Rethinking Your Reverse Supply Chain

Rethinking_Reverse_Supply_Chain

The supply chain. We’ve all heard the phrase, but what does it mean exactly? A supply chain is most often thought of as the process of moving goods from the manufacturer to the retailer and then on to consumers. In the consumer electronics market, as with other industries, this involves the processes of creating, packaging, storing, transporting and ultimately selling the product.

One Half of the Equation

But this is only the forward supply chain, and it is only half of the equation. The other half? That’s called the reverse supply chain. As the name implies, the flow of goods goes in the opposite direction, from the consumer back into the hands of the retailer or manufacturer. Both parts of the chain must be in place in order to maximize profits and minimize waste.

Reverse supply chain activities encompass many of the same principles as the forward supply chain. Yet they’re also a little different. The costs associated with processing returns needs to be considered in terms of labor as well as storage and transportation costs. And then you’ve got to think about the marketability of the consumer electronics on a secondary market and the value of the components for recycling.

The Ins and Outs of the Resale Market

First of all, when a tablet, smartphone or other type of electronic device is returned, for any reason, it has to be transported to a sorting facility, evaluated and its ultimate fate decided. This process adds up, especially when it comes to labor and fuel costs. Striking a balance between future income and expenses is a key to a successful returns program. One way to streamline these procedures and minimize labor costs is to require the point of return to presort according to condition.

Once the returns have been sorted, the next step is determining how to capitalize on the resource in the most efficient manner. Some consumer electronics can be resold as-is either online or via a secondary marketplace such as a discount store or by being exported to another country. This is perhaps the most common way companies engage in the reverse supply chain potential—but it is by no means the only way.

Some cell phones, for example, simply cannot be resold because of defects or some other fatal flaw that excludes them from the marketplace. But smartphones—smartly enough—can often be reconditioned, rebuilt or reworked so that they are viable once again. Other times, the prudent thing to do is to harvest parts for re-use in new consumer electronics, and the remaining materials can be recycled. Recycled materials are quite commonly used to create new merchandise either by the original manufacturer or by another industry. With reverse logistics, there’s money to be made at every stage—all of which flows back into the company.

Sourcely Completes the Circle

Focusing solely on the forward supply chain and ignoring the reverse supply chain is not only single-minded, but it can lose your business money that could otherwise be plowed back into operations. Sourcely specializes in helping manufacturers to close the supply chain loop with innovative and creative solutions. Interested in bringing your business up to speed? Contact us for more information about how your company can successfully integrate both sides of the supply chain into an efficient, profitable endeavor.

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