingtheir focus on how theymanage After-Sales. Formanufacturers to not haveto supply a full exchange /refurbish model there will beincreasing pressure for themto supply fast TAT same IMEIrepair. In order to do thisconsistently they will needto take more of a partneringapproach with repairorganisations and to makesure the commercials theyset up work for both parties.Most repair companieswork on very thin marginsand progressively little ofthis margin comes from themanufacturers. Potentiallywe see the possibility thatmanufacturers will offertheir customers a range ofservices, from rapid sameIMEI to refurbish swap. Itwill be interesting to see howthe commercials of such arange of services will workout.ReworkWith ever larger screens andAUPs there is an increasingfinancial and environmentalpressure to rework subcomponents.This non TATdependent repair will bedone in low cost territoriesand progressively we seethe manufacturers workingcloser with the subcomponentmanufacturerson both how and wherethese repairs occur. This alsoties into the sub-componentmanufacturer responsibilityfor in warranty failuresdiscussed in the reliability,supportability andrepairability section.SummaryIn today’s market, devicemanufacturers cannot affordto not have a well thoughtthrough After-Sales strategy.The level and speed ofchange demands that themanufacturers make surethey have the right people inthe right place. This is alsotrue for the repair companiesand 3PLs. They need toposition themselves with theright services, capabilities, ITand cost base to benefit fromthe changes. Over the nexttwo to three years there willbe two groups of companies,those who made it happenand those sitting there saying“what happened”?David Cope,Founder, MGHC o n s u l t i n g .M a n a g i n gDirector ofMGH Consultingwith 21 yearsexperience inAfter Sales Service and Supply ChainManagement. Major operationalroles in Xerox and ICON with multimillionEuro P&L responsibility.Global Consultancy experienceas a Principal in PricewaterhouseCoopers. Successful delivery ofmajor change initiatives in some ofthe largest global service operations.36 Reverse Logistics Digital Magazine • Digital Edition 40 www.RLmagazine.com www.RLmagazine.comDigital Edition 40 • Reverse Logistics Magazine 37Taking each area in turn;RLM


RL Solutions –We help connect YOU to solutions for. . .· 3PSP Services· Consultants· Facilities withRL Infrastructure· Research· Mergers & Acquisitions· Internship Programs· Industry JobsWe know that many Manufacturers, Retailers& 3PSPs spend a lot of time, energy, and moneytrying to find the right solutions.So we offer ways to expedite your solutionssearch at NO COST to you, while you remainanonymous.RL Solutions – It’s Confidential and FREE.For more information visit RL Solutions atwww.RLA.orgRL SolutionsTechnical TrendsHealthy, Lean or AnorexicI attended my first Lean-Sigmatraining with a focus on Kaizenevents in 2001. Previous tomy Lean-Sigma training I hadreceived training on various other‘flavors’ of process managementthat were to be THE new wayto fix all production ills. Theseincluded; Quality Circles, TotalQuality Management and Voiceof the Customer. Limited tojust Lean-Sigma events, I haveparticipated in, witnessed oraudited the results of 100 orso Kaizen events across sixcompanies. In that entire time Inever documented any savings orbenefit to a repair process or tomost manufacturing operations,six months after the Kaizen event.In spite of the terrific charts, greatPowerPoint, joyous meetingsand backslapping pizza partiesto celebrate the achievement-mytotal experience with all things‘Lean’ has been worse than ajoke.What is even more damning isthat almost universally when youhave dinner or lunch with theIndustrial Engineers involvedoff-site, they all concur that whatthey are doing has limited valueat best and may be detrimental,but they would prefer to keeptheir jobs over discussing thefailures. The problem is thereis such an evangelistic desirefor Lean-Sigma/Six-Sigmato be the solution to getting abusiness back on track, that itis considered heresy to makeany negative observations orcomments. The good news isthat tide is changing and the truthis bubbling up. The result will begood for all especially the “LeanMovement” itself.Since 2008 on there have been aflurry of articles documenting thehigh rate (~60%) of failure from“Lean” projects. What is behindthis trend that is causing a programof such promise to deliver suchlevels of disappointment? Onearticle pointed to an engineeringconcept called the Stress-StrainCurve as the problem. For meI had always held a similarview rooted in the cognitivedissonance of the HawthorneEffect. Make any change goodor bad and then pay a lot ofattention to it and for the periodwhile you are watching, all looksgreat. Turn your head and it allfalls apart. Sound familiar? Verymuch the Industrial Engineeringequivalent of Schrödinger’s catyounever really know if thechanges worked until you openthe box (or look at the P&L sixmonths later).As I have further consideredin more detail the variousimplementations of Leanprojects or Kaizen events, Ihave since refined my opinions.What I now feel is at the rootof how and why Lean in all it’svariations fails is principallyoriginates in Management focusand Operational noise.MANAGEMENT FOCUS: Theone area that I have seen positiveresults from when Lean isimplemented is when the projectfocuses on waste. Almost everyBlack Belt will tell you, thatwaste reduction is the one areawhere Lean as a method worksbest. In fact they will typicallytarget ~80% of any possiblebenefit from Lean Methods willresult from the purging of waste.What seems to happen is thata Lean Program will start at acompany and have some quickwins on eliminating waste. Theseimprovements tend to actuallywork, at least for a time. OnceFEATURE40 Reverse Logistics Digital Magazine • Digital Edition 40 www.RLmagazine.com Digital Edition 40 • Reverse Logistics Magazine 41www.RLmagazine.com


solved, what project should theLean team tackle next? Well ofcourse, the focus begins to shiftto process. As the managementteam moves for greater focus onprocess and to a specific schedule(this quarter) to deliver theresults, a positive outcome forthe project becomes less likely.Plainly stated-this skewed focuson process over waste comesfrom management ignorance. Ifa company is succeeding in anymanner, it must be innovating.This rate of change frominnovation is accelerating at arate that most senior managersstruggle to keep up with. Bythe very nature of success frominnovation senior managementbegins to know less and lessabout what is really going on andwhat levers to pull to managethe operation successfully. Sothe Industrial Engineers go offand attempt to drive processchange and meet the scheduleand financial targets. The resultsreported back are all positive andthe failure from the project inJanuary is ignored as the detailsof the project we are working inMay are now front and center.This also plays into a form ofhubris from the anonymity ofthe process. Perhaps better saidanother way, who do you blame ifthe results don’t appear? Reallyno one. You just blame theprocess. The protection gainedby managers from the processis another powerful attractor forLean management techniques.There is always a reason to pointforward to the next project thatwill have a better outcome, nextquarter…OPERATIONAL NOISE: Thebest way I can think of to explainthis issue is to recount a truestory. You may not believe itbut I assure you this is true. Ata contract manufacturer I workedfor several years ago, a new COOwas hired from GE. He was ahuge believer in Lean in all itsforms but had little understandingof Reverse Logistics. One of therequirements he flowed down toall the operational sites was that‘every program needed to havea Kaizen event every week’. Onthe surface that may not soundtoo bad. But let me share withyou the outcome from a singlerepair production line.Each week a group of 4-8 staffwould be removed from theproduction line for a week for theKaizen event. They would geta day or two of training, spenda day or so on the productionline re-engineering the process.Followed by the final day or sodocumenting the results. Theresults were always positive.I was tasked to look at thepreceding eight months of dataand report on why the site wasnot making money. Duringthat period the reported benefitfrom the various Kaizen eventsreflected that the MPUs (minutesper-unit)was negative. Yes, youread correctly. If the Kaizenreports were to be believed, theproduct was repaired before itwas ever unloaded it from thetrucks! Obviously this was notreality. What really happened isthat there were massive qualityissues and MPUs had grown by~35%.What was causing the failure?Consider something as complexas a repair process. If I amchanging out a portion the staffonce a week and then rollingout a process change-what willbe the result? Total and utterchaos. No one really knew whatthe process was and with all thenoise there was no way to holdanyone accountable. The goodnews is that now there were a lotof new areas to start eliminatingwaste from.In closing I would share thesethoughts in avoiding thethought tunnel of Lean-Based-Failure. The Innovation cycleis accelerating. Operationalprocesses are an outcome fromthat innovation. This rate ofchange leaves top managementreally not understanding enoughof the details to effectively directanyone. Delegation and opencommunication is key as is anunflinching reliance on objectivemeasures and a commitment tocreating a sustainable operation.Don’t destroy what you have,while trying to make it better.RLMB r y a n tU n d e r w o o dmanages PublicSafety Sourcingfor CassidianCommunications,an EADS NorthAmerica Company in FriscoTexas.Returning ThoughtsTips to Improve Reverse Logistics Outsourcing PartnershipsReverse Logisticsoutsource solution partnersare developing skills andservices at a rapid pace.There is a broad selection ofexcellent Reverse Logisticsservices now available toassist OEMs. As a result,many OEMs are nowseeking best practices andbetter ways to work withReverse Logistics outsourcepartners.This article is a collectionof tips assembled fromconversations with OEM’son the outsourcing decision,working with outsourcedpartners and on managing,monitoring the outsourcedpartners to improve ReverseLogistics.Look for Your Points ofRisk - even if you rely on apartner to help you with someaspects of your processing,ensure you understandthe points of risk to yourcompany. For instance youroutsourced repair partnermay be holding your workin progress, refurbishedor parts inventory andyou may wish to closelymanage inventory levels toreduce the risk of excessiveinventory levels.The Market Should YieldStronger Skills Than YouCan Develop Internally– as reverse logisticsoutsource partners becomeincreasingly sophisticated,there is significant additionalreason to outsource certainaspects of your ReverseLogistics processing, sinceit is becoming increasinglydifficult to develop thenecessary skills quicklyand cost effectively fromwithin your corporateenvironment.Reduce the Need forFEATURE42 Reverse Logistics Digital Magazine • Digital Edition 40 www.RLmagazine.com Digital Edition 40 • Reverse Logistics Magazine 43www.RLmagazine.com


esponsibility for repairs tothe original manufacturingpartner. Many OEMs andoutsourced partners aregetting very creative inthis area since the OEMsare often willing to payadditional amounts forthe comfort, convenienceor reduced managementrequired for additionalservices. Work togetherwith your partner to designa contract that is win-winfor both parties. Monitoryour partner to ensure theyremain successful.RLMADVERTISER INDEXAPUwww.apus.eduCaesars Meeting Group www. lvmeetingbycaesars.comRLAwww.rla.orgRLA Singaporewww.rltshows.com/singapore.phpRLA Facilitieswww.rlaconnect.comRLA Membership www.reverselogisticstrends.com/memberships.phpRL Las Vegaswww.rltshows.comRLA Seminarswww.rltshows.comRL Solutionswww.rlaconnect.comRLA Workshopswww.rltshows.com223172Back Cover387354540Information – while youstill need to maintain controlof risk areas, look for areaswhere too much time andenergy is spent gathering,analyzing or managing dataor processes. Do not letyour staff “hide behind”the need for more and moredata or IT issues. Seek tooutsource these functionswith your existing partnersor with new partners.Develop a structure toremove yourself from thedata or process and transferthe responsibilities to yourpartners.Utilize FinancialIncentives – provide afinancial reward to youroutsourced partner forsuccess. For instance youmay wish to pay more for ahigher yield rate on repairsFind Ways to MoveRisk and Responsibilityto Your OutsourcedPartner – there may bemuch less risk to manageif you can transfer it toyour partner. For instance,some OEMs are moving allGood Luck!Paul Rupnow -Director, ReverseL o g i s t i c sSystems, AndlorL o g i s t i c sSystems Inc.(604) 687-1130www.Andlor.comEditor - Reverse LogisticsProfessional ReportBusiness Insights andStrategies for ManagingProduct ReturnsThere is great content available inRLA workshops this year.You’re in town for the RLA Conference & Expo, why not takeadvantage of your Monday and learn more about RL in an interactiveclassroom setting.Beginning at 9:00AM on the day prior to the conference, aregistration fee of $999.99 allows you to attend any three workshops.Some Past Workshops• Successful Outsourcing - RFQs, Contracts and SOW presented by Gailen Vick, RLA• Customer Experience by Kok Huan Tan, Senior Service Program Manager, DELL• Leverage RL to Drive Sustainability & Reduce Expenses by Jesse LaRose, ESE Solutionswww.ReverseLogisticsProfessional.com44 Reverse Logistics Digital Magazine • Digital Edition 40 www.RLmagazine.comRegister now www.RLAshows.org


Closing or Moving out of a Reverse Logistics facility?At this very moment, RL companies arelooking for facilities with infrastructurealready installed. Let us help take thecostly hassle out of having to restoreyour facility to its original state.Looking to Expand or Relocate?Let us help locate facilities with theRL structure already in place. Save thehassle and resources and find it now!The entire process is secure.All inquiries are kept confidential.RLAconnect.com

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