The life of a product begins once it has arrived at the customer’s destination and it’s put into service.  Hopefully the customer will be able to utilize the value of the product for a long time. However there are many ways in which that value is not fully achieved.  A few examples are: the product could break during shipping or installation; it could fail to operate as designed; it could be improperly operated; or it could just plain be the wrong part for the job.  If any of these things happen, the part has lost its value for the customer and it’s important to retrieve the part and find out what’s gone wrong.  The process of retrieving parts in order to evaluate them with the purpose of understanding what happened is referred to as reverse logistics. Just as having a feedback loop to any process helps to better control that process, a robust reverse logistics path back to the factory can help reduce the lost value in the returned product. Setting up a fast and easy return path ultimately reduces sources of waste, improves operational efficiency, and product quality, thereby adding significant value for customers.

THE PROCESS OF RETURNS

Completing the reverse logistics loop usually goes something like this:

1. Return the item to a facility where it can be evaluated
2. Record and, if required, reproduce the failure mode
3. Trace the failure to a root cause
4. Put safeguards in place to prevent the identified failure mode (if required)
5. Disposition the product to the customer
6. Identify actions (repair, replace, recover, scrap)

This is a generalized process for most manufactured goods and to fully support reverse logistics requires skilled technicians, educated in failure analysis and six sigma techniques.  They also need to have access to testing equipment, test protocols and sometimes they will need to access production testing equipment to ensure any repairs will pass any in-line quality tests. Not all companies have the interest, personnel or other resource to handle this task.  That’s why it is not unusual to have the original company (whether in-house or a subcontractor) perform the reverse logistics piece.

RiverSide Integrated Solutions (RIS) a contract manufacturer,  is organized around logistics and has the equipment for producing, testing and evaluating manufactured goods (especially electronics).  This is an added value service that we can provide for products where we are the contract manufacturer. With the rise of ecommerce selling, the seller often is a distributor and their infrastructure is usually built solely around delivery of products.  They may have very little ability to accomplish anything beyond the first step listed above. That’s where we can step in to make the reverse logistics process run smoothly.  Let’s follow the typical flow of a product from the customer,  back to the factory, through the six-step process.

RETURNS

When getting the item back to a facility for evaluation, usually, the burden of freight is carried by the person returning the product. In an ideal situation, the customer will call the reverse logistics facility (in this case RIS), provide make, model and serial number (or other unique identifier).  They will describe the reason for return and RIS will give the customer a return authorization (RA) number.  The person in charge of the product intake will record all of this information in a database.  When the product arrives, the information given by the customer will be checked against the database to ensure that the proper part arrived and that it will be evaluated for the specific failure indicated.

DETERMINE THE FAILURE MODE AND ACTIONS

For manufactured commercial or industrial goods, the product is more often returned because it is not functioning properly in the application.  With the product now in-hand, the failure may be obvious through physical inspection, or it may require an additional conversation with the customer to better understand how the product was being used. There are ultimately three potential outcomes from four unique scenarios.

• The failure was identified as either a manufacturing defect (within our control), or a misuse of the product by the customer (not under our control)
  • If it is a manufacturing defect, the product will be repaired or replaced and shipped back to the customer, generally at no cost. In some instances, it will be necessary to share with the customer, distributor and/or others the nature of the failure, containment actions, and how the manufacturing process changes. These latter requirements would be controlled by the manufacturer’s quality process.
• Another potential outcome is that the product has failed through normal operation, and it is repairable at a reasonable price and within a reasonable time based on the customer needs.
• Lastly, if the cost or time to repair does not meet the customer’s needs, then they will order a replacement part. If the returned product has parts that are worth salvaging, perhaps as spare parts for future repair, then that could be done.  Otherwise the item could be scrapped and disposed of in accordance with any disposal and or recycling requirements.

BENEFITS TO REVERSE LOGISTICS

Streamlining this part of the product lifecycle process ultimately will result in cost reductions, happier customers, and less environmental waste.  By providing this service it helps to build trust by being easy to do business with.  It also provides opportunities to better understand how to improve the product with time. All of this creates much more value in the reverse logistics part of the company than the cost of implementation.

Resource Utilization

Over time, a good reverse logistics implementation reduces the amount of returns.  In turn this reduces the amount of material being utilized for repairs and reducing the reserve for warranty repairs. It also means fewer resources tied up in handling repairs. All of these elements result in an improved cash flow. This adds up to the conclusion that if RiverSide is already acting as your manufacturer or a sub-manufacturer, adding in the reverse logistics part can add significant value to your operation.

Customer Satisfaction and Retention

Handling reverse logistics smoothly and quickly gives your company a chance to really stand out in the eyes of your customer. The true test of doing business well can be seen  when something goes wrong with the product. If your customer is well-served when things have gone wrong, that is a chance to shine.  The expectation on the customer side is that a product return should be simple and hassle-free.  Treating them well when things have gone awry speaks volumes about how you are to do business with, when things are going right.  The stories that people like to share are when they have had an unexpectedly positive experience. That kind of word of mouth is priceless.

Transparency

Just like any process, reverse logistics is not a stand-alone proposition. It must be connected to the manufacturing process and it needs transparent monitoring to identify issues and take action proactively. Reverse logistics closes the feedback loop that helps reduce the volume of returns and optimize the reverse logistics process. Being able to track logistics performance across the life cycle of a product helps better identify opportunities for improvement – adding value across the supply chain.

Seeing the value of a well-managed reverse logistics group, it makes sense to have that capability reside within the manufacturing facility.  RiverSide is prepared as a manufacturer and a subcontractor to provide that service to those clients who are already using their manufacturing expertise.  Having a dedicated team whose size can vary as needed to handle changing loads without impacting production personnel makes a lot of sense.

To learn more about integrating your OEM processes with our electronics manufacturing expertise, and reverse logistics, contact us today. Our team of consultants will review your project specifications and work with you to devise the right strategy for the best combination of refurbishing, return management, and recycling to fit your goals for your products. With a deep bench of highly qualified assemblers, technicians, and logistics personnel, RiverSide Integrated Solutions can provide outstanding value for reverse logistics. We look forward to the opportunity to become your trusted partner!

RIS is an advanced contract manufacturer providing robust solutions in circuit board assembly, product assembly, kitting, supply chain management, fulfillment, distribution, and reverse logistics. We employ more than 300 people and provide services to OEM’s across the world. We operate 3 state-of-the-art manufacturing facilities within the U.S, and as your one-stop-shop we have the capabilities, capacity, quality assurance standards, and resources to provide you with support for all of your manufacturing needs.

With all of the choices in contract manufacturers out there, we know it can be difficult to find someone that not only understands your business model but also has your best intentions in mind. RIS has proven to always be a win-win focused relationship. As your one-stop-shop, we have the capabilities, capacity, quality assurance standards, and resources to provide you with support for all of your manufacturing needs. We understand that supply chain management is difficult and very time consuming, so we urge our customers to utilize us in the fullest capacity. Our total-package solutions include:

· Extensive supply-chain network

· Purchasing and inventory management

· Dedicated Program Manager

· Warehousing and drop-shipping capabilities

· Flexible order fulfillment

· Product assembly: sub-assembly and full product

· Scalability to meet your needs

Contact us today at (507) 523-3220 to see how we can help with your manufacturing project, or click here for a quote.