Reverse Logistics

Here’s a statistic that might come as a surprise: 60 percent of the cameras returned by consumers to Canon U.S.A. Inc. are in “pristine condition,” according to Joseph Warren, vice president and general manager of customer support operations. And nearly all the remaining units have been damaged by customer abuse. But that doesn’t relieve Canon from the responsibility of managing the reverse logistics process and keeping customers happy. In fact, the company has taken dramatic steps over the past decade to improve its abilities. In 1994, it established its first product returns center. At the time, reverse logistics was “beginning to gain recognition and respect, but was still considered disagreeable,” Warren said at the Reverse Logistics Association conference in Las Vegas. “It was out of sight, out of mind.” Warren proceeded to centralize Canon’s return operations at a location in Chicago. Profitability was foremost, but he was also expected to reduce returns. He achieved the latter goal by gathering information on product quality and sending it to manufacturing executives in Japan. Most recently, Canon achieved ISO 9000 and 14001 quality certification at the returns facility, where it carries out refurbishing, remarketing, disposition recycling, return exchanges, failure analyses and call center activities. “Reverse logistics has become more than just managing returns,” Warren said. “Value is created from a comprehensive reverse logistics program.” He quoted a 2007 Aberdeen study which found that reverse logistics accounts for nearly 1 percent of U.S. gross domestic product. And the cost of processing a return can be two to three times that of shipping the same item originally, he said. Still, he finds that many have yet to grasp the importance of reverse logistics. “There’s little evidence that companies understand the true cost of managing returns,” Warren said.

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