Returns Can Be Extremely Costly
One of the largest consumers of your logistics operating expenses is probably reverse logistics. All of the processes needed to handle the return of goods throughout the supply chain are considered to be the most time-consuming and least cost-efficient tasks in the entire supply chain.
Whether it’s managing spare parts inventory, or the manual return approval process, costs can grow exponentially in the returned goods process of your supply chain. Any optimization and savings that you generate on the ship side could easily be eaten away on the return side.
Areas of Opportunity in the Returns Process
There are a number of reverse logistics process areas that would benefit from improved processes and the right technology solution, including the following:
- Return authorizations must have some intelligent automation capabilities to approve or deny returns when needed.
- The exchange and repair process can be cumbersome and awkward for many businesses. So a clean, well-defined process and method is needed to properly track the exchange, monitor the repair, and complete the circle so that the customer has a positive experience and receives a fully-functional product.
- Inventory is tied up in your current return-and-repair process, where high-value products and parts may sit for weeks. This incurs a significant opportunity cost, as many of these items could be immediately resold to another customer. A solution is needed to help correct this.
- Supporting multiple channels for customers to initiate a return, including the retail storefront, online via a website, or via a customer service call center is challenging. No matter where the return is initiated, the processes should be consistent and cohesive so that the customer service level is not impacted.
- A complete history of the transaction is needed, where the sales order is linked to the returns process, to properly gauge quality and process metrics.
- Reporting and analysis tools should provide return rates by customer or by product and isolate problematic areas. Then business decisions can be made to correct particular product quality issues or customer related concerns.
- Some businesses leverage third party returns processors and other strategic partners as part of the reverse logistics process. Software systems should have the capability to integrate to any strategic partners to give high visibility in a seamless enterprise view of the processes.
The Solution: IBM Sterling Reverse Logistics
The IBM Sterling Reverse Logistics solution, a capability within IBM® Sterling Order Management, is designed to handle even the most complicated returns processes for global enterprises. It enables you to effectively track items throughout the entire return-and-repair process, and automates returning items to stock.
IBM Sterling Reverse Logistics Capabilities and Benefits
Key capabilities of the reverse logistics solution include:
- Configurable returns processing based on virtually any product-related attribute
- Complete order life cycle tracking with the ability to link returns with virtually all other related steps (sales orders, replacement orders, repair orders, and more)
- Real-time visibility and exception handling, enabling you to provide customers and partners with status updates and proactively resolve exceptions
- Repair cycle control, enabling you to automatically generate repair orders and expedite them as needed
- Directed workflow processes such as exchange, repair or destroy, enabling you to manage various product dispositions
One of the major benefits to the IBM Sterling Reverse Logistics solution is how easy it is to track costs through each step in the returns process. With this vital information, businesses can make process improvements, renegotiate strategic partnerships, and further automate in order to receive true costs savings. The enterprise level visibility of the supply chain processes give business leaders the ability to look at the overall returns process, and then drill down to a specific area as needed to make improvements.
Complement the cost savings and process efficiencies with the superior integration capabilities that are built into the IBM Sterling Reverse Logistics solution, and you have a world-class solution for reverse logistics.
Whether your strategic partner is a returns processing center, a third party logistics provider, or a fulfillment house located on the other side of the world, the IBM solution can give you the visibility and integration you need to track and manage the returns process in its entirety.
Chad Hooker, Oxford Consulting Group’s Director of Supply Chain Management Services, provides an overview of Oxford’s development services for IBM Sterling Order Management (OMS) customers.
Your Partner for Order Management and Reverse Logistics
Implementing an order management and reverse logistics solution requires a team of professionals that understand this complicated part of the supply chain and all of the hidden costs involved in the returns process.
You also need an implementation team that knows how to leverage the IBM software solution to provide real value and optimized cost savings. With Oxford Consulting Group, you gain the experience and knowledge of an IBM Premier Partner that will ensure you get the greatest value from the solution.
We can help with all aspects of your order management and reverse logistics solution—from solution selection and procurement, to implementation, to support and optimization. Contact us today to discuss your needs.