According to a 2014 Aberdeen Group study, the average manufacturer will spend 9% to 15% of total revenue on returns. The study also found that those organizations which are the top performers in utilizing reverse logistics are 74% more likely to have established marketing and channels for refurbished or recycled parts to drive revenues. In industries ranging from cell phones to carpets, a growing number of manufacturers are now utilizing reverse supply chains as an essential part of their business. For these organizations, there is not only a cost benefit, but also an environmental benefit.
Reverse supply chain schemes can include:
- product returns and management of their deposition
- management and sale of surplus
- management of returned equipment and machines from leasing businesses
- remanufacturing and refurbishing
Benefits Extend Beyond the Numbers
Cost Efficient. Many companies have already recognized the importance of reusing components or products to reduce operating costs and increase revenues. For example, 70 to 90 percent of the goods sold in the motor vehicle aftermarket have been remanufactured, reports the Remanufacturing Industrial Council International. In addition, instead of paying high disposal costs, small businesses can reap the economic benefit by using returned products.
Good for the Environment. Today consumers and authorities expect businesses to reduce the amount of waste produced by their product. When products and components are being recycled, refurbished, and remanufactured, there is less waste going into landfills.
Customer Satisfaction. The growing environmental consciousness of the average consumer can gain your business customer loyalty when they know you are doing your part to improve waste management. In fact, a 2013 survey conducted by Blumberg Advisory Group, Inc., states respondents expect a 67% increase in customer satisfaction due to the implementation of a reverse supply chain.
The Sky’s the Limit
Now imagine the following: A golf club maker, XYZ Inc., replaces the grip on their most popular model; small businesses then accept and sell the old model clubs. Not only do consumers get a discount, the landfills stay that much emptier, and small businesses get to earn additional revenue. Therefore, everybody wins.
Now imagine that same principle applied to the huge consumer electronics market. The profits that stand to be made are tremendous. You will be able to recover remaining value from returned material which would otherwise have been lost in product disposal.