Reverse Logistics: Doing the Supply Chain Dance

When asked “Who was the greatest American male dancer of all time?” most people would respond “Fred Astaire” without hesitation. In numerous stage shows and movies from the 1930’s through the 1950’s, he was, in fact, the greatest American dancer.

However, the response to “Who was the greatest American female dancer of all time?” is typically much more wide open, as any one of the many fine women who have graced our stages and screens over the years – including many who had danced as a duo with Astaire – could be cited as the greatest.

The nod usually goes to Ginger Rogers, although Cyd Charisse or any of Astaire’s other former partners could just as easily be mentioned. However, regardless of who is ultimately cited, one thing is for certain, as expounded so succinctly in former U.S. Ambassador to Switzerland, Faith Whittlesey’s now famous quotation: “Remember, Ginger Rogers did everything Fred Astaire did, but she did it backwards and in high heels!” The analogy with respect to reverse logistics could not be any more painfully obvious.

Just as in accounting, where you have to deal with both debits and credits; in logistics, if you ship things out, some of them are going to need to be shipped back. However, in accounting, at the end of the day, your assets and liabilities will always balance out to equal one another; but in logistics, there are no such absolute “laws” that assist shippers in determining – in advance – how many of their out-shipments may ultimately be returned – and, if so, in what shape, and for what reasons, etc. This problem only intensifies when you have to address what to do with the returns once they are received.

It is bad enough when a customer’s shipment arrives late, damaged, or with the wrong content. Compounding the situation is the fact that once a shipment goes wrong (or the parameters change, such as the customer no longer needs the part, etc.), it only gets worse, because now the customer has to call or e-mail the shipper to arrange for another shipment, re-pack the original item, and ship it back for credit. If all goes smoothly, an incorrect shipment is little more than a “nuisance” to most customers.

However, if things go bad (i.e., shipped the wrong part, successive damaged shipments, etc.), these situations go really bad, really fast – and that bad feeling lasts in the mind of the customer for a long time.

For example, if the customer has ordered a critical part from you to resolve a critical system failure, and you deliver it late, damaged, or otherwise unusable, you can bet that your customer satisfaction rating with that customer is going to take a significant hit. That “hit” is further compounded by the fact that your customer then has to (in their own mind) “fix” some of your mistakes itself by calling you up, re-packing the part, and shipping it back to you – plus, they have to wait another day or more to finally get the right part shipped out. This has all of the makings of a bad situation staying bad for at least another 24 hours or more before the customer can ultimately “forget about it”.

However, if during that waiting period, the customer’s business system (and, hence, its production capability) has also shut down or, as a result, they have to send their late shift home early, then you’re likely to find yourself dealing with the dreaded combination of (An Already Dissatisfied Customer) + (Unanticipated Lost Productivity) + (Unexpected Dollar Expense) = An Extremely Dissatisfied Customer. All this, plus the belief that they now “have to do your job” by shipping the part back, simply makes the matter worse.

The problem that reverse logistics providers have always suffered from is essentially based on the typical human misperception that “shipments coming to me are ‘good’, but shipments I have to return are ‘bad'”. However, there are some things that can be done to make the return shipment process as painless as possible. For example:

1.  Provide as much documentation and instruction as possible – in advance – to assist your customers in handling their end of the reverse logistics transaction. Provide it in written/electronic form; make it accessible via e-mail and the Internet; present it in easy-to-understand numbered steps; etc.

2.  Provide the customer with as many tools as possible to get their part of the process done quickly and accurately. Provide them with easily re-packable shipping containers, instructions, pre-printed forms, adhesive mailing labels, etc.

3.  Provide direct customer support contact information should your customers have any questions or concerns about return shipments not fully covered in your documentation. Make sure they have access to relevant company telephone numbers and/or e-mail addresses, and make sure that these contacts are physically there for them when they make the call or send the e-mail.

4.  Make sure that all situations involving late, damaged or lost shipments are adequately covered in your service agreements with respect to contingencies, penalties and/or incentives. Resolve any open issues as quickly as possible; admit mistakes when they occur, and make good on them.

5.  Provide customers with as many Web-based self-support tools as possible. Some customers believe that anything they have to do is an unwarranted demand on their part or, at the very least, an inconvenience; however, other customers believe that anything they can do over the Internet that will shorten the time it will take for the overall process to be completed, will be glad to do so.

6.  Provide centralized tracking capabilities via either telephone and/or the Internet. More and more of your customers have become accustomed to tracking their shipments – to and from their vendors – over the Internet. (You can learn a great deal from companies like Amazon.com!)

7.  Provide an open forum for customer input and feedback. Everything involving logistics is important to the customer, and they will have a lot to say about the way in which they think you are performing.

In short, make it as easy and non-invasive as possible for your customers to work with you in handling their portion of the reverse logistics process. If you attempt to do everything yourself, then everything that goes wrong will be your fault – and your fault alone. However, if you work with your customers, provide them with the tools and direction they need, and make things as painless for them as possible, then you will have the best chance to improve your customer satisfaction ratings in the long term – or at the very least, prevent customer dissatisfaction from tainting an otherwise good customer relationship.

Service Is a Global Concept

Customer requirements for service and support will never be the same from one country to another, any more than they will be the same from one customer to another. However, one thing remains very clear – the requirements for service are becoming increasingly standardized, even on a global basis.

This is particularly true as more and more local companies are going regional, regional companies are going national, and national companies are going international in terms of sales, marketing and services capabilities.

Just a few years ago, only the largest services organizations had credible worldwide service and support portfolios. However, today, mainly through the proliferation of Cloud-based technologies; Internet, tablet and social media tools; and the use of strategic alliance partners, even the small and medium-sized services organizations are finding themselves empowered to support their customers on a global basis.

Still, the perceptions of what it might take to be a “world class” services provider remain inconsistent even among some of the most sophisticated vendors. For example, while some services providers may believe that their mission-critical customers in Europe require exactly the same level of support as their mission-critical customers in the United States – nothing more, nothing less; there are still others who believe that the only differences between required levels of service in the U.S. and the UK are the substitution of an “s” for a “z”, and an occasional “u” stuck inbetween an “o” and an “r”. However, regardless of each individual organization’s approach or perceptions, it can safely be said that services requirements are both every bit the same, and every bit different, in each corner of the globe.

Further, many services providers in the United States have discovered over the past several years that there is more than one language spoken in global service. This was a lesson learned years earlier by most European and Asian providers, as well as by Canadian services organizations that have been dealing with bilingual support for decades. However, the globalization of service and support refers to much more than simply language differences – it must also focus on the cultural, economic and business differences that are manifested in varying forms all over the world.

As most individual businesses continue to grow larger, and larger businesses continue to acquire, merge and consolidate, there will be increasing pressure on services providers to grow along with their customers’ needs for a broader and more sophisticated range of services – both in terms of breadth and scope (e.g., a full array of professional services in addition to traditional break/fix and help desk support, etc.) and geographic coverage (e.g., cross-border capabilities). The conventional wisdom is that some of the services providers that presently offer very high levels of service and support, but only among the basic, or “core”, types of services, or only in a limited geographic area, may actually end up losing out to other, less high performing providers that offer a wider array of services over a larger geographic (i.e., global) area.

The general rule of thumb is often, “why settle for varying or erratic levels of service and support over the whole of our enterprise by relying on the use of multiple vendors, when we can ensure a more standardized mode of delivery – all at satisfactory levels – provided across our entire system?” While the former mode of service delivery may range from “excellent” to “average” depending on the type of service provided, or the location of the end user, the latter mode generally ensures that, at least, there will be consistent levels of service provided enterprisewide – i.e., with no geo-by-geo “surprises”.

In today’s services environment, the true measure of a provider’s ability to adapt to its marketplace is no longer answered strictly in terms of how well it can deliver different types of support to different types of customers, but in how well it can provide desired levels of service and support to each of its customers, regardless of their size, industry segment or geographical location. This requires a full understanding of both its individual customer bases and the global marketplace, and can only be successfully addressed through a painstaking effort to learn to know each market better – that is, better than the knowledge that was previously available, and better than the competition.

The word “global” should no longer simply conjure up images of field technicians trudging through the wilds of the Great Australian Outback, or cross-country skiing through a harsh Canadian winter terrain (although this may also be the case from time to time), nor should it be interpreted solely as fostering a company mentality of trying to be “all things to all parties”.

Rather, “global” should be defined as “offering the full complement of desired services and support, either directly or through strategic services partnerships, to support the enterprisewide needs of the customer.”

It has taken the services industry the last century to get to the point where it is today. However, it will be around this definition of “global” service and support that the future of the industry will be based. Where it will ultimately take us will, as always, be heavily dependent on how the services marketplace believes its providers are responding to its “global” needs.