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Reverse Logistics and Supply Chain Challenges

May 12, 2017

One of the most complicated and poorly understood terms – reverse logistics (RL), is also one of the toughest nuts to crack. Thankfully, today we have the right technological support in place to help us sail through many of these hurdles. A rather complex process, reverse logistics is the exact opposite of forward logistics. When it comes to supply chain management, RL holds a rather strategic position in its design and development. And therefore, it becomes even more interesting to understand the practical details of this process.

Major hurdles for supply chain managers

#1 Hurdle: Difficulty in value assertion

Unlike the case of forward logistics, it is rather difficult to ascertain the value of the goods in case of RL. Typically, the usable status of the goods needs to be taken into consideration to reach the value of the product. For instance, it is rather difficult to ascertain the cost of product worth USD 1000, when there is a minor defect in it. With the defect, neither is the product worth the original cost nor can its cost be brought down to zero.

Therefore, a proper mechanism to ascertain the value of the product needs to be adopted.

#2 Hurdle: Search for an efficient repair process

An efficient repair process is essential for the proper functioning of any reverse logistics system. A software which streamlines this process, through visual guidelines for technicians to execute the repair process in an effective manner. Video tutorials for compressing the learning curve and helping the bench techs will go a long way in speeding up the entire repair process.

But often a lack of the right software makes the process slow and cumbersome.

#3 Hurdle: Keeping track of the warranty status

This is perhaps one of the most complex things to handle. There are many situations when tracking the secondary warranties is difficult for organizations. This is because most of the RL software is unable to track the secondary warranties back to the OEMs, which make the process of placing claims a tad more difficult. Thus, the organization ends up losing warranty reimbursement amount from the suppliers.

What is needed is a software which effectively captures the anomalies in warranty calculation, so that the company does not have to face financial losses.

#4 Hurdle: Taking care of dealers and contractors

What makes the process of RL even more difficult is the involvement of contractors, sub-contractors, and distributors in the supply chain. Software fails to capture the movement of replacement parts back to the dealers or contractors. This creates a lot of confusion in the accounts, as well as in keeping a check on the quality of products being distributed.

Final Take by SpendEdge

Given that reverse logistics is a complex process, organizations should diligently make it a point to be vigilant in tracking the movement of goods sent back to the warehouses and third party dealers. Also, upgrading the software being used for this process will have a huge impact on reimbursement claims and financial planning of the organization.

To simplify your reverse coordination procurement process

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