March 30, 2010

Revenue from customer returns

Reverse supply chain services, although gaining momentum, are still not a mainstream function for many OEMs and service depots. But given the increased efficiencies, security measures and cost savings that supply chain services offer, companies are quickly learning that best practices in this area are a must for any organization looking to maximize revenues.

Take, for instance, a large high-tech corporation I recently visited. It is a customer of Converge's Product Returns Management service and I was doing a site visit. As we walked through the warehouse, I noticed numerous pallets of hard drives taking up valuable floor space. I asked my host about them and found out that there were 200 pallets (and growing) of customer-returned drives that were not confirmed failures, yet most likely contained customer-sensitive data. The initial decision internally at this company was to have all these drives physically destroyed by a recycler -- this would have been a cost model for them.

The salesperson in me immediately saw another opportunity for my customer to not only realize cost avoidance but recoup some incremental revenues, and so I brought up Converge's ability to have the hard drives screened for physical damage, tested for functionality and securely data erased to DoD-level specifications. Any drives that failed any test or were physically damaged would be destroyed at a Converge facility with certificates of destruction provided. The hard drives that passed would be repackaged and sold into the wholesale marketplace with a Converge warranty. The customer immediately saw the value in this, vetted the processes fully and went with the proposed solution.

In the end we implemented a solid, ongoing product returns program that the company uses regularly. Not only has the company optimized the reverse supply chain, but it has realized significant revenue returns from the program, on the order of hundreds of thousands of dollars.

Of course this is just one example of how you can approach the steady stream of customer returns. The case above could easily have been for full systems, notebooks, LCD displays or any other part that is typically found inside of a PC or laptop. The important point to remember in the reverse supply chain is to consider all your options so as not to leave money on the table.

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