"One of the major reasons that companies are taking a deeper look at the whole area of product returns and the reverse supply chain is the impact this area has on overall customer satisfaction and future loyalty," Jorgensen says. Other reasons include regulations around the proper disposition of goods and the need to have more control over the entire life cycle of products. "Most importantly, of course, is the opportunity to recapture value for these products," he says.
This area can represent new revenue streams for a company and turn a traditional cost center into a profit center, Jorgensen says. "Sometimes returned products have residual value that can be auctioned off, or they might be worth an investment in remanufacturing that gives the product a second or third life," he says.
One of the keys to a successful returns program is having a truly cross-functional team, Jorgensen says. "The returns supply chain touches everything from planning to transportation and, if a product is going to be re-manufactured, you get into sourcing of components, re-packaging and marketing and selling," he says. Other criteria for success are a continuous improvement process and management buy-in, says Jorgensen. "Having leaders who understand the importance of managing returns and who see the value of using returns as a strategy to differentiate the company makes all the difference."
