The seemingly straightforward act of returning products, parts and subcomponents back into inventory involves multiple steps and business entities, quickly making the process extremely complex. With multiple stakeholders, from the customer to your service organization, not all businesses are equipped to manage all the moving parts.
Dealing with the many different scenarios where reverse logistics is required can range from early product life to warranty return, in environments that involve field service, depot repair or both. Below are three scenarios that show the differing roles that reverse logistics plays. If you’re encountering these on a daily basis, then it’s time to access your reverse logistics processes so you can meet your customer’s demands.
Reverse Logistics on the Go
Field service operations don’t have a set location, and technicians are constantly on the move. When on a job, a technician needs the ability to replace broken parts from trunk inventory, or place an order for a part that’s not on hand from the site location. The field technician will need complete visibility of whether the part is under warranty, or if the customer is entitled to special pricing as a result of a contractual commitment. Unsurprisingly, this process takes multiple steps.
Without an integrated end-to-end service platform, you would be relying on a technician to communicate with separate field service, reverse logistics, warranty management, contracts and installed base systems to get the answers you need. This not only takes the technician away from the job to make a call, but also relies on individuals offsite to quickly understand and respond with the relevant information.
Obviously, some type of communication between field service and reverse logistics software is necessary, if only to prevent losing track of parts or components pulled from customer equipment in the field. In these situations, however, there needs to be a seamless way to track whether or not the part is going to be repaired, who owns the item as it enters the reverse logistics process, and whether the part or repair is billable. Then the part must be tied to a return materials authorization (RMA) through the original field service order.
Regardless of whether an environment is focused entirely on reverse logistics or in the field, companies expect their software platform to handle knowledge transfer. A technician in the field should be able to access tutorials on various repair processes, which in turn makes those with less experience more productive while increasing first-time fix rate. Reverse logistics software can embed in the workflow detailed videos designed to walk a worker on the repair bench through the workflow. The result is increased productivity, placing knowledge into the hands of technicians where and when they need it.
New Logistical Steps From Subcontractors
Combining reverse logistics with field service is challenging enough when you’re relying on your own employees. But when you bring in subcontractors who don’t have access to your platform or know your processes, things can get increasingly complicated. To smooth the process, reverse logistics software needs to account for multiple subcontractor types and reimbursement policies, in order to manage the complex situations caused by subcontracting.
First, in order to delegate tasks to a subcontractor, you need to establish its availability, accounting for time constraints and ensuring that it has the parts and expertise needed for the job. The contractor must provide a not-to-exceed cost figure, receive a purchase order, and perform the work.
However, things can get extremely complicated when a subcontractor removes a part from a customer’s equipment for return. If it replaces Part A with Part B, what happens to Part A? The subcontractor might send an invoice and want to get paid for the part used out of its inventory. Depending your arrangement with the subcontractor, it might get paid for the new part only when you receive the returned original part. Or, if you have a stronger relationship and have built more trust, the subcontractor might be paid once a material return is authorized, or when shipping confirmation is received by the contractors. All of this can change by individual subcontractor, customer, product line or geography.
If the work and part are covered by a warranty, the subcontractor will bill the vendor for the part. But if the part and work are out of warranty, and the subcontractor owns the relationship with the customer as an independent service provider, as a reverse logistics organization you might only get back parts if there’s a core credit involved.
Managing Multiple Stakeholders
In most organizations, the reverse logistics process can be delineated by new-product and after-use returns. In an after-use environment, the process involves multiple stakeholders, meaning that a software product used to manage the supply chain must encompass all, not some, of those entities. Here’s why.
The customer service department generally authorizes the service and repair work through the call center, or, increasingly, through digital customer portals, chatbots or even social media.
If a replacement part is due for shipment, the customer service representative will check inventory availability, and might have to contact purchasing. If the product replacement requires a build order, the customer service rep might have to involve manufacturing or supply-chain departments. If the defect is to be received for repair, logistics will be engaged to receive the defect and route it for repair. Each of the stakeholders has a role to play, and each has its specific process to follow. This gets even more complicated when there’s a field service component to the reverse logistics process.
Throughout this process, a set of rules must be followed. They cover the asset or product itself, which parts are sent to which repair facility or depot, whether the part is covered by warranty or contract entitlement, whether a customer has a replacement for the part in inventory, and much more. Clear communication, beginning with the task of defining processes and ensuring that the correct business process is followed, perhaps with configured workflow, is very difficult without some enterprise reverse logistics and repair software. Check yours out.
Maintaining an effective reverse logistics process isn’t easy, and these are just a few of the challenges that companies face. With your reverse logistics pain points identified, finding the right solution is key for customer satisfaction and profitable service organization operation. Having the right enterprise software support will help you to manage complexity, minimize expenditure, and stop your organization from getting stuck in reverse.
Tom Devroy is senior product evangelist for IFS North America.