Sending it Back: The Impact of
Reverse Logistics on Your Operation
Track 3 Session 7
Tim Konrad
Title: Senior Vice President
Company: Genco ATC
Email: konradt@gencoatc.com
Website: www.gencoatc.com
Phone: 412-820-3919
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Abstract
 Reverse Logistics may not be receiving the
attention it deserves in your operation. It may be
causing more pain, costs and inefficiency than you
realize.
 This session will demonstrate why you should
audit your process and then explore some
engineering solutions that will realize more
effective returns management in your warehouse.
 Furthermore, strategies for using returns for
immediate fulfillment of current orders,
refurbishing/repairing/repacking, returning to
supplier, disposal/re-cycling or returning to
inventory will be discussed.
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The Current State of Reverse
Logistics
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The Reverse Cycle
So what happens to
the product you
returned?
Regional
Return Center
C
U
S
T
O
M
E
R
Repair &
Refurbish
Online Sales
Manufacturers
DC/RG
- Disposition
- Triage
- Efficiency/Scale
- Credit
- Consolidate
- Control
OEM
Distribution
Warranty
Donate
Donate
Recycle
Recycle
C
U
S
T
O
M
E
R
Off-Price Store
Store
Liquidation
Warehouse
Export
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Reverse Logistics presents a higher
level of complexity than forward
supply chains
Forward Logistics Characteristics
Reverse Logistics Characteristics
Predictable demand
Unpredictable demand, little
advance notice of return
quantities
Uniform product quality and
packaging
Non-uniform product quality and
packaging, often returned in
“peaches” instead of pallets
Routing of product defined
Multiple routing options (return to
stock, return to vendor, repair,
recycle, scrap etc)
Clear cost structure, uniform pricing
Difficult to determine profit
maximizing methodologies
Straightforward negotiations
Negotiations involve more details
and contingencies
Clearly defined organization
Complex organization structure and
difficulty in assigning roles &
responsibilities
Standardized processes
Often an ad-hoc process with little
budget and attention
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Several global forces are driving
manufacturers and retailers to take a strategic
view of reverse logistics operations
Product Returns Proliferation –
Growth of online retailers and trend
of providing consumers more return
options has increased volume of
returned products
Sustainability Awareness –
Increasing awareness of reusable
and “green” products has led to
consumer willingness to pay a
premium for eco-friendly products
Increasing Legislation – New or
changing laws on product disposal
and re-use have driven companies
to become strategic about returns
and recalls
Global
Reverse
Logistics
Market
Forces
Advances in Technology –
Technology has made it easier to
track returns, provide real time
information to consumers and
process return credits
“Cradle to Grave” Customer
Expectations – To improve
efficiency and operational costs,
customers expect 3PL’ s to manage
entire life cycle of the returned
product
Demanding Consumers Consumers expect same
convenience in returns as in
purchase and want faster
turnaround for return shipments and
credit processing
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Source: A.T. Kearney2 Analysis
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Issues Retailers Face
 Customer Expectations vs. Store Efficiency
 Exploitation of Vendor agreements
 Maximize recovery
 Legislation / Sustainability
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Issues Manufacturers Face
 Exploitation of Vendor agreements
 Channel conflict
 Declining product values
 Time to cash
 Legislation / Sustainability
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What CEOs, Consumers,
Shareholders and Employees are
Saying about Sustainability
CEOs
Consumers
Shareholders
Employees
87% of Fortune 1000 CEOs
believe sustainability is
important to a company‟s
profits
89% of Fortune 1000 CEOs 73% of CEOs believe
believe sustainability will be sustainability affords
a significant issue in the
them cost savings
next three years
91% of consumers say they‟d
consider switching if they
learned about a company‟s
negative practices
90% of the U.S. population
says it‟s important for
companies to be mindful of
their impact on the
environment and society
50% of shareholders believed
a company‟s mindfulness about
the environment and society
would make them more likely to
buy stock
75% of MBA students
from top schools were
willing to accept 10-20%
lower salary to work for a
„responsible” company
Generation “X” and the
Millennials are more
educated and aware of
social/ environmental
issues
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Davos CEO Study, Price Waterhouse Coopers Study, 2009. Mark Albion, True to Yourself, 2006. 2002 Corporate Citizenship Study, Marc Gunter, Faith and Fortune, 2006.
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Major Retailer Solution Overview
Transportation
Operations
Remarketing
Dedicated Logistics
Operations Management
Quote to Cash Services
• Several Thousand Stores
Nationwide
• 25,000+ Pallets per Month
• Online Pick Up Requests
• Products include: clothing ,
tractors, TV’s, tools, sporting
equipment and more
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Advanced Scanning Technology
Inventory & Credit Reconciliation
Disposition Management
Detailed Manifest & Inventory
Tracking
• Material Recycling
• 1 facility, 250 Teammates
Multi-channel re-marketing
Delabeling and Defacing
Cash Control
Domestic & Export Buyers
Compliance services
Millions of dollars in retail value returned goods recovered
Operate National Return Center Network
Product Complexity and Variation
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Pharmaceutical Solution Overview
Returns
Operations
Technology
Returns Management
Operations Management
Technology Management
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• RFID Label for inbound receipt
control
• Control led Substance - DEA,
FDA, DEP Enforcement
• Compliance services
Centralized Returns Processing
45,200,000 units annually
Product Receipt & Processing
Retailer and Wholesaler Credit
Processing
Advanced Scanning Technology
Inventory & Credit Reconciliation
Disposition Management
Detailed Manifest & Inventory
Tracking
• Material Certified Destruction
• 1 facility, 400 Teammates
Millions of dollars in value returned goods Certification of Destruction
Operate National Return Center Network
Advanced security compliance
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Major CE/IT Solution Overview
Returns
Transformation
Technology
Returns Management
Operations Management
Technology Management
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• Test & Repair
• Software Download
• Multi-channel re-marketing
• Hosted Solutions
• Warehouse Management
Architecture
• Secondary Market Architecture
• Parts Management Architecture
Centralized Returns Processing
6,800,000 units annually
ASN capture from Retailers
Product Receipt & Processing
Retailer Credit Processing
• Kitting & Teardown
• Parts Management
• Secondary Market Fulfillment
Streamlined Transformation Processing Yielding Competitive Transformation Costs
Reduced Cycle Time to Cash
Proven Secondary Market Management & Sales Capabilities
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Our Vision for the Future
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Forward Logistics
Transportation
Truckload, LTL, inter-modal, parcel management
Web-based order entry and electronic load tendering
Web-based track and trace
Freight consolidation and optimization
Carrier management and rate negotiation
Freight pay
Claims management
Direct-to-consumer and bulk fulfillment
Warehouse and inventory management
Labeling, kitting, pick-pack and light assembly
Reverse Logistics
Logistics Expertise
Technology
Engineering Consulting
Lean Six Sigma
Damage Research Analysis
Network Analysis
Secondary Market
Management
Multi-channel Sales Venues
Hosted Solutions
Verified Buyers
Warehouse Management
Parts Management
Secondary Market Management
Direct consumer & retailer returns
Asset recovery and disposition
Sustainability programs
Test / Repair / Refurbish
Electronics diagnostics
Repairs
The Impact of Product Lifecycle
Logistics
COST REDUCTION & NET RECOVERY
MANAGEMENT
AVOID
STREAMLINE
REMARKET
through root cause analysis
Reclamation Center processes
for maximum net recovery
• Automated Warehouse Management software
• Provide end to end visibility of product and
product dispositioning
• Suite of built in reporting capabilities
accessible externally by Customers
• Financial structure can create
a Revenue generating program
• Proven Brand Protection
Program
• Access to 100,000+ approved
Buyers
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Network Analysis
Network Optimization
Damage research
Lean Six Sigma
Compliance & Returns
Avoidance
Creates a Revenue
Generating Program
Vs. Traditional Cost
Structure
Provides Transparency to Enable
Efficient Dispositioning & Decision
Making
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The Reverse Cycle
Repair &
Refurbish
Online Sales
Regional
Return Center
C
U
S
T
O
M
E
R
Manufacturers
DC/RG
- Disposition
- Triage
- Efficiency/Scale
- Credit
- Consolidate
- Control
OEM
Distribution
Warranty
Donate
Donate
Recycle
Recycle
Off-Price Store
Store
C
U
S
T
O
M
E
R
Liquidation
Warehouse
Export
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The Reverse Cycle
Repair &
Refurbish
Online Sales
C
U
S
T
O
M
E
R
Regional
Return Center
- Disposition
- Triage
- Efficiency/Scale
- Credit
- Consolidate
- Control
OEM
Distribution
Warranty
Off-Price Store
Donate
Recycle
C
U
S
T
O
M
E
R
Store
Liquidation
Warehouse
Export
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Key Takeaways
 Consumers are demanding more:
- Convenience, Environmental Consciousness Focus
 Retailers and Manufacturers:
- Legislative and Sustainability Factors
- Mitigating Returns
- Cash Cycle Times
- Decreasing Product Values
 Holistic View of Returns
- Every silo has to be involved
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Questions?
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