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Paul Kelly, Head of Supply Chain Development & Strategy at Telefonica - What does an effective reverse logistics operation look like?
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Paul Kelly, Head of Supply Chain Development & Strategy at Telefonica - What does an effective reverse logistics operation look like?

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Paul Kelly, Head of Supply Chain Development & Strategy at Telefonica spoke at the SCL Event UK 2013

Paul Kelly, Head of Supply Chain Development & Strategy at Telefonica spoke at the SCL Event UK 2013

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  • 1. Paul Kelly pkelly9@me.com T: +44(0)7801 671 741 T: +44(0)7801 671 741 T: +44(0)7801 671 741What does an efficient ReverseLogistics Operation look like ?
  • 2. ∀ Defining a role and goal for Reverse Logistics which is "fit for purpose"∀ Using end-to-end Performance Indicators (Measures) Reverse logistics, and specifically product returns, represent significant costs and, if properly managed, the opportunity for significant benefits. ■ Average return rate for online retail sales is 5.6%, although it varies by product and time of year∀ From efficiency to effectiveness ■ Cost of processing a return can be 2–3 times that of an outbound shipment ■ The average cost of processing per return for items bought on the Internet is $30–$35 See Reference on Slide 5
  • 3. Its "purpose" should link to Enhance Revenue the business strategy Enhance Profitability Reduce Operating Costs Supply Chain Value Reduce Working Capital Reduce Invested Capital Reduced Fixed Capital
  • 4. Should we avoid them* - if so how? Improve the experience? What value information? How to increase efficiency/effectiveness? * Is there is some other value/driverSome additional questions > Buyback/Recycling to think about first > Returns policy and contribution to sales
  • 5. Reference:Receive “Managing Product Returns for Competitive Advantage” James Stock, Thomas Speh and Herbert Shear MIT Sloan Management Review FALL 2006 VOL.48 NO.1 Sort and Stage Reverse Logistics: Receiving products & maximising their valueProcess Analyse “Support” - Repair, Refurbish, Dispose Analyse
  • 6. Its just another “transformation” process !Resources Inputs “Transformation” Outputs Outcomes Economy Efficiency Effectiveness (including cycle times) Operational Measures “Business” Measures
  • 7. Drivers to effectiveness Spend € “Return on Returns” € Basic “Screening” Financial Benefits Indirect BenefitsReceive Minimise cycle time Sort & Stage € Total € Total Improve process capability (yield)Process Ratio 1 Ratio “N” Consider the value of information, the benefits of Minimise cycle time “Value add” activities Financial BenefitsAnalyse the policy & the impact of the Customer Exp.Support Improve process capability (yield)- Repair € Total € TotalRefurb.Dispose Enhance or extract value Ratio 1 Ratio “N” Operational Measures “Business” Measures
  • 8. ∀ Conclusions & Implications• Reverse Logistics can can and should contribute to the business strategy• Use measures that look at outcomes as well as outputs• Economy = Procurement Use to align and incentivise your teams and your• Efficiency = Operations suppliers• Effectiveness = Everyone! • Encourage a “ROI” approach to budgets and investments • Promote " joined-up-edness"

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