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APQC’s best-practices research report, Reverse Logistics: Backward Practices That Matter, supplemented with thought leadership from the Warehousing Education and Research Council (WERC), uncovers how best-practice organizations design, establish, enable, and measure service-oriented reverse logistics and disposition strategies that minimize cost and liability while maximizing reverse velocity, profitability, asset value recovery, and customer loyalty.

The research scope focused on:

1.    Designing a service-oriented reverse logistics and return disposition strategy that minimizes cost and liability but maximizes reverse velocity, profitability, asset value recovery, and customer loyalty.
2.    Establishing a physical reverse channel and information flow to support the strategy (including standardized processes and procedures for minimizing for the causes of returns and facilitating the efficient physical flow of planned returns from customer to final disposition).
3.    Assessing information systems solutions and operations systems solutions to enable the reverse logistics strategy.
4.    Measuring the success of the reverse logistics strategy and providing for its continuous improvement.

The best-practice organizations studied in-depth include Carolina Supply Chain Services Inc., GENCO Distribution System Inc., McKesson Corporation (Pharmaceutical Distribution—McKesson Supply Solutions), and Raytheon Aircraft Company (RAPID—Raytheon Aircraft Parts Inventory and Distribution).

The first chapter of the report, entitled “Reverse Logistics Strategy Design,” identifies the key learnings related to how the best-practice organizations design service-oriented reverse logistics and return disposition strategies that minimize cost and liability while maximizing reverse velocity; asset value recovery; and, ultimately, customer loyalty.  It describes how championing the value proposition of reverse logistics encourages senior leadership support in the form of resource investments and change management governance.  It examines how leading organizations identify and meet the needs of process stakeholders, including customers, suppliers, and internal process groups. This chapter also describes how leading organizations leverage strategic disposition avenues to reduce the amount of handling and to recover the most value from returned assets at the earliest possible point.

APQC’s research has found that leading organizations have overcome the misperception that reverse logistics and returns management are little more than perfunctory, costly processes. A well-planned and executed reverse logistics strategy can substantially contribute to organizational goals to cut costs, satisfy customers, and comply with environmental regulations while enabling innovative practices in product improvement, return reduction, and asset value recovery.

The best-practice organizations in this study recognized the importance of reverse logistics initiatives in meeting key organizational goals.  These leading organizations have implemented and continue to execute their reverse logistics strategies in order to accomplish common goals related to profitability, customer responsiveness and satisfaction, asset recovery, and velocity.

The findings in this first chapter are:

1.    Awareness of the importance of reverse logistics must be raised to a high level in the organization.
2.    A reverse logistics effort must be championed by senior management and supported by cross-functional teams.
3.    Reason codes should be used to identify and solve problems that cause returns.
4.    A disposition strategy should be an integral part of the reverse logistics strategy.

To read this entire chapter from APQC, please click here.