The Key to Success – Perhaps Survival - Along the Reverse Logistics Trail

“I rode my bicycle past your window last night
I roller skated to your door at daylight
It almost seems like you're avoiding me
I'm okay alone but you got something I need
 
Well, I got a brand new pair of roller skates
You got a brand new key
I think that we should get together
And try them out, you see “……  (“Brand New Key” by Melanie, a folk singer – 1971)

My company has had the fortunate history to have survived a 15 year paring down of repair service providers from over 500 to now less than 12 by our largest customer – a Fortune 500 OEM. After an equally long crucible of continuous improvement initiatives, we have emerged as their “best in class” repairer of proprietary electronics, as have our competitors equally emerged in their respective specialties.   Our OEM customer wisely maintains this portfolio of specialists each within sight of each other, occasionally competing by virtue of the overlap in capabilities. But our customer has on occasion instigated collaboration amongst players -- and this has resulted in growth and profitability among the providers and ultimately our customer.

Back in 1989, Harvard Business Review defined collaboration as “a strategic alliance typically between two firms with the goal of providing mutual benefit for each firm.”  But that was then, and the slicing and dicing of the Reverse Supply Chain into specialty providers over the last 25 years has been accompanied by changes in business philosophy which embraces our overall industry objective – the triple bottom line: People, Profits, and Planet.  Wise executives such as NCR’s EVP Pete Dorsman recognize that “Everything we do begins and ends with the customer,” and without that approach, brand loyalty will rapidly erode.   It is my contention that collaboration must be an alliance between two (or more) firms with the goal of meeting the needs of our common customer.  But, how to accomplish this successfully?

According to an Auburn University article, successful mutual collaboration stems from these three criteria:

1. The size and market power of both partners are modest compared with industry leaders.

2.  Each partner believes it can learn from the other and at the same time limit access to proprietary skills.

3. The partners’ strategic goals converge while their competitive goals diverge.

The strategic goals that must be strived for by the collaborators are best framed by those defined as the top values of a well run service organization by Aberdeen’s study:  Optimizing the Service Supply Chain (one of my favorite studies).

1. Improved customer satisfaction
2. Improved service profitability
3. Decreased inventory and distribution costs
4. Decreased service operational costs
5. Increased service revenues

The independent service provider industry will survive only by demonstrating our abilities to drive these values for our OEM customers as well as their customers.

  

I have heard of several consortiums that have successfully employed these practices.  We have had several projects that worked well and will continue to approach competitors and OEMs.  I encourage OEMs to foster collaboration among service providers.  I don’t expect them to be without conflict – harmony doesn’t mean success.  Success will be defined by our ability to survive and continue to drive value for our OEM customers and achieve the triple bottom line. Try it.  It works.

Fear and Loathing on the Reverse Logistics Trail

 -“How I rediscovered my passion for Aftermarket Repair Service “

(with apologies to J Hunter Thompson, the Rio, and anyone else who might take offense)

Las Vegas: Rio Hotel – 2013 - At first glance, “Reverse Logistics” does not appear to rouse one’s passions as can other professions.  Wiki defines it as: "the process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.”  Yeah, right….can we go out and play now?

One would think that there are no rock’n’roll idols nor superstars associated with the task of handling the burning acid reflux in the supply chain, but after over 5 years of attending the Reverse Logistics Association’s  Annual Conference at the Rio in Las Vegas, I would say they are truly beginning to emerge.  Last month perhaps a thousand professionals braved tripping over walkers of elderly, Walmart-clad (ok I wear that too sometimes), gambling enthusiasts and had to breathe re-circulated second- hand cigarette smoke on our 15 minute trek to the RLA Exhibition Center.  In the Exhibition Hall were some really cool companies exhibiting – besides us of course.  There was one that makes all kinds of products out of the electronics most companies throw away, wasting nothing.  Another one has over 5,000 “how-to” repair videos on YouTube. “Why shouldn’t people know how to fix their own computers?” asks the founder.  Brilliant!  But, there we all gathered to discuss and debate “Best Practices” in those processes which prevent billions of electronic waste from winding up in cast-iron cooking pots in Africa or landfills in out-of-the-way idyllic settings in Appalachia.

This is an industry that heralds member-giants such as Intel, Apple, Dell, IBM, Samsung and Canon – who met with service providers, large and smaller (like us), to explore answers to some of the most compelling questions posed in the industry today:

“How can we derive additional revenues and profits by efficiently handling product returns?”

“What does “best in class” in Reverse Logistics really mean?”

“How do we measure Customer Satisfaction?”

The purpose of this essay is not to detail the answers to these questions (I could tell you now but then I would have to kill you, and, besides, I fully intend to explain in later blogs)  but really to applaud this industry in which my company makes its living, and to confess that after over 15 years, I have rediscovered my mojo.   As a result of the discussions undertaken in this conference, I for the first time truly recognize that the “triple bottom line” has become embraced by this industry- People, Profits, and Planet.  Sure, it’s about People (customer satisfaction), Profits (reducing costs associated with product returns),  – but most importantly it is about our Planet.   Yes, we focus on preserving our OEM customers’ customer’s brand loyalty (“hey, I sent my electric toothbrush back because it doesn’t work. I don’t want someone else’s - back!!”), and driving their costs down by reducing OBF’s and NFF’s (fancy terms, right?).  But, most important is this:   I estimate that Renova Technology, our  40 person enterprise whose core competency and focus is in circuit board repair, has repaired almost two million pounds of circuit boards -- and keeping those thousands of tons of dangerous metals out of landfills, as well as not needing to extract another 2 million pounds of natural resources, is  a major profit for our ailing Planet!

I mentioned that number to our assistant logistics manager (14 years with Renova) this morning.  She smiled wide and said “I knew that.  Why do you think I am so proud?  Now, about that raise ….”