Unlocking Supply Chain Profitability: Best Practices (Part 3)

by From the Top on 2013-08-06 00:30:35

Doug PasqualeThis is the final post in a series of three that will offer tips to help suppliers bring their products to market in a quicker, more cost-effective and profitable manner. Doug Pasquale, vice president, supply chain solutions division Ingram Micro Mobility North America, analyzes the entire product lifecycle and identifies cost-saving best practices that optimize the supply chain at each stage of the product’s life, and shares tips on how to boost profitability.

In the last post, I detailed ways in which revenue can be maximized through strategies such as utilizing foreign trade zones along the shipment route and extending market reach through strategic partnerships. The final key to unlocking supply chain profitability is to recover the most value from returned and repurposed products. Companies often overlook the hidden value in providing a second life to used or outdated products.

Manage Buyer’s Remorse
According to research by Accenture, the consumer electronics industry was projected to incur $16.7 billion worth of losses in returned “No Trouble Found” (NTF) products in 2011. The cost to retailers and manufacturers includes the expense to receive, assess, repair, repackage, restock and resell the returned product. But the biggest concern for any industry is the buyer’s remorse that results once the product has been shipped back to the retailer.

Keep these tips in mind in order to cut down the attached costs with product returns, boost customer satisfaction and bolster your company’s reputation:

  • Look for opportunities to share the responsibility and cost with manufacturers and other stakeholders for preventing returns
  • Focus on creating and maintaining positive customer expectations and interactions that forestall returns
  • Support the product before and after sales with effective, attractive alternatives to returns such as offering delivery and set-up services like the Best Buy Geek Squad, having customer service contact the customer within 24 hours of the purchase of the product, and tailoring customer service to the preferences of the customer (i.e. contacting them by phone, email, text)
  • Elicit customer feedback to determine causes of returns and find an actionable solution to each concern
  • Provide post-sale customer support for complex devices such as mobile devices to minimize the risk of returns based on a lack of understanding

If It Ain’t Broke – Fix It Anyway
Even if a returned product is categorized as NTF or minimal trouble found, repairing and refurbishing the product is an option to recoup some of the value that would otherwise be lost. These services transform the product into a like-new, marketable condition which allows them to reenter the sales cycle. Therefore, it’s critical to have high-functioning and efficient device recovery solutions in place to handle the necessary parts management and reconfiguration services.

Parts management services enable companies to strategically procure replacement parts from the lowest cost source for use in B-stock which includes: reclamation yield, new manufacturer parts, or aftermarket parts. Reconfiguration services allow for the reconfiguration of repaired or refurbished products which include functions like programming a device’s software, physically branding the product, and assembling it with its components and branded packaging. If your company is outsourcing these processes, ensure the partner has the capability to run parts management and reconfiguration services and to repair and refurbish products in-house. However, the key in optimizing repair and refurbishment services is to minimize the number of parties handling a product.

You’re in the Green
It’s important to remember that producing a product in a financially responsible way can also mean doing so in an environmentally friendly way to capture additional value. Even if the product has been labeled as irreparable or dead on arrival it is not worthless. For example, reclaiming recyclable parts or precious metals is a simple way to promote sustainability, generate positive brand awareness and reclaim hidden value. Aligning with a partner can also help to responsibly handle products at the end of the lifecycle.

The final piece in the supply chain optimization puzzle rests on product returns. Industry players who reduce the overall number of returns and manage buyer’s remorse, streamline repair and refurbishment processes, and master remarketing and recycling of recaptured devices will maximize their profitability and optimize the back end of their supply chains.

Doug Pasquale
Vice President, Supply Chain Solutions
Ingram Micro Mobility North America