W Edition: January/February

Extended Producer Responsibility
by Cradle2Cradle? Pg. 28
Reducing Returns, Maximizing Loss Prevention and Validating

Warranty Entitlement in the Retail Industry Pg. 12
Reverse Logistics Financial

Model Pg. 44
Sp
ec
ia
lS
ho
w
Ed
iti
on
January/February 2008
US: $4.95
Issue9.indd 1
12/24/07 8:09:51 AM
Excellence in Service
Fully Dedicated to After Sales Services

Industry & Technical Expertise:
Global Reverse Logistics Solutions:
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Mobile
Storage
Videocom
Gaming
Imaging
Displays
Printers
PC/Notebooks
Depot Repair
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Warranty/Inventory Management
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Issue9.indd 2-3
12/24/07 8:09:53 AM
CONTENTS
On the Cover
Issue 1 Volume 3
Page 22
by William K. Pollock, Strategies
For GrowthSM
In the course of running our
own businesses, we have all
recognized the importance of
dividing our time effectively
between managing the day-today operations, and planning for
the future (although the reality
of running the business often
forces us to divide our time
less than optimally on many of
the planning aspects). Whatever
business segments we serve, we
typically find ourselves relying
more heavily over time on various tools and disciplines such
as Total Quality Management
(TQM), Continuous Quality
Improvement (CQI), Customer
Relationship Management
(CRM), etc., or just plain old
common business sense, to
barely make it from quarter-toquarter, or year-to-year.
Page 16
Reducing Returns, Maximizing Loss Prevention and

Validating Warranty Entitlement in the Retail Industry
by Michael R. Blumberg, Blumberg Advisory Group, Inc.
Product returns are an inherent part of the cost of doing
business within the retail sector. Market studies indicate
that returns of consumer electronics products sold through
the retail channel account for as much as 26% of products
shipped to these channels.
How to Avoid the Risks of Donating Used Computers

(and Still Enjoy the Rewards)
by Jeff Zeigler,TechTurn
What are you going to do with your old computers when
you dont need them anymore? If youre like a lot of people,
one idea that might occur to you is donating them to a worthy cause.
Keep Cool
Extended Producer Responsibility by Cradle2Cradle?

by dr ir H.R. Krikke, CentER Applied Research,Tilburg University
The environment is keeping us busy. Since Al Gores
Be Consumer
Inconvenient Truth it is impossible not to know about
Friendly
Look Cool
the greenhouse effect and its main cause: carbon dioxide.
Although sustainability involves many more aspects (such
Think
About
Page 28
the Environment
as hazardous materials, resource depletion, etc.), it certainly
has made a tremendous impact.
Be Profitable
Live Long
Remain Cheap
Page 35
Go to www.RLmagazine.
com. Individual
subscriptions are available
without charge to qualified
individuals within the
U.S.Non-qualified rates
are as follows:
Single issue: $4.95
One Year Subscriptions:
U.S.: $18
Canadian: $35
International: $70
Articles
Page 12
To Subscribe:
Replacement Parts Supply: Opportunities for Vehicle

Manufacturers and Customers
by Karsten Platz,TEQPORT Services GmbH
In Part One of this article, we explained that European
manufacturers of railway vehicles cannot count on their new
vehicle business to sustain long-term growth in the future.
In this second of a 2-part series, we will outline the ways in
which vehicle operators can benefit from Vendor Managed
Inventory agreements with their customers in the field of
spare-parts.
Reverse Logistics
Magazine welcomes
unsolicited articles and
abstracts. Please send to:
[email protected]
Articles
To unsubscribe: email
[email protected].
President & Founder Gailen Vick

Editor Christine Morrow
Production Director Luis DeGuzman
Creative Design LunaWebs.com
Board of Advisors
John Benardino Hewlett-Packard
Jose Garcia Microsoft Corporation
Dan Gilbert Cisco Systems
Chuck Johnston WAL-MART
Steve Jones Federal Express
Hartmut Liebel Jabil Global
Services
Larry Maye Palm, Inc.
Dr. Dale Rogers University of
Nevada, Reno
Howard Rosenberg eBay Inc.
Doug Schmitt Dell
Tony Sciarrotta Philips Consumer
Electronics
Editorial and Circulation Office
43289 Osgood Road
Fremont, CA 94539-5657
Phone: (510) 440-8565
Fax: (510) 991-9950
[email protected]
www.RLmagazine.com
Printed in the U.S.A. on paper
containing 50 percent recycled content
with 10 percent post-consumer
material. Reverse Logistics Magazine
(ISSN 1934-3698) is published
bi-monthly by Reverse Logistics
Association. The information presented
in this publication has been provided
by corporations and is believed to be
accurate; the publisher cannot assure
its completeness or accuracy.
Page 44
Page 50
Reverse Logistics Financial Model

by John Mehrmann, Data Exchange Corporation
It has been said that a boat is a hole in the water in which to
pour money. The same may be said of some Reverse Logistics financial models. Failure to track the true costs and chart
a safe course may result in titanic losses. Far too often the
most reported metrics only reflect the tip of the iceberg.
RecallsWhen the Worst Happens

by Hannah Kain, ALOM
Managing risk when quality control procedures fail and can
be a nightmare, especially when there is no recall contingency plan in place. Forethought and a streamlined customer
interaction plan are essential to minimize both short- and
long-term damage that results from recalls.
Features
To Our Readers Letter from the Editor
Industry Events
43
Wireless News
Technology Spotlight
49
Message from the

President
Read the Press
53
Industry Committees
11
Site Visits
54
On the Move in
Reverse Logistics
34
Returning Thoughts
58
Money Talks
39
Advertiser Index
58
Technical Trends
40
Copyright 2008 by Reverse Logistics Association. All rights reserved. Reproduction in whole or par t without permission is prohibited.
4 January/February 2008
Issue9.indd 4-5
Reverse Logistics Magazine
www.RLmagazine.com
www.RLmagazine.com
12/24/07 8:09:59 AM
Reverse Logistics association

Wireless News
To Our Readers
Full articles available from:

RLA News Center
A Letter from the Editor

Theres much talk these days about
global warming and the effects of
greenhouse gases. Ive been aware
that manufacturing operations are a
major contributor to CO2 and that
many are taking steps to decrease or
eliminate their carbon footprint.
confirmation and advertising. Also by

ensuring that venues where we hold
events, fully support recycle efforts,
What I didnt realize until I started

research for this column, is that the
paper industry which includes
magazines, newspapers, catalogs
and writing paper due to its
consumption of energy, emits the
fourth-highest level of carbon dioxide
among manufacturers .
Weve reported how many of

our members are addressing this
issue: Wal-Mart is known for their
company-wide initiatives focused
on waste-reduction, renewable
energy and sustainable products; also
how HP, Microsoft, Dell, Ericsson,
Philips and Cisco have joined a
United Nations initiative that aims
to harmonize world policy and
legislative approaches to electronic
recycling and to standardize recycling
processes. And we applaud their
efforts.
In a recent column, I talked about the
efforts RLA takes to utilize green
meeting tactics to minimize our own
carbon footprint including paperless
technology for online registration,
charities. I thought we were doing a

pretty good job.
So here we are, very pleased that our

circulation is rapidly growing, when
at the same time we are contributing
to one of the global problems that RL
aims to contain.
use of reusable dishware, cutlery

and linens and to the fullest extent
allowable, donate leftover food to local
I dont have the answers yet;

however, I understand that awareness
is the first step. I do know that if
were going to talk the talk we need
to walk the walk. Future columns
will include further investigation
findings and RL Magazine steps
toward reducing our carbon footprint.
Reverse Logistics Association Mission

ur mission is to educate and
inform Reverse Logistics
professionals around the world. RLA
focuses on all industries in the reverse
logistics process. No matter what
industry, High Tech, Automotive,
Medical/Pharmaceutical, Publishing,
Apparel, or Consumer, our goal is
to provide RL process knowledge
to all industries. We want to educate
everyone about the Reverse Logistics
Processes that are common to all
industries. We have been and will
continue to provide our services at a
moderate price to our members.
Issue9.indd 6-7
Managing the latest information

in repair, customer service,
parts management, end-of-life
manufacturing, service logistics, field
service, returns processing and order
fulfillment (just to name a few) can be
a little intimidating, to say the least.
Yet, that is exactly what the Reverse
Logistics Association provides with
our membership services. We serve
manufacturers and retailers in a variety
of settings while offering ongoing
updates on market trends, mergers and
acquisitions and potential outsourcing
opportunities to 3PSPs. We have
gained the attention of 3PLs like

FedEx, DHL, USPS and UPS. 3PSPs
like Teleplan, Foxconn, Solectron,
Canon, Sony and Jabil, along with
small service providers have found that
the RLA resources help advertise their
services. OEMs like Microsoft, HP,
Palm, and Sony, along with Retailers
like Wal-Mart, Canadian Tire, Tesco
and Best Buy all participate at our
events. Our online RL Magazine and
Weekly News Clippings help OEM,
Branded and Retail companies find
service partners that were unknown to
them.
www.RLmagazine.com
Why Learn Another

Language - Download the
Translator
Japanese electronics giant
NEC Corp said Friday it has
created a world-first real-time
translator on a cellphone,
which can instantly turn
Japanese travelers words into
English.
Reverse Logistics Association Membership
Reverse Logistics Association

Membership Benefits
RLA Membership has its benefits!
RL Quote, Publication Subscriptions, Exhibit/Sponsorship
Discounts and much, much more.
Platinum
Benefits
Solar and Cells Save Lives

After Cyclone
Mobile phone communication
and solar panel power are
literally saving many lives in
the remote cyclone hit areas,
and greatly helping rescue and
relief operations.
When Roads Are a Luxury
Mobile Phones Are Required
In a country where roads
are often impassable, travel
is fraught with danger and
recent history recalls many
Afghans taking the long road
to Pakistan just to make a call,
the mobile phone is king.
Celebrate the Birth, This
December-NPN & PNP Are
60 Years Old
Sixty years ago, three
scientists came up with the
solid state transistor, the
mechanism at the heart of all
computer chips and digital
processors.
www.RLmagazine.com
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RL Quote - Submit RFIs*
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News clipping services (weekly)
Posting Approved member's white papers
Corporate Logo and Home Page Link from RLA web site
Industry Job Posting
Logo and Link from Job Posting
Search of World Wide OEM/ODM
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WORKSHOPS & SEMINARS
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Download Conference Presentations
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Search of Regional 3PSP (without Profile information)
Discount on all reports and research published by RLA
Discount on Custom Studies/Research and Consulting
services
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Join today and start to take advantage of all

RLA has to offer!
12/24/07 8:10:02 AM
LO1TT16 ad

Message from President and Founder of RLA
hange is inevitableso our staff here at the Reverse Logistics Association is use to it.
Since we started this trade association in 2002, there hasnt been one week without some
of our members asking for another solution, which always results in change. Today, over five
years later, the RLA team consist of ten professionals that work around the clock to meet the
demands placed upon our shoulders.
We continue to grow our services as requests are madetake a look at where we are
today.
One area of focus is our commitment to sponsor research with Universities and Colleges that have a Supply
Chain Management Department focusing strongly on Reverse Logistics. We like to partner with these
departments for our long-term RL research.
Yes we fund
research, but only
if the institution
has a solid RL
platform. We
have and will
continue to fund
research. It is
important to the
members of our
association and
for educating
industry on this
important process
in the reverse
supply chain.
We are happy to
welcome three new Advisory Board members who also know the importance of research:
Hartmut Liebel of Jabil, Doug Schmitt of Dell and Dr. Dale Rogers of the University of Nevada, Reno. They
will help RLA focus on solutions that are important to the RL Process.
Gailen Vick
President
www.ReverseLogisticsAssociation.org
www.RLTShows.com
8 January/February
2008
Issue9.indd 8-9
Reverse
ReverseLogistics
LogisticsMagazine
Magazine
been set up to monitor and assist the Reverse Logistics

Association management team in making informed
decisions. Advisors include:
John Benardino
Hewlett-Packard
Company
John Benardino is
currently a Director of
Reverse Logistics for
HPs Imaging and Printing Group.
In his position, John is responsible
for credit issuance, engineering,
remanufacturing, and all return related
costs. His product responsibilities
cover printing, digital imaging,
supplies, scanners, and shared printing.
Jose Garcia
Microsoft Corporation
Jose Garcia is
Director Repair
and Refurbishing at
Microsoft Corporation.
Jose joined Microsoft 4 years ago to
establish World Wide Repair of X-box
console from the ground up. Building
a world class team, he integrated
systems, processes and partnerships
with expert service partners.
Charles Johnston
WAL-MART Stores,
Inc.
Charles Johnston is
www.RLmagazine.com
2:46 PM
Page 1
Reverse logistics association

TEST
Board of Advisors
TECHNOLOGY
A Board of Advisors comprised of industry experts has
INC.
Dan Gilbert Cisco

Systems
Dan Gilbert is Vice
President of Worldwide
Reverse Logistics at
Cisco Systems, Inc. His
charter when joining Cisco in 2005
was to define and create a worldclass reverse logistics organization.
Dans global team is responsible for
driving excellence in product recovery,
receiving, inventory, and recycling
operations, and for transforming
returned product into value for Cisco
shareholders.
Our research
team is
spearheaded by
Philip Danielson
(Director of
Research).
10/15/07
www.RLmagazine.com
General Manager at the Bentonville

Return Center, WAL-MART Stores,
Inc. Chuck has been with WALMART for the past 13 years and
his responsibilities include Returns,
Imports, Exports, Tires and Printing
and Mailing Distribution.
Steve Jones FedEx
Corporation
Managing Director
Supply Chain Services
& Reverse Logistics.
He is a 22-year veteran
of the transportation industry, with
extensive experience in sales and
sales management of transportation
and logistics services to corporate
accounts. Steve was selected to
lead the Supply Chain Services and
Reverse Logistics sales organization
with responsibility for new business
development, base business growth
and supply chain integration across all
the FedEx operating companies.
Hartmut LiebelJabil
Global Services
Hartmut Liebel was
named President,
Jabil Global Services
(JGS), in October 2004.
He joined Jabil as Executive Vice
President in July 2002 and was named
Chief Operating Officer in October
2003.
Your Complete
Outsource Resource
For electronic equipment OEMs
who need top quality, world class
repair and refurbishment services,
and third party logistics.
State of the Art

ISO 9001: 2000 Registered
Facilities
Highly Skilled Technical Staff

Processing product returns and other
forms of reverse logistics
have been at the core of the services
weve provided for over two decades.
Larry Maye Palm

Global
Larry Maye is currently
serving as the Sr.
Director of Palm Global
Reverse Logistics. In
this capacity he is responsible for the
global repair and logistics for Palm to
include repair operations, customer
service fulfillment, vendor
TEST
TECHNOLOGY
INC.
Call Kelley Dunleavy
(800) 443-5860, ext 237
[email protected]
www.testtech.com
See Us in Las Vegas

at Booth Number O6
12/24/07 8:10:05 AM

Board of Advisors, Continued
management, returns processing and
global strategy.
Dale Rogers is
the Director of the
Center for Logistics
Management and
a Professor of
Supply Chain Management at
the University of Nevada. Dr.
Rogers is a frequent speaker,
a consultant to several leading
firms, has been published in
several logistics journals and
has published several books on
logistics and reverse logistics.
His current research interests are
focused on the following: reverse
logistics and returns, supply chain
technologies, e-business supply
chain management, and supply
chain management.
Howard Rosenberg
eBay, Inc.
Howard has been
with eBay for over
4 years and runs
the Companys Trading Platforms
business serving companies
interested in maximizing their
recovery rates on excess and
refurbished inventory through the
Reseller Marketplace or through
their own, private-label auction
marketplaces. He has 14 years of
experience in various capacities,
including operating, advising
and investing in, companies in
the consumer product, consumer
services and business services
sectors.
Doug Schmitt
serves as VP of
Dells Global Field
Delivery organization
with international
responsibility for global break\fix
field engineers, same day service
delivery, spare parts depots, parts
planning, service logistics, repair,
reverse logistics and Dells global

command centers. In addition to
Dougs role as VP Global Field
Delivery he has responsibility
for Americas Support Services.
Previously, Doug held executive
and senior management positions
in service and finance at Dell, Inc.
Focus Sub-Committees were set up to

provide a standing forum for Reverse
Logistics Professionals to meet on a
regional and global basis and discuss
common Reverse Logistics issues at the
RLTS Conferences & Expos. Focus
Sub-Committees educate the industry on
reverse logistics:
Tony Sciarrotta
Philips Consumer
Electronics
Tony is Director of
Returns Management
at Philips Consumer Electronics
North America. In this position,
Tony leads returns reduction
and entitlement initiatives
for mainstream consumer
electronics, and is also currently
concerned with further driving
the implementation of electronic
registration for Philips products
at leading retailers. Working with
Philips Sales, Service, Marketing,
and the Philips Business
Excellence Group, Tony is helping
drive several teams to improve
the consumer experience and
subsequently reduce the high rates
of products returned with no defect
found.
Best Practices
Consumer Satisfaction Issues
Regulations on a Worldwide &
Regional Basis
Processes that can reduce costs
Industries we currently monitor are:
High Technology
Wireless/Telecommunications
Chairperson Larry Maye, Palm
Advisor Gailen Vick, RLA
Committee Members:
Art Teshima, Bell Tech.Logix
John Coffield, GENCO
Bob Sullivan, The Wireless Source
Al Mahesh, TOPP Service Solutions
Joseph Tarantino, Sprint Nextel
Bill Kenney, OnProcess Technology
Bryant Underwood, Foxconn
Notebook/PC
Consumer Electronics
Imaging
Printers
Complete biographies of Advisory

Board Members are available from
the RLA site at
www.reverselogisticstrends.com/
company_advisory.php.
10 January/February
2008 Reverse
ReverseLogistics
LogisticsMagazine
Magazine
Issue9.indd 10-11

Focus & Industry Committees
Doug came to Dell in 1997 from

Sequent Computer Systems where
he held various senior level finance
positions. Before Sequent, Doug
worked in the banking sector.
Data Storage
Chairperson Ed Inal, Western Digital
Advisor Dave Whitley, RLA
Committee Members:
Matt Fouts, Iomega
David Lick, Seagate Technology
Steve Maglior, Quantum
Gary Gear, Toshiba
Don Collier, Flextronics
Glenn Grube, Moduslink
Information Technology Solutions
Chairperson Lee Norman, ClearOrbit
Advisor/Secretary Dave Whitley,
Committee Members:
www.RLmagazine.com
www.RLmagazine.com
Len Wierzbicki, Black & Decker

Matt Fouts, Iomega
Paul Rupnow, Andlor Logistics
Systems
Anne Patterson, FreeFlow
Elliot Klein, Intellareturn
Paul Trulove, Newgistics
Jason Orpe, Microsoft
John Rinehart, Intel
Spare Parts Management
Chairperson Michael Shelor, Shelor
Consulting Inc.
Advisor/Secretary Dave Whitley,
Committee Members:
Roy Steele, RoShar Associates
Mark Stetson, Hewlett-Packard
Tim Andreae, MCA Solutions
Traci White, Credence Systems
Matthew Cutone, Horizon Technology
Scott M. Oberg, Tektronix, Inc.
Standards
Acting Chairperson - Ken Jacobsen,
Connexus
Advisor/Secretary Gailen Vick, Reverse
Logistics Association
Committee Members:
Holly Elwood, U.S. EPA
Larry Maye, Palm, Inc.
Paul Rupnow, Andlor Logistics
Systems
Norman McEachron, Consultant
Larry Chalfan, Zero Waste Alliance
Bill Guns, SRI Consulting
Clare Lindsay, U.S. EPA
Ken Purfey, AICPA
Emily Rodriguez, The Results Group
Paul Relis, CR&R Waste & Recycling
Services
Anthony Schell, ValuLink, LLC.
Food & Beverage
Chairperson Don Rombach, GENCO
Committee Members:
Eugene Schachte, HJ Heinz
Lori Kleinschmit, ConAgra Foods
Sharon Joyner-Payne, Carolina
Logistics
Aviation
Chairperson - Bernie Gagnon,
Kuehne+Nagel
Advisor/Secretary - Jeremy Vick, Reverse
Retail Consumer Products
Chairperson - Christopher F. Fabian ,
Professional Service Solutions, LLC
Advisor - Michelle Warner , Reverse
Brian F. Eddy, SubCon Industries
Shima Adyorough, The Home Depot
Mark Blevins, Toshiba
Medical/Pharmaceutical
Chairperson Michael Blumberg,
Blumberg Advisory Group
Corporate Social Responsibility
Chairperson - John Mehrmann, Data
Exchange Corporation (DEX)
Advisor - Jeremy Vick, Reverse Logistics
Association
India Chapter
Chairperson Sanjeev Kakar, RT
Outsourcing Service Limited
China Chapter
Chairperson - Haozhe Chen Ph.D., East
Carolina University
Advisor/Secretary - Jeremy Vick, Reverse
Committee Members:
Glenn Norem, eeParts
Yuan Xu, China Marketing
Association
Meiping Liu , Bostar Consulting Ltd.,
China
Yu Tian, Ph.D. , Sun Yat-Sen
University
Automotive
Publishing
Apparel
Aerospace
11
12/24/07 8:10:08 AM
Reducing Returns,
Maximizing
Loss Prevention
and Validating
Warranty
Entitlement
In the Retail
Industry
by Michael R.
Blumberg
be to return
the product
for repair or
Overview & Current

Situation
Product returns are an

inherent part of the cost
of doing business within the
retail sector. Market studies
indicate that returns of consumer
electronics products sold through
the retail channel account for as
much as 26% of products shipped
to these channels (Figure 1). A
significant portion of returns are
due simply to customers who no
longer feel the product is right for
them either because of remorse,
dissatisfaction or any myriad of
reasons. The amount of money
tied up in returned products is
significant. Research indicates
return of computer products, alone,
account for as much as $22.5 billion
a year1. As such, anything that a
retailer and manufacturer can do to
offset the costs of returns can have
a dramatic impact on bottom line
profitability.
Surveys of retailer return
experiences (Figure 2) suggest that,
the more willing the retailer is to
support their products after the sale,
the more likely the customer will
Issue9.indd 12-13
replacement.2
The retailers return
policy, particularly if its a
liberal policy, and customer
remorse with respect to product
feature functionality, are identified
as the second most important factors
impacting product returns. These
facts suggest that manufacturers
and retailers have conditioned
consumers to expect that returns
are a normal part of the customer
buyer experience, thus creating the
current status quo with respect to
the volume and cost of returns.
Costs & Challenges Associated
with Returns
There are three product shipments

for every product that is returned
and replaced with a new one;
the shipment of the original sold
product, the replacement product,
and the returned product. Many
products are returned by the
consumer, both knowingly and
unknowingly, after the return and/or
warranty period expires. A retailer
who accepts return products for
exchange or reimbursement after

the warranty or return period has
ended incurs additional costs, as
identified above, as well as lost
sales opportunities for itself and the
OEM. A segment of the consumer
population has learned how to take
advantage of the return policy and
in effect engage in fraudulent and
unscrupulous practices. In essence,
these individuals have learned how
to conceal old, stolen, or broken
products as new and exchange for
cash or new products which costs
OEMs and Retailers millions of
dollars a year.
Everyone has at one time purchased
a gift for someone only to find the
person had received a similar gift
from someone else. In this situation
the consumer needs to have a
proof of purchase receipt in order
to return the product and receive
cash back. Without such receipt, the
retailer has no way to determine if
the product was actually purchased
at his or her store. The store can
accept the return and provide cash
back. However, the product may
not have been purchased at that
particular store in the first place
in which case it will cost the store
money. The store could refuse to
accept the product without a proper
www.RLmagazine.com
receipt. However, the store risks

offending a customer and loses a
stream of revenue from repeated
sales if the customer actually did
purchase the product but simply lost
the receipt. Most consumers would
be dissatisfied with this type of
treatment.
With respect to defective products,
the OEM is responsible for repair
during the warranty period. The
retailer and OEM need to have
good information on when the
product was purchased in order to
determine if it is still covered under
warranty. Without this information,
a judgment call must be made. This
could result in unnecessary repair
and logistics costs for the OEM.
The OEM also risks the possibility
of not setting aside enough cash
reserves to cover the warranty
period if the warranty policies
continued to be overlooked by the
retail channel. Overestimating
Annual Percent Returns
Causes of Returns
Defective
Non-Defective
Consumer Electronics (Brown)
Consumer Appliances (White)
Failure
9.4%
1.5%
Shipment Damage & Other Causes
2.3%
1.2%
Stock Balancing & Store Returns
3.6%
.5%
Shipping Errors
3.2%
.3%
Customer Returns & Non Satisfaction
7.5%
1%
26%
4.5%
Total
warranty reserves can be perceived

as poor financial management on
the part of the OEMs warranty
administrator. Ideally, the OEM
would want to be as precise as
possible in order to cover costs and
minimize risks of cost overruns.
Another practical problem for
OEMs is when retailers observe a
trend of an inherently large number
of No Trouble Found Returns (NTF)
within a specified period of time.
This type of situation is commonly
associated with a phenomenon
Customer satisfaction.
Its the most important thing we return.
described as free rentals by retail

industry participants. They occur
when consumers buy a product
for an immediate or short term
need, knowing that they wont be
keeping it; when they return it, they
receive full credit for the original
purchase and in effect, get a free
rental of that item. This practice can
occur with items that are seasonal
or periodic in their usage such as
portable air-conditioning units
and space heaters used during
extreme weather conditions. The
retailer often cant sell the used
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When a product hasnt met the consumers
expectations, return and exchange service
becomes a crucial element to customer satisfaction.
As specialists in returns, exchanges and eld
replacements, NVC Direct has the solutions. Our
team of professionals has the experience, technology
and personal touch necessary to be a reliable
extension of your service department.
Were dedicated to remaining a leader in this
highly specialized field. Whether a pick-up,
exchange, replacement, installation/de-installation,
or warehousing, NVC Direct is equipped to be
your in-the-eld return and exchange manager.
Not only do we return the item, we also return
customer satisfaction.
We have the solutions for all of your return and exchange needs.
Call us toll-free 877.526.3393 or email us at: [email protected]
www.RLmagazine.com
When delivery is more than a destination
13
12/24/07 8:10:11 AM
Factors
Estimated Impact Comment
PRODUCT RETURN POLICY
LIBERAL POLICY CREATES HIGHEST RETURN RATE
RETAILER/DEALER COMMITMENT TO SERVICE/

SERVICE RESPONSE
LEVEL OF RETAIL SERVICE AND SUPPORT WILL DIRECTLY INFLUENCE PRODUCT

RETURNS, BUT MAY INCREASE PART AND SUBASSEMBLY ACTION
PHYSICAL FACTORS
(SIZE, WEIGHT, COMPLEXITY)
LARGE AND HEAVY WHITE GOODS ARE RETURNED LESS THAN CONSUMER
ELECTRONICS
PRODUCT RELIABILITY
INCREASING MOVE TO DIGITAL AND MODULAR DESIGN HAS INCREASED

RELIABILITY
BUYING FACTORS (EASE OF USE, CONNECTIVITY,

USER FRIENDLINESS OF INSTRUCTIONS, ETC.)
USER UNHAPPINESS AND REMORSE INCREASING IN IMPORTANCE
PRICE
HIGHER PRICED UNITS ARE RETURNED MORE FREQUENTLY
product, and must either liquidate

it at a loss or attempt to return it
to the manufacturer for some sort
of credit. The manufacturer is
then faced with additional costs
associated with shipping, testing,
repairing, and refurbishing a unit
which the consumer essentially
rented for free. Not only do free
rentals create an enormous
cost burden for retailers and
manufacturers, it creates a trickle
down effect for other consumers.
It is the consumer who pays the
ultimate price in the long term
when return policies are abused,
as retail prices need to be raised to
cover losses.
Returns for fraudulent reasons
dont always involve a matter of
breaking the law. However, there
are instances where the intent to
steal is obvious. There have
been reported incidences where
a product is returned for credit
or exchanged for a replacement
product. Upon further inspection it
is revealed that the item in the box
is not the same one as originally
purchased. The person or persons
who participate in these schemes
have committed a crime by stealing
a new product. Unfortunately, the
Issue9.indd 14-15
crime is not detected until days,

weeks, or months later when the
return product is inspected by the
OEM or Retail Returns Distribution
Center. Worse, if the product was
returned to the sales floor and
re-sold, it is discovered later by
the next customer. By this time,
the perpetrators are long gone.
Retailers in 2006 lost $9.6 billion
due to fraudulent returns. (Source:
National Retail Federation).
New Developments &
Implications
A common factor in all these

situations is a lack of real time data
regarding when a specific product is
purchased, from which location, and
the length of the warranty period.
With this type of information a
retailer could effectively monitor
product returns and take the
guesswork out of interpreting and
enforcing return policies. Access
to information on product purchase
information can allow a retailer
to positively ID a return. By
doing so, a retailer can discourage
fraudulent returns and better control
costs. This type of a solution would
also provide an enormous financial
benefit to OEMs since it will result
in the reduction of overall returns,
thus a reduction of unit transaction
costs associated with the entire

product return and replenishment
process. More importantly, such
an approach could also have
a positive impact on customer
satisfaction because it facilitates the
return process in instances when a
customer does not have his or her
sales receipt.
The key technical element required
to deploy this type of system is an
online database which can scan
and track all product sales by date
of purchase and correlate this
information with the stores return
policy as well an OEMs warranty
policy. The amount of investment
in computer hardware, software and
programming required to develop
such a system would discourage
a single OEM or Retailer from
building it on their own. It is likely
that an OEM or Retailer would
want to optimize the solution to fit
their own reporting requirements
and IT infrastructure. Going at
it alone could create a serious
risk in infringing on proprietary
intellectual property rights and in
the sense that the solution would not
be compatible with the Enterprise
Systems of every retailer and OEM
unless a significant and amount of
planning, resources and capital were
www.RLmagazine.com
allocated to the development effort.

It is also questionable as to whether
every participant could agree on
the right solution and if an ROI of
significant justification could be
achieved. The ideal system would
need to be open and transparent,
and in effect function as a utility so
that it can be utilized by multiple
retailers and manufacturers to track
returns and cross-retailer returns
without bearing high development
and ongoing support costs for
individual users.
During the 1990s, product return
rates were at an extremely high
rate in the U.S. and Nintendo of
America, Inc. found that it was
losing millions of dollars due to
fraudulent returns, free rentals,
and poor implementation of
retailer and vendor return policies.
To counter this situation, the
company developed an Electronic
Registration program that provided
a systematic method for recording
POS data then regulating returns
and a complementary, easy to use,
gate-keeping tool at the retail store
level. This technology proved so
successful, that Nintendo patented
the business methodology as
Point of Sale (POS) Electronic
Registration and founded SIRAS.
com, as an independent
subsidiary, to expand the application
and to commercially develop the
process and make it available to all
retailers and OEMs across multiple
product lines. In essence, to create
an industry wide Utility for
managing product returns across
brands at a fraction of the cost of
deploying a system on a standalone
basis.
the industry, measured in both

quantitative and qualitative terms.
The SIRAS POS Electronic
Registration methodology provides
a complete audit trail for managing
all aspects of a retail products
return lifecycle. SIRAS does not
collect or store any customer
information whatsoever: Because
the program captures information
about only the product, the returns
process can be factually based
and totally automated through
POS. This solution offers retailers
and manufacturers an extremely
valuable benefit, the ability
to verify a products purchase
history and warranty eligibility
by serial number. Retailers
can track a products purchase
history to confirm with absolute
certainty that product and warranty
returns conform to the retailer
and manufacturer policies. This
application has enabled retailers
and manufacturers to place greater

controls over the return process
resulting in a significant reduction
in the volume of returns, protecting
their assets, and saving millions of
dollars per year. RLM
Michael R. Blumberg is
a Certified Management
Consultant (CMC)
and President & CEO
of Blumberg Advisory
Group,, Inc. His firm
focuses on providing
strategic and tactical
assistance to client organizations for
improving the overall profitability and
quality of aftermarket service operations.
Mr. Blumberg has established himself
as an expert and industry authority on
Reverse Logistics and Closed Loop
Supply Chain Management.
1Research conducted by Blumberg
Advisory Group, Inc.
2Surveys of retailer return experiences
conducted by Blumberg Advisory Group,
Inc.
By commercializing the technology

vis--vis an independent subsidiary,
Nintendo obtained a return on
their investment in the Electronic
Registration methodology while
providing a significant benefit to
www.RLmagazine.com
15
12/24/07 8:10:12 AM
How to Avoid the Risks of Donating Used

Computers
(and Still Enjoy the Rewards)

by Jeff Zeigler
hat are you going to do with

your old computers when you
dont need them anymore? If youre
like a lot of people, one idea that might
occur to you is donating them to a
worthy cause. In fact, Computerworld
recently reported (March 26, 2007)
on a 2006 Gartner study indicating
that 19% of companies that had a
policy for disposing of unwanted
PCs donated them to schools or
nonprofit organizations. Thats more
than the percentage that put them in
storage, traded them in or sold them to
employees.
Good intention; bad policy,
according to the Computerworld
article. The problem is that there are
serious risks associated with donating
used computer systems directly to
charities that they wont be used
as you intended, for example, or that
sensitive information remaining on
them could be compromised. On the
other hand, there are also rewards,
ranging from the satisfaction of
helping a worthy cause to the tax
savings associated with making a
charitable contribution.
The question is, how can you enjoy
the rewards without subjecting your
company to risk? This article will
examine:
the reasons people donate
computers
the risks of donating directly
to a charity or a school
the option to use electronics

recycling to reduce risk
Theres nothing wrong with wanting to
donate used computers. The important
thing is to do it right.
The Drivers for Donating
Unwanted Computers
What makes donation one of the
top methods companies choose for
disposing of old computer assets?
There are three main reasons.
Enable a deserving organization to
re-use them
It can be extremely satisfying to do
your part to close the digital divide
by giving your old computers to
schools or charities. And the idea
that the computers could actually
be doing some good somewhere
instead of gathering dust in a closet
or possibly even releasing toxins in a
landfill makes it even more satisfying.
Ironically, though, those undesirable
fates may be exactly what await the
systems you donate. Read on to find
out more.
Enjoy a tax break for donating them
Of course, its great to
get a tax break.
And that used
to be a simple
matter of telling your accountant

how many PCs you gave away and
to whom. Since 2006, though, the
IRS has set forth strict rules about the
condition and value of the computers
you donate, as youll learn in the next
section of this article.
Free up the space where youre
storing them
Theres no argument about that
storing computers is a waste of space
that you could be using for something
more productive. The issue is whether
donating them is the best way to
accomplish that goal.
The Risks of Donating Directly
How can you go wrong giving away
your unwanted computers? Let us
count the ways.
Even worse, if the organization

cant use them, its likely to dispose
of them in a manner in which you
have no control. And that can
cause major headaches, if they
still have data on them that could
be compromised or if they end up
going to a landfill. Lets take a look
at what could happen then.
2. The data on the computers will
be compromised.
Of course, you would never hand
over used systems to anyone
without taking steps to remove any
proprietary or otherwise sensitive
information on the hard drives. But
even if you have been careful to
use disk wiping software to remove
the data, theres always a chance
that it may be recoverable not
necessarily by the organization to
which you donated the computers,
but by whomever ends up with
them if the organization doesnt
need them. Consider these facts:
Donation
19%
Disposal
company
Storage
17%
32%
15%
Return
to Vendor
9% 8%
Employee
Sale or Gift
Other
*Based on information in Tech Trash: Still Stinking up

the Landscape, Computerworld, 03/26/2007
Think about what could be found

on your old computer drives: Client
information? Company financial

records? Employee social security
numbers? If you dont want to risk
this kind of data ending up in the
1. The systems wont be re-used

after all.
If your main goal in donating
systems is to provide an
organization in need with
technology it can use, keep in mind
that theres a good chance it wont
be able to do so. The systems may
not be right for that particular
group, because of the way theyre
configured or because theyre in
less-than-good condition. So you
may not even be able to meet your
main objective for donating the
systems in the first place.
www.RLmagazine.com
Issue9.indd 16-17
Testing by a German
technology firm of
hard drives bought
on eBay revealed
that seven of every
ten tested still bore
readable information
(CNET News.com,
04/24/2005).
An investigation
into computer
equipment
disposal in the UK
discovered that only
two of more than
100 hard drives
from computers
bought online, at
computer fairs,
or from traders
contained no
recoverable data.
(The Register,
02/17/2005).
17
12/24/07 8:10:13 AM
Methodology
Effectiveness
Reuse Value Preserved
User-conducted disk wipe
50%
100%
Professional disk wipe with

manual verification
99+%
100%
wrong hands, think twice about

donating your computers.
3. The computers will end up in a
landfill.
If your business is like many
today, being green is becoming an
increasingly important priority.
The options you might consider for
disposing of old computers would
certainly not include sending them
off to the dump or shipping them
out to a third-world country with
lax environmental standards. But
thats exactly where they could
wind up. Here are just a couple of
examples.
A computer discarded by the city
of San Antonio in 2005 ended up
in a garbage dump in Nigeria. At
the time, the city typically sold
its old computers on an Internet
auction site (San Antonio
Express-News, 02/12/07).
Photographs taken by the Basel
Action Network in Lagos show
scrapped electronics lying in
wetlands, along roadsides, being
examined by curious children
and burning in uncontained
landfills (Where Computers Go
to Die and Kill, salon.com,
04/10/06).
Its irresponsible to ship equipment
with potentially toxic content
overseas, and its just plain illegal
to dump it in a landfill which
leads us to the next risk of donating
computers.
4. Your company could be liable for
inappropriate disposal.
If the EPA finds old computers
illegally dumped in a landfill,
Issue9.indd 18-19
and the asset tags still have your

companys name on them, who
do you think is going to be held
responsible? If old computers
associated with your company
end up polluting a river in China,
whose name gets dragged through
the mud in the media?
The environmental consequences
may be hair-raising, but thats not
even half the story. If sensitive
customer information on your
computers ends up being reused
after the systems are sold on eBay,
you could be sued for any damage
that results. Not only that, there
are dozens of local, federal, and
international laws today that govern
the privacy of electronic data. If
you are found in violation of one of
these laws because your companys
name is on computers that have
sensitive data on them, you could
end up paying a hefty fine.
Thats the problem with donating
computers directly to an
organization. When you dont
have a bill of sale or other official
transfer of ownership, those
systems still technically belong to
you. So even though you have no
control over what happens to them,
you may still be held accountable.
5. That tax deduction may not
come as easily as it used to.
In 2006, the Internal Revenue
Service issued new rules relating to
charitable contributions. According
to a story in the El Paso Times
(April 30, 2007), for noncash
donations, the following rules
apply.
Noncash contributions, including

computers, need to be in good
condition for you to claim a tax
deduction.
For noncash contributions
totaling $500 or more, you must
include a detailed list with your
tax return that states exactly what
you gave and to which charity.
If a single item such a computer
is worth $500 or more, you will
have to get an appraisal and
include a summary of it with
your return.
By the time you put together all the
documentation and get the systems
appraised, your tax deduction is
likely going to be worth less to you
than it might have been in the past.
A Better Way to Donate
If you want to see your old computers
go to a good cause, theres a better
way than just handing them over
to a charitable organization. This
alternative entails working with a
reputable electronics recycler to
participate in a formal program for
donating to charity. TechTurn, for
example, works with Operation
Homelink to provide used computers
to the families of U.S. service men and
women so they can stay in touch by
email with soldiers who are overseas.
Or, as an alternative, you can sell your
used systems to an electronics recycler
outright and then donate the money to
the charity of your choice to use as it
sees fit.
But how does adding a third party
to the mix affect your risk of data
security breaches, environmental
violations, and potential legal liability
www.RLmagazine.com
www.RLmagazine.com
19
12/24/07 8:10:16 AM
When you use a reputable

electronics recycler to dispose of
your assets, you transfer ownership
of the assets to that company, so
that there is no risk that you will
continue to be liable for them.
or regulatory noncompliance? The
answer lies in choosing a recycler with
proven best practices for handling used
equipment. Choose one who provides
the following services to reduce your
risk.
Stringent Data Erasure
Procedures
We referred earlier to the risk of
using disk wiping software to erase
data from your hard drive. Because
that approach may not always be
successful, reputable electronics asset
recovery companies will have the
capabilities to go far beyond simple
disk wiping to ensure

that sensitive data is
erased. Ensure that the
electronics recycler
you choose employs
multiple sophisticated
data wiping programs
and then follows up with
a variety of diagnostic
tools to visually inspect
every hard drive that has
been processed. Finally, the company
should manually verify that all data
has been successfully eradicated.
Formal Transfer of Ownership
When you use a reputable electronics
recycler to dispose of your assets,
you transfer ownership of the assets
to that company, so that there is no
risk that you will continue to be liable
for them. In addition, the company
should provide a detailed accounting
of the disposition of your assets and
documented indemnification of your
company.
Stated Asset Disposition

Policy
The recycler should also have a formal
policy for disposition of used assets
that addresses the following issues.
If the systems will be donated to
charity, the recycler should be
able to demonstrate relationships
with organizations whose mission
is charitable donations such
as Operation Homelink or the
National Cristina Foundation,
which matches used computer
assets with those in need.
If the systems will be resold rather
than donated to charity, the recycler
should have a formal resale
program with established standards
for the refurbishment and sale of
reconditioned systems.
If the systems cant be resold
for some reason because they
cannot be restored to sound
operating condition, for example
the company should have the
resources to destroy them in an
PH: 425.738.4091 x101

FX: 425.251.0787
environmentally sound fashion.

Methods for doing this may include
degaussing, which eradicates the
data on hard drives by exposure
to strong magnetic fields (and
renders the drives unusable), and
shredding, whereby the hard drive
is physically smashed into pieces.
Achieving the Risk/Reward
Balance
Donating used computer equipment is
not as simple as it sounds; there are a
number of risks associated with this
practice. But it also comes with the
rewards of knowing your old systems
are being put to good use. The key to
reducing the risks and realizing the
rewards is to work with a reputable
electronics recycler. Such a company
can help you turn equipment into
cash for charitable donations or to
contribute systems through a safe,
formal program designed especially
for that purpose. RLM
CompuVest
Corp. is a global
platform connecting
OEMs with resellers around
the world.
We specialize in sales of
refurbished, excess and obsolete
inventory.
With a unique customer base combining
end-users, small & medium resellers, and
large exposure on Google, we are the most
effective vehicle to move your inventory.
Our specialties are: Laptops, Networking,
CPUs, hard drives and VGA cards.
We have extensive operations throughout
Europe, S. Korea and Russia.
ViVU>>JViV
Jeff Zeigler founded

TechTurn in 1999,
and was selected as
Entrepreneur of the
Year by Ernst & Young
in 2007. Prior to
founding TechTurn,
he worked in the
computer services industry for eight
years where he developed programs
domestically and internationally for
manufacturers and service providers
in the IT industry, focusing on returns
management and asset recovery
programs.
TechTurn is the trusted industry leader
for technology recovery, refurbishing
and remarketing. Through world-class
facilities and processes, TechTurn
helps to build the foundation for
sustainable technology, providing
enterprises with an economically
smart, environmentally friendly and
risk-free method for the transportation,
refurbishment and reselling of used
technologyso it can continue to
benefit others. For its Sustainability
effort, the company was recognized
as one of the Going Green Top 100
companies in 2007.
Issue9.indd 20-21
www.RLmagazine.com
www.RLmagazine.com
21
12/24/07 8:10:19 AM
by William K. Pollock
of running
Ihavenourtheallowncourse
businesses, we
recognized the
importance of dividing
our time effectively
between managing the
day-to-day operations,
and planning for the
future (although the
reality of running the
business often forces us
to divide our time less
than optimally on many
of the planning aspects).
Whatever business
segments we serve, we
typically find ourselves
relying more heavily
over time on various
tools and disciplines
such as Total Quality
Management (TQM),
Continuous Quality
Improvement (CQI),
Customer Relationship
Management (CRM),
etc., or just plain old
common business sense,
to barely make it from
quarter-to-quarter, or
year-to-year.
However, regardless of
which tools we use, or
names we give them,
everything comes
down to the same basic
principal: we need to be
able to offer the right
products and services to
our customers; deliver
them in a timely fashion,
and at a competitive
price; and be able to
handle customer support
and returns quickly and
efficiently in order to
maintain the desired
levels of customer
satisfaction (and margins)
that will support the
future growth of the
Issue9.indd 22-23
business. This is what reverse

logistics is all about.
Each of the components that
comprise the overall process
is equally important, and each
requires our full attention on an
ongoing basis. This means that we
must continually focus on meeting
(and exceeding) our customers
needs; managing our business
processes and logistics operations;
providing our personnel with
the most appropriate tools to
support the customer; and last,
but not least, fostering the ability
to effectively manage growth to
ensure that we are always able to
attain the desired business results
(Figure 1).
In assisting our clients over the
years, we have identified the
following 10 critical success
factors that must be addressed to
ensure successful reverse logistics
operations (Figure 2):
1. Up-to-Date Support
Offerings
It sounds obvious, but keeping
your reverse logistics offerings
up-to-date in todays everevolving service economy
is a challenge. The changing
market requirements and
expectations, intensifying
competition, and continual
advances in new technology
are all drivers that lead toward
both the need, and the ability,
to embed commensurate
change in all of our products,
services and solution offerings
in order to remain responsive
to our customers total needs.
Regardless of which industry
segments we serve, product
life cycles have declined
dramatically over the last
couple of decades. The
www.RLmagazine.com
implication of this trend is

that we will need to maintain
a continuous effort to improve
and upgrade our support
products over time to ensure
that we consistently meet
our customers expectations.
However, in order to do this
effectively, we will also need
to be able to anticipate what
our customers expectations
will be at the end of the
product life cycleand this
may be difficult, as the general
rule of thumb is the longer
the cycle, the more difficult
it will be to anticipate your
customers expectations.
2. Value-Added Services
Most products, especially
the higher-priced or more
complicated ones, neither sell
nor operate by themselves, and
require supplemental levels of
service and support in order
for customers to benefit from
their full use and application.
This may include anything
from routine maintenance and
customer technical support; to
customization and application
training; to real-time inventory
management and state-ofthe-art channel support. This
trend in the high-tech services
industry is decades old, and
yet, many organizations have
not yet made a complete
transition to the new way of
providing cradle-to-grave
customer support. Thus, an
organizations value-added
services need to be focused
on the total needs of its
customers, and not merely
initial installation and ongoing
technical support. This requires
a full focus on all of the preand post-sales-related activities
23
12/24/07 8:10:32 AM
Ensure that Your Reverse Logistics Products,

Services, Solutions and People Focus Squarely
on the Customer
that contribute to overall

customer satisfaction.
3. Integrated Solutions
In most cases, it may be
assumed that customers
are not so much interested
in the technical nature of
the products or services
they use, but rather in the
breadth of the solutions
they use to support their
day-to-day business
operations. As a result,
ongoing customer support
throughout the entire life
cycle of the products they
use has become a common
requirement nowadays,
typically involving a variety of
post-sales service and support
offerings including remote
diagnostics and self-service
via the Internet; consulting,
training and engineering
services; and a full array of
customer support offerings.
For these reasons, providers
have to make sure that their
customers total requirements
are always considered in the
final specifications of the
products and services they sell,
and are fully integrated into
the systems they use to support
their customers.
4. Effective Business Processes
In order to be able to
effectively deliver the
products, services and
solutions that our customers
need, we also need to ensure
that the business processes we
utilize are appropriate, up-todate, and that they get the job
done. If they are not, then we
may need to upgrade and/or reengineer them where necessary
to meet our customers
growing expectations without
creating an overly-costly
Issue9.indd 24-25
Business
Objectives
Strategy
Products
Solutions
Customer
Services
Processes
Technology
People
Organization
2008 Strategies For Growth SM
solution that effectively

eats into our targeted profit
margins. As our service and
support offerings continue
to be enhanced in order to
provide customers with more
comprehensive solutions, the
processes required to support
them will also need to change,
and that may require more
sophisticated skills and tools.
5. Empowerment and
Accountability
As internal solutions and
processes become more
complex, it also becomes
more likely that multiple
personnel will get involved at
different stages along the way.
Although technology can help
manage this to some extent,
there is still a big risk that
something may go wrong, or
may fall between the cracks.
To avoid these possibilities
requires a different approach
and, more importantly, a
different attitude. The presence
of a not my job attitude
among existing personnel
would be devastating in this
kind of environment. The

best way to ensure success
is to actively promote
teamwork, empowerment
and accountability. Many
businesses have already
successfully implemented
empowered team efforts,
with fully articulated
accountability dedicated to
taking care of the customer
vs. merely taking care of the
problem.
6. Customer-Focused FrontLine Organization
Since the customer should
always be the main focus
of the business, we all need
to make certain that the
organization is structured
appropriately to provide this
focus. The most important
interfaces with the customer
are typically made by the
sales and services components
of the organization, as these
personnel are in direct contact
with the customer virtually
all the time, either in person,
by phone, or via the Internet.
The way they interact with
customers will ultimately
determine the customers
perceptions of the organization
as a whole. This means that the
skill sets that are required must
not only cover the technical
aspects of customer support,
but also the communications
and interpersonal skills that let
customers know they are being
cared for properly. By creating
(or refining) a companywide
set of customer-focused,
integrated processes, we can
ensure that the organization
will always be focusing
squarely on the needs and
expectations of the customer,
thereby greatly increasing its
chances for success.
www.RLmagazine.com
7. Flexible and Responsive

Back-End Organization
However, in order to allow
front-line personnel to focus
directly and effectively on
customers, the organization
will also require a flexible
and responsive back-end
organization. This part of
the organization needs to
be able to support its frontline personnel through the
development of the tools and
methods that enable the proper
execution of all required
service and customer support
activities. This includes the
formal documentation of the
technologies utilized, and
the instructions and guidance
for applying them; the
development of effective sales
and support tools; and, last but
not least, a documented set of
escalation procedures. As such,
www.RLmagazine.com
the back-end organization

will be responsible for setting
the stage by creating an
infrastructure that allows the
front-line organization to
perform its tasks without any
undo hassle or interference.
8. State-of-the-Art Technology
Technology is one of the key
drivers for change, and can
provide most of the tools
needed to improve business
performance, as well as
lowering the operational costs
of the organization as a whole.
We all know the rallying call
to do more with less; and
in most cases, technology,
if applied correctly, is the
principal tool that allows us
to do so. The real challenge,
however, is to determine
what is realistically available,
and how we can use it to our
greatest advantage. With the

nearly continuous flow of new
technology at our disposal, the
potential is there to improve
all aspects of the business,
as well as our ability to more
effectively, and profitably,
support the multitude of
products, services and
solutions we offer, as well as
the specific business processes
that are required to deliver
them.
9. Applying the Right
Technology
The availability and
proliferation of technology
solutions can be very
confusing, and sometimes
even misleading. The old
saying that you should never
apply technology merely for
technologys sake is still very
true. For this reason, we still
25
12/24/07 8:10:33 AM
full_page.pdf
10. Managing
Continuous
Change
This last rule
might actually
be the most
important
one: how to
manage and
control the
continuous
change (and
growth)
process.
We have
seen many
businesses
develop
and deploy
initiatives
for change
that have
been very
12/1/06
2:41:37 PM
designed and implemented, and

the existing business processes
can be carefully adapted to
meet the new requirements.
Reverse logistics is not an end unto
itself; it is part of a much larger, allencompassing, process dedicated to
taking care of the customer. As such,
how goes reverse logistics, also goes
customer satisfaction is the name of
the game. Therefore, we believe that
while following these 10 rules will
not unconditionally guarantee success,
it will certainly help to increase the
chances. However, as we have seen
time and time again, businesses that
embrace only some of these rules
for success typically only see some
improvements. The maximum effect
can only be achieved if all 10 rules are
embraced, and executed, collectively,
as they will all ultimately build
upon one another, empowering your
organization to support its customers
the way they expect to be supported
throughout the entire product/service
life cycle experience. RLM
E-RECYCLING.
DISPOSITION.
DESTRUCTION.
CM
MY
CY
need to carefully investigate

alternative technologies, as
well as their applications to our
specific business situations.
The best way to do this is to
design our business processes
and infrastructure around
the most realistic technology
solutions, and only focus on
the ones that will directly help
us in achieving our business
objectives. Technology should
be the means by which we may
attain our business goals, but
not the primary objective. As
such, we will need to accept
that not all technology will
provide us with the benefits
we are looking to gainit is
simply a tool to assist us in
meeting our overall business
objectives.
Issue9.indd 26-27
successful; however, even

more have turned into disasters
or are abandoned halfway
through the implementation.
From our experience, it is
critical that senior management
always has a clear vision of
the future of the company.
This requires forward thinking,
supported by market research
and customer surveys that
need to be translated into
a clear vision and strategy.
Once the vision and strategy
are in place, an assessment
can be made to determine
a baseline for change, and
a plan can be developed to
make it all happen. Based
on this comprehensive
internal assessment, a change
management plan can be
William K. Pollock
is president of
Strategies For
GrowthSM (SFGSM),
the Westtown,
Pennsylvania-based
services consulting
firm specializing in
strategic business
planning, services marketing,
CRM consulting, market/survey
research, and customer satisfaction
measurement and tracking programs.
During the past 25-plus years, Bill has
conducted more than 250 strategic
planning, customer survey and market
research studies for clients all over
the world. He is a frequent speaker at
trade conferences, and has published
more than 120 articles covering a
wide range of services-related topics.
He may be reached at 610-399-9717
or via e-mail at [email protected].
SFGSMs website is accessible at
www.s4growth.com.
CMY
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Partnerships In Managing Electronic Waste Streams
For More Information, please call:
310-282-0330
www.RLmagazine.com
www.RLmagazine.com
Corporate Office:
Recycling Headquarters:
On the web:
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6025 SCOTT WAY
WWW.BMIONLINE.US
CENTURY CITY, CALIFORNIA 90067 U.S.A
COMMERCE, CALIFORNIA 90040 U.S.A.
310-282-0330
323-722-5587
27
12/24/07 8:10:36 AM
Extended
Producer
Responsibility by
Cradle2Cradle?
by dr ir H.R. Krikke
he environment is keeping us busy.

Since Al Gores Inconvenient
Truth it is impossible not to know
about the greenhouse effect and its
main cause: carbon dioxide. Although
sustainability involves many more
aspects (such as hazardous materials,
resource depletion, etc.), it certainly
has made a tremendous impact.
Most companies however, are still

concerned with their bottom line.
Businesses are expanding into
international markets, requiring the
ability to manage manufacturing
and distribution on a global basis.
(Out-) sourcing strategies have led
to complex supply chain networks,
with different locations for different
activities.
Globalization increases energy use
and hence CO2 emissions, and causes
many other inefficiencies as well. The
manufacturing boom in China, for
example, creates a volume imbalance
in the global transport system. From
European mainports, 41 percent of
the containers return empty to Asia.
Not only are the volumes of returned
empty containers a problem, also the
number of products and packaging
returned, continue to grow. Reverse
Logistics is becoming a strategic issue
because returns costs are staggering,
materials and energy become scarcer
and customers demand green policies.
Now the environment is everybodys
problem. So, politics joins in.
Legislators increasingly hold Original
Equipment Manufacturers (OEMs)
responsible for greening their products
and supply chains. This is often
referred to as Extended Producer
Issue9.indd 28-29
Responsibility or EPR for short. Its

implementation is found worldwide,
but mostly within the European Union.
One of the most important industries is
Electronics, both for professional and
consumer markets.
The European Union was the first to
tackle the fast increasing Waste stream
of Electrical and Electronic Equipment
(WEEE) in order to prevent growing
quantities of equipment from being
incinerated or land-filled and to
reduce environmental pollution as a
result of the uncontrolled release of
toxic materials. Also Norway and
Switzerland and some Asian countries,
like South Korea, Japan, and Taiwan
are adopting similar though not as far
reaching legislation.
Other areas of the world, for instance
China, are also opting for EPR as a
policy tool.MAI_ReverseLogisticsAd
In the USA, on a voluntary
basis and under the influence of
Keep Cool
various mandatory state regulations,

e-waste is subject to national recovery
and recycling targets.
Directives that apply to EEE-industry
include the WEEE-Directive, the
RoHS directive, packaging directive,
REACH, and the battery act. This
generates volumes of returns flows,
possibly destined for Far-East
production. To regulate exports of
(hazardous) European waste we find
more directives, in particular (EVOA,
1994/2007). More recently, the EU has
discovered the carbon footprint and
develops policies driven by energy
concerns.
Many comments have been put
forward on their environmental
effectiveness as well as economic
impact. Rebound effects include
increased energy use through
mandatory recycling, illegal exports
to developing
12/6/07
9:39 countries,
AM Page conflicting
1
objectives of directives, no level
Be Profitable
Live
Be Consumer
Friendly
In conclusion, if
well managed,
economy and
environment go
hand-in-hand. As
one knows the
perpetuum mobile
does not exist, and
we dont believe a
closed loop supply
chain can be fully
autarkic and that
would be C2C
nest pas? But
energy and material
savings up to 25%
can be achieved.
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satisfaction
tel: 847-719-5688
Look Cool
It is common
knowledge
that there is a
Think About
huge market for
the Environment
recyclables in the
Far-East. This flow
can contribute to solving
Remain Cheap
the container imbalance
because (part of) the logistics
routes concur. The efficiency
can be improved, resulting in
playing field for business and little
fewer (empty) container miles and
effective conservation of natural
henceforth lower emissions to the
resources. Moreover, perceived high
environment and lower energy use.
cost create reluctance with industry.
The application of recovery (i.e. reuse
and recycling) can in many cases
In response, industry is adopting
improve the energy profile through the
Cradle-to-cradle or C2C approaches,
so-called substitution effect. Capacity
aiming for optimal customer
constraints in global main-ports can be
service, low cost and environmental
relaxed, lowering prices. Staggering
friendliness (read carbon footprint)
energy prices
also emphasize
economic aspects.
Call Center & Fulfillment Services
Call Center Services
simultaneously. Now if
waste =food then it might
as well be
raw material.
In fact this
is what
Long
Baumgart
and
McDonough
are claiming.
In the ECO project

of Transumo, we
have done a number of
e-mail: [email protected]
www.mktalt.com
Continues on Page 33
www.RLmagazine.com
www.RLmagazine.com
12/24/07 8:10:37 AM
REVERSE LOGISTICS ASSOCIATION CONFERENCE & EXPO
Expo Floorplan
Issue9.indd 30-31
E12
Las Vegas 2008

Planet Hollywood
Grand Ballrooms
CONFERENCE ROOM
TRACK C
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WOMEN
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MAIN ENTRANCE
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FHC
CASINO/LOBBY
OVERLOOK
DIAMOND
MEETING ROOM
1
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MEETING ROOM
2
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MEETING ROOM
3
REGISTRATION
RLA
WORKSHOP
ROOM 1
CONFERENCE
ROOM
TRACK E
TELEPHONES
MEN
TOPAZ
MTG.
RM. 3
SAPPHIRE
BALLROOM
MEN
WOMEN
TOPAZ
MTG.
RM. 1
WOMEN
PRE-CONFERENCE WORKSHOPS
TOPAZ
MEETING
ROOM 4
MEN
TOPAZ
BOARD RM.
B
Bernies position encompasses

the global operations associated
with procurement, new product
introduction, manufacturing,
customer fulfillment and repair. He
is responsible for repair and reverse
logistics operations across all
Motorola businesses worldwide.
CONFERENCE
ROOM
TRACK D
Bernie Shaeffer,
Corporate Vice
President, Global
Repair & Reverse Logistics
Integrated Supply Chain, Motorola,
Inc. will deliver the Wednesday
Keynote Address.
TOPAZ
BOARD
ROOM A
Wednesday Keynote
Address - Reverse
Logistics as an Asset
TOPAZ
MEETING
ROOM 2
The Wednesday keynote will be preArrive early to have some fun before
sented by Bernie Schaeffer, Corporate
the conference starts on Monday. Super
Vice President, Global Repair & Reverse
Bowl Sunday in Las
Logistics IntegratVegas no other city
ed Supply Chain,
RLA has done an amazing job
generates as much
Motorola, Inc.
in creating a focal point for the
excitement surroundMore sessions and
Reverse Logistics Industry that
ing this all-American
panels will follow.
simply didnt exist before. The
spectacle. Entertain
trade show has given us entree
your clients with the
A wide range of
to companies that we would
parties and celebraleading global
tions at the Planet
Reverse Logistics
probably never have reached,
Hollywood Resort &
companies will be
and the VIP program has been
Casino.
in attendance ina tremendous tool for building
cluding: Best Buy,
relationships with prospects
The RLA conference
Canadian Tire,
and clients.
kicks off on Monday
Western Digital,
Shawn Stockman, Business
with a number of
Cisco, Wal-Mart
Development, OnePack
activities including
and Dell.
RL Workshops, RL
Industry Focus Committee meetings
Be sure to visit the Exhibition Hall
and the opening of the Exhibit Hall. For
where ODMs and OEMs will be lookthose who like one-on-one time with
ing for 3PSPs that can manage Reverse
their clients, join us at the RLA Golf
Logistics in the Americas, along with
Tournament.
identifying solutions for Europe and the
Far East. There will be many exhibitors
Tuesday will start with an industry
showcasing their Reverse Logistics seroverview and forecast presented by RLA vices and solutions. This is a rich opporPresident, Gailen Vick. The keynote
tunity for OEMs and Branded companies
address, this year will be presented by
to identify future service partners. For
Joe Warren, VP & General Manager,
more information and complete details,
Customer Support Operations of Canon
visit www.RLTShows.com.
Joe has more than 40 years

of combined experience in
manufacturing, logistics, and
customer service. Joe is currently
responsible for Canons nationwide
customer service and support
network as well as the reverse
logistics system and recovery
processes associated with Canons
consumer product returns.
FHC
USA. Afternoon sessions and panel discussions by RL professionals and leading

academics will focus on cutting edge
reverse logistics practices. Check the
schedule available at www.rltshows.com
for session topics. The day concludes
with roundtable discussions with each of
the speakers.
FOOD & REFRESHMENTS
The 5th Annual RLA Las Vegas Conference and Expo will be held on February 4-6, 2008 at the Planet Hollywood
Resort & Casino. Reverse Logistics
Association is offering three full days
of Reverse Logistics immersion starting with RLA Workshops and Industry
Focus Committee meetings followed by
two days of sessions and exhibition.
Joseph Warren,VP
and General Manager,
Customer Support Operations,
Canon USA, Inc. will deliver the
Tuesday Keynote Address.
FHC
Over 100 Exhibitors -- More than 1,500 RL Professionals Attending
S9
Planet Hollywood Resort & Casino

February 4-6, 2008
R12
V9 W9
T9
U9
CONFERENCE ROOM
TRACK B
Americas Premiere Reverse Logistics Event
CONFERENCE ROOM
TRACK A
5th Annual RLA Conference & Expo Las Vegas
Tuesday Keynote
Address - Centralization
of Reverse Logistics
Services
FHC
S10 T10 U10 V10 W10
FHC
www.RLmagazine.com
www.RLmagazine.com
31
12/24/07 8:10:43 AM

Continued from page 29
SUNDAY - FEBRUARY 3, 2008

3:00PM-7:00PM
MONDAY - FEBRUARY 4, 2008

8:00AM-1:00PM
RLA ANNUAL GOLF TOURNAMENT (Sponsorships Available)
8:00AM-5:00PM
Workshops
1:00PM
EXHIBIT HALL OPENS
1:00PM2:00PM
RLA Focus Committees - Open Discussions

Track A
Track B
Track C
Wireless Communications Focus

Committee Discussion
Data Storage Focus Committee Discussion
Information Technology Solutions Focus Committee

Discussion
2:00PM-3:00PM
Retail Consumer Products Committee Discussion

Spare Parts Management Committee
Discussion
Standards Focus Committee Discussion

Medical/Pharmaceutical Industry Committee
Discussionv
6:00-9:00PM
EXHIBITOR, SPONSOR & SPEAKER RECEPTION - EXHIBIT HALL (Sponsorship Available)

TUESDAY - FEBRUARY 5, 2008
8:30AM
CONTINENTAL BREAKFAST - EXHIBIT HALL (Sponsorship Available)
9:30AM
Welcome Address: Industry Overview, Size and Forecast, Gailen Vick - President & CEO, Reverse Logistics Association.
Forward AND Reverse Logistics: The Importance of End-to-End Integration, Micky Long, Research Director, Aberdeen Group.
10:30AM
Industry Keynote Address: Centralization of Reverse Logistics Services. Joe Warren,VP & General Manager, Customer Support Operations, Canon USA
11:30AM-12:30PM
BUFFET LUNCH - EXHIBIT HALL (Sponsorship Available)

Track A
Track B
Track C
Track D
12:30PM
Panel Discussion: Diamonds in

the Rough: Maximizing Secondary
Market Revenue Opportunities
Pretty Good Practices in Retail

Reverse Logistics
Technology Providers and 3PSP

Outsourcing
Environmental Supply Chain Planning:

Taking the Environment Seriously
1:30PM
Measuring and Driving the Return

of Service Parts - Best Practices
and Methodologies
Completing the Shippng Circle
Wireless Future Trends
Repeat-Use Packaging For Supply Chain

Management and How It Can Reduce
Packaging Costs and Landfill Waste
2:30-3:00PM
AFTERNOON BREAK - EXHIBIT HALL (Sponsorship Available)
3:00PM
Panel Discussion: Online Auctions - Changing The Way We Do

Business
Reverse Logistics: Extended Enterprise Perspectives
Environmental Compliance Scene
Maximizing Reverse Logisitics and

Asset Recovery
4:00PM
Panel Discussion: Reverse Logistics

Issues in the Storage Industry
Supply Chain Sustainability - Integration of Forward and Reverse

Value Chains
Wireless Carriers, OEMs &

3PSPs - Working Together for
Customer Support
Returns Management Maturity Model
5:00-8:00PM
EVENING RECEPTION (Sponsorship Available)
WEDNESDAY - FEBRUARY 6, 2008

8:00AM
CONTINENTAL BREAKFAST - EXHIBIT HALL (Sponsorship Available)
9:00AM
Industry Keynote Address: Reverse Logistics as an Asset Bernie Schaeffer, Corporate Vice President, Global Repair & Reverse Logistics Integrated Supply Chain,Motorola, Inc.
10:00-10:30AM
INTERMISSION - EXHIBIT HALL
10:30AM
Panel Discussion: Retail Reverse

Logistics Issues
The Challenges of IT Asset

Lifecycle Management in Global
Companies
Cellular Telephone Reverse

Logistics and Repair Market Market Size, Competition and
Forecast
Loss Prevention Strategies and

Analysis
11:30AM
Panel Discussion: Reverse Logistics

Issues in the Food & Beverage
Industry
Managing Complexity Under Duress: A Proactive Global Approach

to Product Recall and Replacement
Improving End-to-End Reverse

Logistics Operations
How to Build a Business Case for

Returns and Reverse Logistics
12:30-1:30PM
BUFFET LUNCH - EXHIBIT HALL (Sponsorship Available)
1:30PM
Using Reverse Logistics to Enhance

Customer Service and Competitive
Performance
Cradle to Cradle; Product Re-birth,

The True Goal of Recycling
Transportation Management in
the Reverse Logistics Model
Cost-effective On-Demand Solution for

Merchants: Return Labels to Consumers
Through the US Postal Service
2:30PM
Panel Discussion: Retail Consumer

Products - Early Defect Detection
Managing Global Asset Recovery

Partnerships in an Ever Increasingly
Regulated Landscape
Panel Discussion: RL Shared

Costs Between Carriers and
Manufacturers
Returns and Asset Protection Strategies: New Applications for Retailers

and Suppliers
3:30PM
Closing Remarks: Gailen Vick, President & CEO, Reverse Logistics Association
4:00PM
LUCKY DRAWING for iPods, DVD RW, Portable DVD Players, External Hard Drives, Digital Cameras (must be present during the drawing to win)
Issue9.indd 32-33
As a follow up to ECO, we are

in the process of setting up the
REBOUND project. Starting
point is that Extended Producer
Responsibility in itself is a good
concept but its implementation
needs to be based on C2C
principles.
cases with multinational companies

in amongst others automotive, copier,
electronics and aviation. Below we
discuss the case of an industrial
fridge, which was published in 2003.
RLA FOOTBALL PARTY
Industrial refrigerators are used

in slaughter houses, warehouses,
hospitals and laboratories. The firm
already had done a study in product
design for life cycle, in corporation
with Tokyo Metro University. Product
modularity was optimized for three
alternative product designs: Two
of them are specifically designed
for maintenance and recovery,
PMPP is an intermediate design.
The Bills of Material consist of
modules, components and materials
(in decreasing order of hierarchy).
The designs are equal in terms of
quality and functionality and utilize
the same 25 components (see Figure
1) and the same materials. However,
because the products have different
modular structures, they have
different costs and environmental
impact functions (measured by
energy and mass balances), and have
different feasibility for recovery and
disposal options at various degrees
of disassembly. Figure 2 represents
the closed loop supply chain. One
can see that it actually implements
the C2C concept since reuse on the
original supply chain is enabled
by product reuse, component and
module remanufacturing and material
recycling. If this is not wanted for
www.RLmagazine.com
The project focuses on the

optimal closed loop supply
chain, with three focal points.
(i) optimal use of empty return
legs to improve efficiency of
international (secondary) goods
transportation, (ii) the application
of reuse and recycling to save
material and energy resources and
(iii) determining an optimal global
supply chain design, including (out)
sourcing and location decisions. All
contribute to improving the carbon
footprint, but have other spin-offs
such as lower cost, good customer
responsiveness, better/cleaner job
opportunities, increased material
reuse and reduction of illegal waste
transports.
20
3 alternative product designs

same 25 components
same quality to final consumer
to sponsor Dr. Krikke

as the the new
professor in Reverse
Logistics at the
Open Universiteit
Nederland.
some reason there is still the option of

energy recovery.
We optimized closed loop supply
chain network for each product design
within the EU. It should be noted that
neither customers nor suppliers were
present outside the EU in this case.
Figure 3
Maintenance
13
Association is proud
Project REBOUND is actively

seeking OEMs from the EEE
industry to participate in this
project. Companies interested
in the REBOUND project may
contact Harold Krikke at
[email protected].
Product data
Reuse
Reverse Logistics
PMPP
10
different modular structures

different economic and environmental functions
Continues on Page 34
www.RLmagazine.com
33
12/24/07 8:10:47 AM
Continued from page 33

Clearly, the EPR applies to this case
by means of the WEEE directive,
RohS was not an issue at the time.
Supply chain decisions involve
number, capacities and locations
for supply chain process facilities
combined with allocation of goods
flows in the system. Goods flows
represent intermediate flows between
facilities, inbound supply flows,
outbound market deliveries, inbound
return flows and outbound disposal/
thermal disposal flows. Inbound and
outbound flows relate to supply points
(i.e., suppliers of raw materials),
market locations and disposal/thermal
disposal locations. The supply chain
network structure has most impact
on costs, whereas the product design
has most impact on energy and waste.
We applied a Mixed Integer Linear
Programming model to support

solving this optimization model.
A centralized supply chain network
by far outperforms a decentralized
supply chain network in terms
of costs. Product design, using
modularity as the main instrument,
can reduce opposing behavior of
costs, energy use and waste functions.
Overall, it appears that intermediate
design PMPP is best as it is most
flexible. Figure 3 compares results
on cost, energy use and waste for
all three supply chains, specifically
designed for the three product designs
and compared with a traditional
design (where all is disposed). A
suggested management strategy
would be a centralized chain network
in Eastern Europe combined with the
PMPP product design. Figure 3
shows that the application of reuse

and recycling not only improves
material balance but also energy and
hence carbon footprints.
Next to optimizing the supply chain
design, the impact of recovery targets
based on EPR-based EU-legislation
was put to the test. They proved to
be ambivalent. On the one hand it
reduced waste but on the other hand
it increases energy use and costs.
In other studies, amongst which
for Auto Recycling Nederland, a
national Dutch automotive recycler,
we showed that in achieving ecoeffectiveness, optimal recycling is
not equal to maximal. In other words,
in some cases energy recovery is
to be preferred. We also showed in
several studies that universal quota
(e.g. 70% recycling for brown goods)
work out completely differently in
various product categories
or even branches and
in different geographic
areas. The method used
in optimizing closed loop
supply chains should be
standardized rather than the
desired outcomes. In global
networks, this argument
applies even stronger. RLM
Harold
Krikke is the
head of the
operations
research
team of
CentER
Applied
Research of Tilburg
University. He and his
team develop advanced
planning tools for supply
chain optimisation and
reverse logistics. Clients of
CentER Applied Research
include large industrial
corporations, training
institutes and government
bodies. Dr. Krikke may be
reached at [email protected]
Issue9.indd 34-35
www.RLmagazine.com
Mutually
beneficial?
Replacement parts
supply: opportunities
for vehicle
manufacturers and
customers
In Part One of this article (RL
Magazine November/December
2007), we explained that European
manufacturers of railway vehicles
cannot count on their new
vehicle business to sustain long
term growth in the future.We
showed that establishing Vendor
Managed Inventory agreements
with their customers in the field
of spare-parts sourcing may be
a feasible strategy to ensure that
manufacturers receive a substantial
share of the spare-parts business.
In this second of a 2-part series
we will outline the ways in which
vehicle operators can benefit from
such a scheme.
by Karsten Platz
VMI cooperation reduces the

vehicle operators capital tie-up
costs
To answer this question it should
be noted the material prices
represent only one component
in the overall cost of supplying
replacement parts. As another cost
pool, there are first of all the capital
tie-up costs for the replacement
parts held. To calculate these
www.RLmagazine.com
costs, the value of the average

stockholding of replacement parts
to ensure the operability of the
vehicles in question must first
be determined. The capital tied
up in these replacement parts
is no longer available for other
investments. Therefore, the value
of the replacement parts held must
be evaluated using an imputed rate
of interest geared to the minimum
return on investment required
within the company. It should be
noted that these imputed costs are
incurred over the entire service life
of the vehicles in question.
If the vehicle manufacturer
takes over the stockage of the
replacement parts, the operator
no longer needs to finance the
required pool of replacement
parts. The capital required for this
purpose is freed up for other uses.
This effect can be felt as soon as
a VMI project comes into force
if it is agreed that the vehicle
manufacturer buys back from the
customer the replacement parts
which the latter has procured prior
to the VMI.
The vehicle manufacturer
takes on the material demand
planning risk
If he is obliged to stock
replacement parts, the vehicle
operator faces the attendant risk
of material demand planning
whereby he attempts to ensure

a certain material availability.
Whether this is successful depends
on the quality of the operators
material planning. If this is less
than optimum, the operator faces
the problem of material bottlenecks
and their consequential costs even
if replacement part stocks are high.
In the best case scenario, in the
event of bottlenecks at one storage
location the operator will be
able to circumvent the problem
by transferring stock from other
locations. However, this entails
costs for transportation and
materials handling, as well as for
the accounting processes involved.
If material transfer is not possible,
the bottleneck must be overcome
by express orders which are more
expensive than regular orders.
Further costs accrue in this case
due to the disruption of vehicle
maintenance associated with the
bottleneck. Here it is necessary to
consider in particular the reduced
workload of the employees who
cannot continue working on the
vehicle as planned and must be
deployed elsewhere. If an express
order cannot be fulfilled quickly
enough, in some cases the vehicle
affected by the bottleneck must
be taken down and removed from
Continues
35
12/24/07 8:10:50 AM
Total Demand
The Graph demonstrates

how the variations in
demand from the
customers workshops and
the manufacturing plant
compensate in an ideal
situation. While it is unlikely
that the result depicted
here will be achieved, a
certain smoothing of the
demand curve is possible
depending on the magnitude and correlation of the
variations in demand.
Ideally, combining demand from the customers

workshops and the manufacturing plant will
result in a smoothing of the total demand curve
Manufacturing Plant
Combining demand
from the customers
workshops and
the manufacturing
plant can result in a
smoothing of the total
demand curve
Customer Workshop 1
Customer Workshop 2
the maintenance shop because

the assembly stand blocked by
it is needed for other vehicles.
The VMI concept, on the other
hand, guarantees the vehicle
operator a contractually defined
material availability. Within
these availability requirements,
material bottlenecks remain the
manufacturers responsibility
and are subject to the agreed
contractual penalties. In turn, the
vehicle operator must provide
the manufacturer with details of
his medium-term planning for
vehicle maintenance and overhaul
and notify him promptly of any
changes. With the aid of the
known parts list structure and the
operators medium-term planning,
the manufacturer can take a
combined planning approach based
on past consumption and planned
estimates.
Guaranteed availability allows
the vehicle operator to predict
vehicle maintenance delays
caused by supply bottlenecks
more precisely, which means that
vehicle availability also can be
more accurately planned. Under
a VMI arrangement, the vehicle
operator can therefore reduce
Issue9.indd 36-37
10
his fleet of standby vehicles by

the number of vehicles currently
required to compensate for
variations in the downtimes due
to supply bottlenecks. If a level
of availability greater than that
already existing is agreed, a further
reduction in the standby fleet is
possible. This means that vehicles
can perhaps be decommissioned
or not even ordered at all. For
this reason it is advisable to take
the material supply concept into
account even when ordering new
vehicles.
Vehicle operator saves
obsolescence costs
As the vehicle operator does not
need to manage the replacement
parts covered by the cooperation
agreement, he is also exempt from
the risk of these parts becoming
unusable. Conventional shelf life
problems are naturally somewhat
rare in the case of railroad spares
(with the possible exception of
rubber seals). Nevertheless, it is
possible that parts which, because
of the requirements planning
difficulties, have been purchased
and stored in large quantities, may
not be used within the service life
of the relevant vehicle. In the best
11
12
case scenario, the vehicle operator

is able to sell these obsolete stocks
at a slight loss or otherwise dispose
of them. However, if problem
materials are involved, additional
costs may even be incurred for
their disposal. This cost saving
must likewise be taken into account
when assessing a VMI project.
Vendor Managed Inventory

defers the start of the warranty
period and simplifies warranty
management
A possible saving that is perhaps
less obvious at first sight is
the deferred commencement
of the warranty period for the
replacement parts supplied. The
warranty period normally begins
with the delivery of a part to the
vehicle operator. However, the
part now often remains in storage
until it is required. When it finally
comes to be used, part or all of
the warranty period will have
pointlessly elapsed. If the part is
then found to be defective when
installed, the supplier of the part
can no longer be held responsible.
The operator of the vehicle is
therefore faced with additional
costs of procuring a new part and
www.RLmagazine.com
also for disposing of the

defective part.
With the VMI concept, the
replacement parts remain
the property of the vehicle
manufacturer until they
are used, i.e. the warranty
period does not commence
until they are actually
installed.
In many cases it is only
through a VMI model
that warranty claims
can be exercised, as the
storage date of a particular
replacement part (identified
by its serial number) is
only rarely documented. If
under these circumstances
a replacement part is found
to be defective when being
installed or fails shortly
after installation, it is
difficult to know whether
a warranty claim in respect
of the replacement part is
possible or whether the
warranty has already run
out. With the VMI concept,
the storage date of the replacement
part is immaterial to the exercise of
warranty claims: if a part removed
from storage is defective, it is
automatically covered by warranty.
The extra charges for the
cooperation must be financed by
savings
From the rail operators point
of view, the difference between
the additional costs arising from
the service premium payable to
the vehicle manufacturer and the
abovementioned savings is critical
for the profitability of a VMI
project. The premium charged by
the manufacturer is therefore the
most important point of discussion
when negotiating a VMI.
www.RLmagazine.com
The size of the premium

depends on the guaranteed
material availability and on the
agreed contractual penalties for
noncompliance. Also critically
important is the question of which
materials must in the customers
opinion be kept continuously
available, and in what quantity,
at the place of consumption. This
factor affects in large measure
the vehicle manufacturers scope
for reducing the costs he incurs
in providing the material: in the
optimum case, the manufacturer is
able to store most of the material
destined for the customer at a
central location, together with the
materials for the production of
new vehicles and for maintaining
the leasing machines. Only the

function-critical materials are then
stored at the place of consumption,
and in a quantity commensurate
with one days requirement
including a small safety margin.
This approach, also known as
geographic postponement
enables the manufacturer to
combine the material requirements
of the place of consumption
with his own requirements. In
the case of correspondingly low
demand correlation, combining
the individual demands results in a
smoothing of the overall demand,
as the variations in the individual
demands cancel each other out (see
graphic). Consequently, the safety
Continues
37
12/24/07 8:10:52 AM
Classic Sourcing
Cooperative Materials Management
Combining
demand from
the customers
workshops
and the
manufacturing
plant can result
in a smoothing
of the total
demand curve
margin maintained to ensure the

desired material availability can
be selected lower than the sum
of the safety margins necessary
for individually safeguarding the
demand functions.
A large part of the possible savings
relates to the guaranteed material
availability. To calculate these
savings, it is therefore necessary
to calculate simulatively the
inventories with which the rail
operator would have to work in
order to achieve, with his own
resources, the material availability
guaranteed by the manufacturer.
In this context the material
availability indicators to be used
must also be agreed.
The evaluation of the replacement
part inventories to be taken over by
the manufacturer at the start of the
VMI project generally constitutes
another contentious issue.
In addition to the financial topics
mentioned, there is also a need for
clarification in organizational areas.
For example, a physical separation
Issue9.indd 38-39
between the materials managed

by the manufacturer and the
customers other replacement parts
must be organized. It is necessary
to clarify which employees are
responsible locally for issuing
materials and for booking out
materials removed and in which
form such consignment stocks
are to be shown in the vehicle
operators ERP system (Enterprise
Resource Planning). The question
of preventing procurement
elsewhere of the materials
managed by the manufacturer must
also be addressed.
It is on resolving the above
questions that the success of a
cooperation project depends. In
the interest of all parties, the VMI
premium must be pitched in such
a way that the vehicle operator can
make reasonable savings, while
the vehicle manufacturer generates
substantial additional business.
Lastly, in concluding a VMI
agreement the vehicle operator
enters into a certain dependence on
the vehicle manufacturer. Due to
a lack of own stocks for important
replacement parts, the supplier

could massively disrupt the
railroad transportation companys
operations if he should fail to
meet his supply obligations. If the
forecast savings on the part of the
customer do not allow an adequate
margin to be generated for the
manufacturer, the project should
not be entered into. RLM
Karsten Platz is
employed as Manager
Business Development
at TEQPORT Services
GmbH, a Munich
based ICT business
solution provider.
TEQPORT specializes
in developing concepts for marketing
pre-owned equipment.
Karsten studied business
administration at Mannheim and
Swansea University and served
various internships, predominantly
within the rail industry. Prior
to joining TEQPORT, Karsten
worked as a consultant on various
railway-related projects at Barkawi
Management Consultants. You can
contact Karsten at Karsten.Platz@
teqport.com.
www.RLmagazine.com
RL Research
Money Talks
Full articles available from: RLA News Center
Xerox Dividend another

Milestone for CEO
Xerox Corp.s announcement
Monday that it will reinstate its
dividend after a six-year hiatus
marks another success for Chief
Executive Anne Mulcahy, who
reached the copier companys top
spot in 2001 when it was reeling
under $17 billion in debt, shrinking
market share and an accounting
scandal.
Target Logistics, Inc. Announces
Completion of Definitive Merger
with Mainfreight Limited
Target Logistics, Inc., a domestic
and international freight forwarder
and logistics provider, recently
announced that the definitive
merger agreement announced on

September 17, 2007, for Target
to be acquired by Mainfreight
Limited has been completed.
As a result of the merger, Target
Logistics, Inc. is now a wholly
owned subsidiary of Mainfreight
Limited.
Matsushita Results Burdened by
Battery Woes
Having bit hit hard by recent
instances of global financial
turbulence and the fallout from a
swath of battery recalls, Matsushita
Electric Industrial Co. Ltd., the
Japan-based electronics company
best known by its Panasonic brand
name, today reported lackluster
consolidated financial results for its
fiscal Q2 and first half of the fiscal
2008 ended September 30.
One Less Thing to Worry About

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12/24/07 8:10:56 AM
and Garmin are making to enter cross

markets as they expand the capabilities
of their products. However, there are
barriers to this black-hole strategy.
Technical Trends
L. B. Underwood
Disruptive Changes Around the Corner?

L is unique in business. In almost
every case RL Service and Repair
is at best an afterthought during a new
product development cycle or change
in market planning. Anyone with
much time in this business has been
faced with at least once, an immense
challenge from new product launches
or some other last minute change. In
this ultra-competitive marketplace
this is an understandable behavior. It
comes from the need to protect new
products, their features and designs.
Nonetheless, surprises are still tough
for RL operations to manage. Because
this is how it is, I spent at least some
time trying to map out the key drivers
for the RL market to ensure we are
prepared to provide our Clients with
the best possible service options. For
2008, I have identified three interesting
emerging trends that have the strong
potential to drive disruptive change in
RL service.
refurbishment. Previous thinking was

that these costs would just be pushed
back onto the OEMs as a warranty
charge. However, for the OEMs
warranty is a cost that is just loaded
into the product price. So ultimately
the Wireless Carrier and End Users
pay regardless. It is also a process
that generates huge amounts of waste
from the plastics discarded during
refurbishment. This is a large direct
cost as well as a growing environmental
concern. Plus the warehousing of these
parts to support the service channel
often creates supply chain issues in
manufacturing and shortages in new
product for the Carriers to sell. There
is also the increasing anxiety over
Media/SW Licensing, ID-Theft and
Objectionable Content remaining on
the phones that are swapped out in the
market place. This is a difficult and
complex liability problem to solve.
However, with same unit repair the
majority of these issues just go away.
wireless market segmentation any

number of demographics including
tweens. With the consumers pushing
for more freedom and Wireless Carriers
looking for more margin, there will be a
growing shift to same unit repair.
The End of the Bulk Repair Model?

The trend is clearly, Yesat least
for the main user of the modelcell
phone carriers. The first signs were
from Googles push for the FCC to
require Open-Access in the 700 MHz
spectrum auctions. Other hints came
from Verizon opening up their network
to product not specifically approved
by Verizon. But mostly, this will be
change based on cost. Bulk repair is
a very expensive RL model. There
are costs for logistics and inventory in
addition to the costs of the repair and
But the main reason that the bulk RL

model will decline is that the usefulness
for it has passed. The bulk repair
model grew out of the need to ensure
End Users had product to generate air
time and billing. Having functioning
product for what was primarily a
business market was the requirement
that made bulk repair the solution of
choice. Thats not the case today.
Most/all service plans are flat rate
with structures to promote sharing of
airtime minutes. The business market
is still a major player, but now we have
Many are now predicating that GPS and

navigation systems are next. And what
a tasty market this is. Data from big
box retailers show two major product
offerings with double digit year-onyear growth; DLP/LCD/Plasma TVs
and Nav Systems. So will GPS go the
way of the pager? Maybemaybe
not. One group of thinking sees cell
phones as the black hole that will just
eat GPS like any other product it has
consumed in the past. There are clearly
elements of that school of thought that
are valid. Just look at the efforts Nokia
Issue9.indd 40-41
Reverse
ReverseLogistics
LogisticsMagazine
Magazine
Form Factor Compression and the

Black Hole of Convergence:
The phrase Killer Product never had
so much meaning as the one it carries
for cell phones. Consider for a moment
what cell phones have affected or
outright devoured;
Pay Phone
Land Line Phone
Pager
2-Way Radio
PDA
Media Player
Camera
Web Browser
Gaming
Wallet/Banking
www.RLmagazine.com
Form Factor. The big resistance to

PDAs being digested into cell phones
was the general discomfort people
felt with holding what looked like a
calculator up to their ears. Then the
Bluetooth headset and the proliferation
of crack-berry addicts made that an
acceptable form factor. However,
it is unlikely that cell phones will
threaten console gaming. The gaming
experience is fully integral to the form
factor of the console (at least for now).
There is a similar gap with set top
boxes and cable receivers. Cell phones
already have TV and are delivering
content for info-tainment snacking.
But it is doubtful that these types of
fixed TV installations for homes will be
integrated into the cell phone product.
Then there is the case
for GPS. Clearly the
plurality of the
next-gen cell
phones will be
GPS enabled.
But will that
kill off the
GPS navigation
market? It may kill a
segment. But the core
of navigation has way
too much traction to die,
but it will change scope. The
way it will survive is to become
integrated navigation. In effect
resurrecting what many declared
a dead product segment-telematics.
A current product example gives us
insight has to how this segment stays
separate from cell phone convergence.
to maintain the distance with margins

built in for road/traffic conditions
gathered from the Nav system. In one
mode if you brake manually to avoid
the car in front, the system will monitor
the cars behind you and modulate the
braking in a way that ensures you are
not hit from the front or rear. There
are already plans in place to have these
systems use road traffic data to not just
raise comfort or safety but to improve
fuel mileage and reduce emissions. So
no, GPS/Nav will not be completely
taken over by the mobile form factor
but to survive it will become integrated
in ways that produce whole new classes
of products and service models.
Open Source Hardware:

There was a press report from a major
US wireless carrier regarding the
openness of their wireless networks;
when asked about their intent in
allowing more open-access to
their network, the representative
stated that even basement
built phones would be
allowed on their network.
No doubt that there was
a great deal of tonguen-cheek in that
statement. The
reality however
is that there is
a growing
trend
loosely described as proponents of

open-source hardware or Makers.
These folks are a very fast growing
demographic that are altering and
driving significant change in products
and the entire service market place.
One of the best examples of this, are
the various wireless routers intended
for home networks. Any number of
these routers have a huge range of open
source firmware (usually on Linux)
ported to them to increase the control
and functionality the owner has over the
devices function. Some manufactures
have recognized this and now have
produced routers with optimized
memory and ports to allow easy
The phrase Killer

Product never had so
much meaning as the one
it carries for cell phones.
modification. Some have even released
source code for their devices to aid the
open source development community.
The result is that product has much
longer presence in the marketplace as
an independent user community works
to advance and update the product free
of charge.
OK, you say thats great for WiFi
but things like this do not go on with
cellular networks and productsright?
Not true. There are several
major efforts at
developing
A major automotive manufacturer has

in their auto lineup a car with a fully
integrated Nav/Braking/Radio/Cruse
Control system. The Nav system uses
LIDAR (or Radar for some OEMs) to
help the other systems make highway
travel easier and safer. In one mode
you can set the distance to follow a car
in front. The system will then monitor
traffic data on the broadcast band subcarrier and control throttle and braking
www.RLmagazine.com
Reverse
ReverseLogistics
LogisticsMagazine
Magazine January/February 2008
41
12/24/07 8:11:01 AM
hardware and software for open source

cell phones. The most recent example
is Googles Android SDK. A project
that even has millions of dollars in
prize money for the best developer of
phone functionality using Android.
Google is not alone. All the other
OEMs have similar SDKs that are
usually freely available to help drive
application development. I have even
dabbled in this myself. My daughter
uses an electric wheelchair and this
year she went off to college. Her mom
and I were concerned that she may get
her chair stuck or have some type of
trouble and not be able to get to her cell
phone. So as any dad would, I built a
telematics system for her wheelchair.
What you see below is the main board
as I was finishing the final testing and
the device as mounted on her chair.
our home, or with another sequence
of button presses it will call campus
police. When anyone is reached, the
unit acts like a standard speakerphone.
The joy for me is that its always on and
I never have to worry. With a lot of the
documentation that was already on the
web it was assembled over a weekend
including the
time for coding
and de-bugging.
So in a very
short time, at
home I was able
If you are a job seeker or a hiring
to develop and
deploy a one of
manager looking to staff positions
a kind wireless
with a Reverse Logistics focus,
product that
the Reverse Logistics Association
exactly fit my
Job Center is the place for you.
needs.
I took a standard GSM phone, got a

pre-paid SIM and connected a microcontroller and two wireless remotes.
One on her chair and one she keeps
in her purse. If there is a problem she
can push the buttons on the remotes
and the device will call a local health
care provider, then my mobile and then
RL Job Center
Posting positions on the site is a

member* benet. Let us help you
nd the staff you seek posting is
quick and easy. Position posting
is generally approved and posted
within 24 business hours. Check
out the positions currently posted
at the RLA Job Center. For more
information, contact RLA at
info@ RLTinc.com.
*Job posting is a benefit of
Professional Members and
above.
Issue9.indd 42-43
Summary:
The value of
this kind of
strategic thinking
is not just in the
planning, but in
the competence
it brings to your
organization.
In addition, as
you work with
your Clients, its
knowledge like
this that brings
the relationship
closer and you
become a true solution partner. From

this outline consider some possible
actions;

Greater end user repair can require
significant changes to shop floor
control systems
Customer master configuration.
You may need a small call
center for out of warranty
estimate units.
The accounting team will need
to research tax law and nexus
issues.
The reduction in materials cost
could dramatically improve
your ROIC.
Ensure you are prepared for the
logistics requirements for differing
form factors.
Some industries like
transportation are tough to
penetrate, build relationships
now.
Work to identify key form
factors of products and build
logistics solutions that solve
Clients needs.
Gauge and anticipate a Clients
position in the market and
build solutions to solve not just
todays problems but the ones
coming up.
For Clients that promote differing
product configurations and mass
customization;
Develop IT strategies that
collect the needed information
to support the Clients needs.
Be aware of ways to automate
testing and management
processes to support
handling complex product
configurations.
All of this is just part of providing good
service and enabling success. Change
is always coming, are you ready? RLM
L. Bryant Underwood
is Director, North
Americas Service at
Foxconn Technology
Group. Bryants past
positions include GM,
Director and VP level
assignments in support
of Operations, CRM,
Materials and IT.
www.RLmagazine.com
Industry Events
The Reverse Logistics Association
staff takes advantage of every
opportunity to evangelize the
reverse logistics message, thus
raising awareness of the process
and increasing visibility for our
association and its members.
Comtek
Computer
Systems
If you would like to have RLA

present at an event or if you
have an event you would like to
publicize in RL Magazine, please
send an email to
[email protected].
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43
12/24/07 8:11:06 AM
Reverse
Logistics
Financial Model
by John Mehrmann
t has been said that a boat is a

hole in the water in which to
pour money. The same may be said
of some Reverse Logistics financial
models. Failure to track the true
costs and chart a safe course may
result in titanic losses. Far too
often the most reported metrics
only reflect the tip of the iceberg.
It is only by looking below the
surface, planning for changes in
currents beyond the horizon, and
planning a blue ocean strategy, that
executives can chart a safe course.
Lets take a look below deck on the
HMS Reverse Logistics.
It is only by looking below the surface,

planning for changes in currents
beyond the horizon, and planning a
blue ocean strategy, that executives
can chart a safe course.
Issue9.indd 44-45
In measuring the cost effectiveness

of processing returns, it is common
practice to compare the cost
of refurbishment in contrast to
the potential resale value of the
product. This is not only common
practice, but it is also common
sense. However, measuring the
cost of returns and refurbishment
is anything but common. The
methods of measurement are as
unique as they are diverse, and the
contributing factors are as complex
as the intricate links in the supply
chain.
To measure the full impact of
returns, it is necessary to begin
with an understanding of the real
value of the product. From the very
beginning of the financial model,
it is important to recognize that
www.RLmagazine.com
product value can be measured as

a single unit, and also as a sum of
the individual parts. Typically, the
rate of price erosion for a whole
unit is at a much more rapid pace
than the depreciation of the parts.
This is especially true when mass
manufacturing is complete, and as
customer service drives demand
for replacement spare parts.
A complete complex financial
model tracks trends and adjusts
refurbishment, repair, and parts
harvesting accordingly with the
passage of time.
business decisions. The first step in

avoiding non-value-added cost is to
recognize it.
The next step in the financial
model is to measure the cost of
returns and refurbishment. Many
years ago, it was sufficient to
compare vendors based exclusively
on labor rates. As we have become
more sophisticated in analyzing
the supply chain, we realize that
labor is only the tip of the iceberg.
Typically 1/8 of an iceberg is
visible, and 7/8 is submerged
below the
surface. While
it is very easy
to see that
portion on the
surface, it is the
bigger mass that lies beneath the
waterline that could sink the ship.
What contributing factors impact
labor? Location location
location, labor rate is often a
result of the geographic location.
The cost of labor may vary
dramatically from one region
to another. While this may be
very appealing on the surface,
it is necessary to investigate the
rest of the iceberg. Take time to
investigate the historical trend of
quality as it relates to the lower
cost of manpower. Does the
transfer to another geographic
region also require an investment
in freight and fuel surcharges? Far
too often the proposed benefits of
lower labor rates in other regions
are consumed with the burden of
freight, import or export, duties,
and taxes. To add insult to injury,
crossing borders may also result in
delays for customs, paperwork, or
even different holidays and work
schedules. Be prepared to measure
All product and all sales

channels are not created equal.
All product and all sales channels
are not created equal. When
measuring the overall financial
impact of returns, it is important
to recognize that some sales
channels or specific partners
have significantly lower rates of
returns than the average. Some
sales partners have programs to
discourage returns, or remarketing
solutions that significantly reduce
the quantity and expense of returns.
Sales to enterprise customers
and business-to-business (B2B)
typically have very different
results than business-to-consumer
(B2C) and end-user retail channel
returns. Marketing discretionary
funds to support sales efforts may
also be significantly different
for each channel or partner.
Manufacturers should track and
compare these costs, just as
retail and sales channel partners
should track the return ratio by
product. Of course, there are sales
strategies, relationships, and profits
to protect when making overall
www.RLmagazine.com
Continues
FRS is Service.
Problem.
Action.
Solution.
Individual Service Concepts
Customized Warranty Management
Repair and Logistic Services
Carry in Service
On site Service
Rework/Engineering Changes
Assembly
E-Services
Value added logistics
Helpdesk and Hotline support
Spare Parts Management
FRS Europe BV,

Amsterdam, The Netherlands.
www.frs-europe.nl
We give our customers

the care they need
12/24/07 8:11:08 AM
and document all of these

hidden costs when developing a
financial model.
But wait, theres moreif you
are planning to process returns
and refurbishment in another
geographic region, consider
the impact of accumulating
product and the freight method.
Accumulating and consolidating
product can reduce freight carrier
expense, but the product is also
depreciating while it waits on
dock. Cargo and rail options
may be less costly than truck and
air, but once again there is rapid
erosion of the product resale value
while it remains in a transport
container. There is no single right
or wrong answer to this dilemma,
the proper answer is to diligently
investigate your own costs and act
accordingly.
It is also important to consider
changes in the regional economic
conditions, and the potential for
dramatic changes. Labor rates in a
geographic region may be desirable
at the time of negotiation, but what
happens if the currency exchange
rate changes, or cost of living
increase? It may have seemed
inconsequential several years ago,
but competition for employment
in a region, median income
levels, and the currency exchange
rate, have all impacted business
decisions and strategies. These are
important factors to monitor and
evaluate regularly.
Moving beyond the focus on
labor, a growing concern that no
longer lurks beneath the surface
is the cost of freight. There is a
potential for many legs of freight
Issue9.indd 46-47
Every time that someone

handles the product, it
adds cost to the entire
chain, and that cost is put
back into future product.
Every time that someone
handles the product, it is
risk for damage and it is
a delay to complete the
return to resale.
in the complete reverse logistics
cycle. Each leg of freight also has
an inherent risk of the dynamic
application of fuel surcharges.
The amazing and adjustable fuel
surcharges are typically overlooked
in budget planning processes,
much to the dismay of executives
who must find a place to absorb the
expense later on.
The question remains, who pays
the freight? At first, you might
be tempted to respond with the
simple answer of freight related
to a product return. However, if
the product is accumulated and
shipped to another location for
refurbishment, then that is another
leg of freight and possible fuel
surcharge. If the product must
be forwarded to a location for
distribution after completion of
refurbishment, then that is yet
another cost of freight. If spare
parts or accessories need to be
moved from a separate inventory
position, this introduces even more
risk for freight related expense. To
avoid potential for wasted freight
costs, all units should be received,
processed, refurbished, and
shipped, all from under one roof.
Parts and accessories should be in
the same facility as the product.

Any unnecessary movement of
parts or product is an exposure to
non-value added cost.
Is there a warranty on the
product or on key components?
Are you leveraging the warranty
that you paid for? Can you get
credit? These are also critical
questions that can impact
the financial model. When
calculating the value of returning
product or parts for credit or
warranty work, it is important
to minimize freight and maximize
the warranty coverage. If there
is only a small percentage that
is actually covered as a result of
defect in material or workmanship,
then it may be more expensive
to implement process delays and
freight to take advantage of the
warranty. As with all of these
examples, identify the frequency
and the severity of the costs to
make good business decisions.
How many times is the product
being touched along the way?
Every time that someone handles
the product, it adds cost to the
entire chain, and that cost is put
back into future product. Every
time that someone handles the
product, it is risk for damage and
it is a delay to complete the return
to resale. Collaboration and honest
discussions are necessary between
retail, sales channel partners,
manufacturers, and vendors. Steps
in the process must be measured,
assigned cost and time metrics,
evaluated, consolidated, or
removed. Boxes should be opened
one time only. Product should be
inspected, tested, and processed
one time only. Every extra step
www.RLmagazine.com
in the supply chain places you

one step behind your competition
in time and costs. Remove
unnecessary steps and handling.
You can build a
reverse logistics model that is
better, faster, and stronger.
Make a determination immediately
as product enters this reverse
pipeline, how much time and
expense to process it. What will
it sell for when it is done? Is
the resale value of the product
still more than the value of the
sum of the parts? Can you use
the product to exchange for a
customer? Can you harvest parts
to satisfy customer demands
elsewhere? Does the resale value
of the product exceed the purchase
price of the sum of the spare parts?
When considering this option, it is
3039 reverse logistics NO_07 10/12/07
very important to understand the
language of the original limited

warranty, and the classification of
the product. Refurbished parts can
not be used to repair New Class A
grade product. Use of refurbished
parts to repair used or B Class
products must be explicitly cited
in the limited warranty terms and
conditions. This article is not
intended to provide legal advice,
just a friendly reminder that you
should seek legal advice before
embarking on this cost saving
course.
Do you really have duplicate
inventory? Are you holding spare
parts to support field service and
also holding parts for refurbishing
activities? Do you have more
than one inventory of spare parts?
Can whole units be used for parts
12:13 PM Page 1
harvesting? Are you tracking the
value of the parts recovered in

comparison to the value of the
product that is disposed? Are you
doing all of this under one roof, or
are you also paying for shipping
charges to get your parts to and
from the units for refurbishment or
Do you really have

duplicate inventory? Are
you holding spare parts
to support field service
and also holding parts for
refurbishing activities?
repair? Freight on moving parts is

a common hidden cost, but it is a
cost nonetheless.
Continues
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3039
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www.RLmagazine.com
47
12/24/07 8:11:09 AM
There are other forgotten costs

to manage reverse logistics.
As you evaluate your expenses for
refurbishment and repair of return
products, consider the recovery or
replacement costs of accessories,
boxes, manuals, cables, etc.
These costs may be minimal in
comparison to the potential value
of the product, but there are many
pennies to be saved by careful
management of these seemingly
small costs. Every penny saved is a
penny earned.
Are the resale value and volume
as robust as the refurbishment?
Warehouse and storage costs apply
for the space to receive, process,
and warehouse, the product.
Sometimes
this cost is a
clearly defined
line item on the
vendor invoice,
and sometimes the real cost for
warehouse management or storage
is buried inside an aggregate rate.
Regardless if the cost is clearly
itemized or buried in a total rate,
the cost is passed on from vendor
to client, and eventually back
through the entire supply chain
to future products. By working
together, all parties can identify
true cost, eliminate the handling,
and reduce the rent on slow
moving processes or products. It is
all about velocity.
A new and rapidly growing area of
cost consciousness is recycling and
e-waste disposal. The industry will

either drive change or be driven
by it when it comes to restrictions,
regulations, fines, and compliance.
Regions that have adopted
compliance and regulations have
also introduced a small variety of
new charges, and in some cases
new revenue, associated with
recycling and e-waste management.
Costs or revenue streams must
be accurately documented and
archived for cost analysis and for
applicable compliance. There is
enormous opportunity to work
together for cost effective tracking
of part and product compliance
in cost effective managements
systems, and it begins with each
organization recognizing both
responsibility and expense.
There are other forgotten costs to
manage reverse logistics. How

many people in your organization
are required to manage this
process? How many to administer
the credits, logistics, accounting,
and IT? Are you systematically
tracking your inventory, receipts,
shipments, and your true costs
as they occur? Can you rapidly
identify anomalies before they get
out of control? It may be that only
a portion of the time is devoted
to these activities, or it could be
many full time personnel. When
looking for ways to reduce costs
and eliminate steps in the process,
be careful not to achieve this
goal by accidentally transferring
the burden to internal personnel
as an accidental byproduct of an
otherwise excellent strategy.
Time is money. Determine the
fiscal value of depreciation as
it applies to product and parts.
Identify the rate of price erosion,
the cost to procure replacement
parts in comparison to back-orders
and refund checks, and delays in
the process due to extra handling
steps. Identify the monetary value
of depreciation as assigned to each
day, and then measure the total
time from RMA request to resale,
recycle, parts harvest, or rent and
disposal. This will illuminate the
dark corners where hidden costs
lurk in shadows and prey on your
profits.
Take some time to build your
financial model. Look for best
practices and identify hidden costs
by collaborating with partners and
peers. The result is continuous
contribution to the profitability
of your organization, avoiding
disastrous decisions with hidden
costs, and charting a clear course
www.RLmagazine.com
Issue9.indd 48-49
for success. To get this exposure

and interaction with partners
and peers, you need look no
further than the Reverse Logistics
Conference and Expo at Planet
Hollywood Resort and Casino, in
Las Vegas, Nevada. Similar events
are in Amsterdam in June and
Singapore in October. These events
provide an opportunity to meet,
collaborate, and learn from peers
in a friendly and non-competitive
environment. We look forward to
seeing you there. RLM
About the Author:

John Mehrmann
has more than 20
years of management
experience that spans
logistics, operations,
e-commerce, finance,
customer relations,
marketing, training and consulting.
John has served the business
community as Regional Sales Director
at Data Exchange Corp, and Director
of Service Operations for Toshiba.
John is co-author of The Trusted
Advocate, a powerful and refreshing
new book on relationship sales, it is
full of entertaining and hard-hitting
perspectives to accelerate sales with
authenticity and integrity.
Technology Spotlight
Full articles available from:
RLA News Center
Zebra Technologies to Offer

Direct Communication Capabilities between Thermal
Printers and Oracle(R) XML
Publisher
Zebra Technologies Corporation, a global leader in specialty printing and automatic
identification solutions, today
announced that its line of Zebra
ZPL-based thermal printers communicate directly and
seamlessly with Oracle XML
Publisher. Now, Zebra ZPLbased printersthe first in the
industry with this capability
can receive and process XML
output from any Oracle application more quickly to eliminate
printing delays, save customers
valuable time and money, and
improve operational efficiencies.
Savi Technology Taps Solar

Energy to Power RFID Asset
Tracking Systems
As many companies are now
investigating green practices
for their supply chains, Savi
Technology, a Lockheed Martin
company, has recently begun
deploying solar-powered radio
frequency identification (RFID)
readers and signposts, enabling
customers in the defense and
commercial sectors to conserve
energy and reduce costs while
tracking supplies in real-time.
Cyber Spying Set to Explode
Organized criminal activity will
continue to be a big risk on the
Internet next year, but the growing rumors of cyber espionage
and cyber warfare could metastasize, suggests security firm
McAfee.
49
12/24/07 8:21:32 AM
RecallsWhen the Worst Happens

by Hannah Kain
anaging risk when quality

control procedures fail and
can be a nightmare, especially
when there is no recall contingency
plan in place. Forethought and a
streamlined customer interaction
plan are essential to minimize both
short- and long-term damage that
results from recalls.
The mere word recall can send
a shudder all the way through a
company, from receptionist to the
executive team, to the boardroom
and shareholders. Recalls are
costly and risky and can threaten
the existence of a company.
How a company reacts to a
recall can determine whether
the company gets through the
incident fairly unscathedor
even not at all. It is all about
minimizing corporate exposure and
maintaining customer satisfaction.
Prevention and
Preparedness
As with any such incident,
prevention and preparedness are
key elements. While this is scant
consolation to the companies
subjected to a recall, this article
would not be complete without
mentioning these two aspects.
Prevention is, of course, related to
quality control, failure analysis and
supply chain management. Strict
control from the design stages of

a product to delivery would have
prevented most recalls. Product
recalls are frequently caused by
the product being designed without
proper consideration for the use
and the dangers it may pose. In
a rush to market, the product is
not properly tested or evaluated.
However, as is commonly seen
today, a recall can be caused by
even one small failure in the supply
chain.
As supply chains become
increasingly complex, the risk of
failure goes up exponentially. Raw
materials from subcontractors to
a subcontractor to a subcontractor
can be consolidated in one part
of the world, used in another part
of the world for a subcomponent,
then stored and shipped to a third
continent before being used in
the final product eliminating
the likelihood that the buyer of
the final component has a chance
to review the supply chain risks.
A risk assessment of the supply
chain is a major aspect of recall
prevention.
But even if recalls cannot be
prevented, being prepared with
a contingency plan is absolutely
crucial (for a free contingency plan
template, please contact ALOM
or see other sources at the end of
this article). The contingency plan
includes: vendors; legal advisors;
compliance team members; a
The product may be functionally sound,

but if it is perceived to have a significant
flaw, it can certainly impact the
satisfaction or experience.
Issue9.indd 50-51
experience and lessen the

impact of a recall:
forms to fill out; and putting the

burden of proof on the customer.
React fast
Instead, review what a great

customer experience would
entail. For instance, companies
can consider sending customers
a replacement unit before
receiving the original product back
instead of waiting to receive the
customers unit prior to shipping a
replacement unit. This tactic allows
the company to include the return
packaging and prepaid label with
the replacement unit, making them
return very convenient and free for
the customer.
PR agency; call centers; the web

design team; the executive team;
and information and authority
levels to guide the recall team to
move ahead in a fast, controlled
manner.
As customers hear about the

recall, they get concerned and
frustrated about what to do
with their potentially unsafe
product. Reaction speed is
critical.
However, most companies simply

are doing business without a recall
contingency plan in place.
Make it easy for your

customers
Forced or Voluntary Recalls

Recalls can be initiated and
implemented by authorities as a
forced recall or by a company as a
proactive step to prevent authorities
from issuing a forced recall or just
to ensure that customers have a
working, safe product. Authorities
that can force a recall in the U.S.
include the Consumer Products
Safety Commission (CPSC), the
FDA, the National Highway Traffic
Safety Administration, the U.S.
Environmental Safety Protection
Agency, the USDA Food Safety
and Inspection Service and the
United States Coast Guard. The
forced recalls mainly take place
when the hazards are both serious
and fairly likely to happen.
Several agencies have a Fast Track
program for companies that issue
a voluntary recall, cutting down on
the required paperwork. The Fast
Track programs typically allow a
company to complete the recall in
an easier, less bureaucratic manner.
The CPSC, Office of Compliance,
has issued an excellent booklet
about recalls.
Recall Impact and Cost
The impact and cost of a recall can be
broken into several groups:
Cost of customer dissatisfaction/
avoidance
Long-term impact on brand
www.RLmagazine.com
Operational cost of recall

Potential litigation cost
The following will outline these
impacts/costs as well as how the
cost can be contained.
Cost of Customer
Dissatisfaction/Avoidance
For most companies, customer

satisfaction and customer retention
are key to running a profitable
business. Any situation where the
customer believes they received
and paid for a substandard product
represents a significant threat to
customer satisfaction. The key
- that many executives do not
realize - is the perceived injustice
by the customer. The product may
be functionally sound, but if it is
perceived to have a significant
flaw, it can certainly impact the
satisfaction or experience.
In addition, during a recall a
company typically asks a customer
to respond with their own time
when getting the product fixed.
This can be as simple as returning
the product for a new replacement
or having the customer re-install
a component. The replacement
product may furthermore be
cumbersome to reinstall, as is
typically the case with technology
products. Several steps can be
taken to improve the customer
www.RLmagazine.com
Make the return or the

replacement easy. This includes
both the logistics part and the
reporting part. This is not a good
time to question the honesty or
to test the relationship with the
customers. Avoid anything that
could further enrage the customer.
Prevent: long holds on toll-freenumbers; confusing information
on your website; poor customer
interface for online reporting or
troubleshooting; cumbersome
Make sure that it is done right

A recall is not a good time to
make errors since the customer
relationship is already fragile.

The order must ship right, work
correctly and arrive in perfect
condition. Any refund must be
Continues
51
12/24/07 8:22:06 AM
prompt and correct. Impeccable

quality of customer interaction
becomes a must. This is especially
hard for companies where customer
interaction is usually not prompt,
not very efficient or generally
not of high quality. Internal staff
is not trained to provide the high
quality interaction needed, and the
vendors used are mostly selected
for cheaper price. Now is not the
time to cut corners with a cheaper,
inexperienced vendor.
Understand emotions
Customers feel that the contract has

been broken. They paid for a good
product, and they either received
a bad product, a potentially
defective product or - worst case
- a dangerous product that may
even be life-threatening. This is
not - obviously - a normal business
transaction. It is a transaction
where the recalling company has

broken trust, and the company
must work hard to reestablish the
trust. This attitude must permeate
everyone who is involved in the
recall.
American Society for Quality Control,

The Product Safety and Liability
Prevention Technical
Committee (PS&LPTC), (www.asq.
org) has published a book 9 www.
asq.org/qic/display-item/index.
html?item=10181) RLM
Next issue: RecallsWhen the Worst

Happens, Part II by Hannah Kain
will cover operational responses,
communication strategies, long-term
brand impact, and the costs associated
with various recall options.
Hannah Kain is
President and CEO
of ALOM, a leading
package assembly and
fulfillment company
headquartered in
Fremont, California.
Kain, who founded
ALOM in 1997, has extensive
experience in the packaging industry.
She has three university degrees and
has won numerous awards, including
ABWA, NAWBO and Womens Fund,
and has been featured in books and
articles, including CEO Chronicles
and Women Who Paved the Way.
Other sources:
CSCP - Consumer Products Safety
Commission (www.spscs.gov)
FDA - Food and Drug Administration
(www.fda.gov), for policies, see
vm.cfsan.fda.gov/~lrd/recall2.html
Reverse Logistics Association (www.
reverselogisticstrends.com/index.php)
Center for Business Intelligence,
Recall Conference (www.cbinet.com/
conferences.cfm)
Read the Press

Full articles available from: RLA News
Center
Target Tests Electronics
Recycling Program
Way down at the bottom of the
electronics section on Target.
com is something youd miss if
you werent looking for it: a tab
called Pre-owned Electronics.
The retailer has been testing out
selling some gadgets on its Web
site only that have been returned to
stores for the past month, but the
company finally called attention to
the experiment during its quarterly
earnings call Tuesday, as Reuters
reported.
Costco Will Buy Your Electronics
Bulk retailer Costco has partnered
with Greensight to take unwanted
electronics off your hands. Seeing
the need for proper disposal of
obsolete or unwanted products has
driven the two companies to collect
goods and resell or disassemble
them for recycling. Theyll even
pay for shipping.
Catastrophic Failure and Recalls
DEX Receives ISO 14001

Certification
DEX (Data Exchange
Corporation), a leading supply
chain solutions provider for hightech industries, announced today
that its Dublin, Ireland facility,
supporting Europe, the Middle East
and Africa (EMEA) has received
ISO 14001 certification. The
ISO 14001 standards specify an
environmental management system
(EMS) and include requirements
for establishing an environmental
policy.
Issue9.indd 52-53
www.RLmagazine.com
www.RLmagazine.com
FreeFlow Expands Channel

Strategy for Excess Inventory
With Andlor Partnership
FreeFlow, a recognized global
leader in inventory asset
management services, today
announced a strategic channel
partnership with Andlor, a provider
of reverse logistics software for
manufacturers, distributors and
third party logistics providers.
The partnership pairs FreeFlows
award-winning solution for
dispositioning returned, excess and
obsolete inventory with Andlors
growing roster of customers
that depend on its technology to
manage the end-to-end process for
returned products in the reverse
logistics pipeline.
Cisco Keen to be Seen as Green
in China
The three- to five-year plan is
in alignment with [Chinas]
long-term economic, societal and
environmental goals, according
to a statement from Cisco. The
company began investing in China
in 1994 and already employs more
than 2,300 staff there, in divisions
ranging from sales to research and
development and manufacturing.
IBM Recycles Silicon Wafers for
Solar Cell Use
To repurpose scrap semiconductor
wafers for use in silicon-based
solar panel manufacturing, IBM
Corp. today detailed a reclamation
process that was developed
at its Burlington, Vermont
manufacturing facility which uses
a specialized pattern removal
technique.
53
12/24/07 8:11:20 AM
Site Visits
Gailen stated,
OnProcess should
be credited
for proactively
anticipating client
needs with a unique,
practical approach
to managing
the customer
experience.
OnProcess
Gailen Vick, President of the
Reverse Logistics Association,
recently met with OnProcess
executives at their headquarters in
Ashland, Massachusetts, outside
of Boston. OnProcess CEO and
founder Ed Barry; William Kenney,
Executive Vice President, Business
Development; and Dan Gettens, Vice
President, Managed Services provided
the history of OnProcess and shared
some of its expansion plans, including
the opening of a second OnProcess
office in Fall River, Massachusetts.
Philips, Comcast and DIRECTV with

a variety of reverse logistics needs.
Since its first day, OnProcess has
pioneered the development of
outsourced reverse logistics programs
using advanced methods and
technologies that are customized to
meet the specific performance goals
of its clients. Using its proprietary
asset retrieval system, RL360SM,
OnProcess Technology helps
companies reduce service inventory
and increase the velocity of inventory

returns while building customer
satisfaction and retention. OnProcess
Technology has specialized program
expertise in Advanced Exchange
Inventory Recovery, Sales Demo and
Evaluation Inventory Management,
End of Life Cycle Inventory Recovery,
Product Upgrades and Trade In
Management, Product Recalls and
Logistics.
The idea for OnProcess originated in

1998 when the company accepted the
challenge of building a more efficient
reverse logistics management system
for a Fortune 500 client. Today,
OnProcess Technology conducts
business in six languages for multinationals in the Americas, Europe and
Asia. Directed by an experienced
management team, OnProcess helps
clients in the telecommunications,
business and consumer electronics,
wireless services, medical products,
and cable / entertainment industries,
among others, including clients such
as Dell, HP, AT&T, Cisco, Juniper
Networks, T-Mobile, AT&T, NetApp,
Issue9.indd 54-55
Gailen also previewed OnProcess

latest offering, CE360SM, which
provides clients with proactive
management of the entire life cycle of
the customer experience. Gailen stated,
OnProcess should be credited for
proactively anticipating client needs
with a unique, practical approach to
managing the customer experience.
Clients can use CE360SM to increase
their customers awareness and
understanding of current product
solutions and to inform eligible
customers about product and service
upgrades. CE360SM helps clients
create a more positive customer
experience and strengthen loyalty to
their brand.
Both RL360SM and CE360SM enable
clients to:
Gain visibility into the customer
experience
Positively manage that customer
experiencethat is, to take a
potentially negative customer
experience and turn it into a
positive one
Generate measurable, predictable,
sustainable profit improvements
Visit www.onprocess.com for more
information on OnProcess Technology,
CE360 SM, and RL360SM.
5th Annual RLA Conference

& Expo Amsterdam
At the Dorint Sofitel Amsterdam Airport Hotel
June 16-18, 2008

Over 500 RL Professionals and 40 Exhibitors
Reverse Logistics Association is offering three

full days of RL immersion starting with RL
Workshops and Focus Committee Discussions
followed by two days of sessions and exhibition.
Workshops are offered on Monday, June 16 on
a variety of topics including Successful
OutsourcingRFQs, Contracts and SOW and
Reverse Logistics Self Assessment and Performance Improvement Toolkit.
The RLA conference kicks off on Tuesday with
a Keynote address followed by sessions
presented by RL professionals, leading academics and also includes panel discussions.
Session topics include field service, RMA,
support and help desk/call centers. A wide
range of Reverse Logistics companies will be in
attendance from repair/refurbishing to
recycling/e-waste and transportation logistics.
Be sure to visit the Exhibition Hall where
ODMs and OEMs will be looking for Third
Party Service Providers (3PSPs) that can
manage Reverse Logistics in Europe, along with
identifying solutions for Asia and the Americas.
There will be many exhibitors showcasing their
Reverse Logistics services and solutions. This is
a rich opportunity for OEMs and Branded
companies to identify future service partners.
For more information, visit:
http://www.rltshows.com.
If you are a Reverse

Logistics professional
don't miss this event!
www.RLmagazine.com
12/24/07 8:11:33 AM
Site Visits
Jeremy Vick made
the trip to the
Lone Star State
to visit with
Sydcor
Sydcors new stakeholderowners are Damien Matherne,

Kuykendall Coburn, Darryl
Kelinske, Henry Heil and Keith
Jacoby
Sydcor
Recently, Jeremy Vick, RLA VP of
Worldwide Business Development,
visited Sydcors new Austin
headquarters.
Located on the north side of the
city, the corporate office handles
packaging solutions, supply chain
and fulfillment management and
after-market services projects.
Greeted by CEO, Darryl Kelinske,
Jeremy learned that Sydcor manages
all of the needs a company may have
to service a product once it comes
off the production line. Sydcors
operations are strategically divided
between an large hub in Fairfield,
Ohio and operational facilities in
Austin, Nashville and High Point,
North Carolina.
Sydcor handled the largest consumer
electronics safety recall. Within
twenty-one days of being tapped,
Sydcor designed a plan, built
infrastructure, created a reporting
and tracking system and launched
the recall. Sydcor implemented four
synchronized initiatives:
Built a 16-language Web
site--100 million hits in the first
several days
Issue9.indd 56-57
Nimble, ondemand solutions

can handle
volume swings up
to 800,000 labels
per day
Established an Austin call

center--300,000 calls on opening
week
Ramped-up the Ohio facility-capacity to ship 40,000 batteries
daily
Designed a real-time reporting
structure--tracked each shipped
and received battery
The next room (see label machines)
is dedicated to New Product
Introduction Services, which allows
clients the flexibility to postpone
product launches. Here, modified
printers and software handle shifts in
daily volume caused by unforeseen
manufacturing demands.
Jeremy then visited the Service Parts
Management area where a team
manages warranty parts programs
for its customers enterprise clients-services include order management,
CRM, fulfillment, returns
management and reporting.
The best is always last. In recent
years, there has been a push to
use recycled materials; the lab has
everything needed to design and test
prototypes by simulating real-world
conditions. The ISTA lab can test
temperature, compression, vibration
and fall durability. Available for

contract testing, the lab works with
partner-suppliers to create thermal
forming, molded pulp and foam
packaging.
Using customized
systems, Sydcor
tracks every part,
component or
finished good that
enters or leaves
Sydcors ISTA Lab has a complete

compliment of testing machines:
Lansmont PDT-56 Shock Tester
simulates the damage from
multiple drops
Lansmont Vibration System
creates vibration frequencies
common in shipping
L.A.B. Validator Compression
System verifies corrugated
stacking strength
Thermotron SM-35C Atmosphere
Conditioning Chamber heats to
180C or cools to -70C packages
for real-world testing
Data Technology M3000 creates
prototype packaging and labels
from CAD drawings
Computer packaging software
includes CAD Score! 6, CAPE
Systems and AutoCAD
Prototype assembly line is the last
step in a new pack-out process or
new packaging designs
www.RLmagazine.com
Sydcor handled
the recall, disposal
and replacement
of millions
of portable
computer
batteries
With an ISTAcertified lab,

Henry Heil,VP
of design and
engineering, can
make prototype
packages or
perform contract
testing
On the Move in Reverse Logistics

Andrew Katcher recently
joined FreeFlow as VP of
Business Development.
Prior to joining FreeFlow,
he was CEO of Rapid
Results, a supply chain
management consulting
company, specializing
in Asia-based forward
and reverse logistics
solutions. Past experience
includes Director of World
Wide Returns at 3Com
Corporation, divisionlevel controller positions
in Israel and Europe and
Supply Chain management
positions in Japan, Korea,
Australia, Singapore and
the US.
TechTurn, a trusted leader

in technology recovery,
refurbishing and resale,
recently announced
that David Wright has
joined the executive
team as VP of Product
Sales and E-Commerce.
Wright brings to
TechTurn extensive
leadership experience in
the equipment leasing,
computer and service
industries. Wright will be
responsible for expanding
and maintaining channel
development to optimize
and diversify TechTurns
product availability.
The Numina Group
recently announced the
appointment of Ken Carnes
as Director of Logistics
Automation Services. Ken
will focus on the reverse
logistics market for The
Numina Group, a leading
material handling integrator

for warehousing and
distribution automation.
Liquidity Services Inc.
(LSI) has appointed Rob
Caskey Vice President of
Marketing for its Asset
Recovery Division and
online auction marketplace,
Liquidation.com. He
will be responsible for
developing marketing
strategy to drive increased
customer acquisition and
retention for Liquidation.
com and will work closely
with the technology
department to develop
marketplace features, tools,
databases and enhanced
reporting mechanisms
to increase the usability
of the marketplace for
professional buyers.
Lulu.com, the premier

online marketplace for
digital content on the
Internet recently named
Bryce (Skip) Boothby
Jr. as President and COO
of Lulu Enterprises.
Boothby will oversee all
finance, engineering, and
business at Lulu.com as
well as Gnack, the Lulu
Enterprises company
that provides support and
services for open media
businesses. Past positions
include Vice President,
Services at Celestica
International, President
and CEO of SalesLink and
Vice President, Market
Development for Quebecor
Printing.
www.RLmagazine.com
12/24/07 8:11:43 AM
Returning thoughts
Key Performance Indicators Used by
Philips to Manage Reverse Logistics
As reverse logistics evolves within
your company, you will want to start
developing or improving the Key
Performance Indicators (KPIs) used to
measure and monitor the performance
of your Returns Management and
Reverse Logistics. To help develop
KPIs, Tony Sciarrotta shared some of
his insights and important KPIs he uses
as the Director of Returns Management
at Philips Consumer Electronics, North
America.
Tony brings a great deal of experience
and industry expertise to the Reverse
Logistics requirements for Philips, its
supply chain partners and its returns
processing partners. Gate keeping,
Product Data and Asset Recovery are
three of the key areas I monitor closely,
says Sciarrotta as he outlined some of
the KPIs he uses to help manage each of
these areas.
Gate Keeping
Product Data
Philips works closely with its Retail

partners to monitor and manage returns.
To do this, Philips shares and reviews
regular reports with the retailers to
outline the data related to recent product
returns. These reports help everyone
work together in order to reduce returns
and become critical in the arrangements
that Philips negotiates with its retail
partners.
Philips outsources its Reverse Logistics

processing and repair. The Philips team
works closely with its Reverse Logistics
partners to monitor No Trouble Found,
Repair with Parts, Repair without Parts
and the Scrap levels. This important
data is forwarded to manufacturing
and to the product design groups.
Consumer electronics products are
becoming more and more complex. If
a product is experiencing a high No
Trouble Found rate, the data is sent to
manufacturing to seek product or user
experience improvements to reduce the
return rate
Philips also monitors statistics about

the condition of the returning goods
upon arrival. Flat Panel TVs can be
very expensive if they are not handled
properly in the return process. Working
with Retail partners to avoid damage is
of major importance.
Discrepancies are also an area monitored
closely to ensure that all returning
units have been authorized. Recently,
Philips has been experiencing very few
discrepancies.
Advertiser Index
Astea
BMI
Canon
Chicago Tag and Label
Choice Logistics
CompuVest
Comtek
Craters and Freighters
Cycleon
DEX
Freeflow
FRS Europe BV
Intechra
Jabil
Li Tong Group
Marketing Alternatives
Metech
Montech
NVC
Pelican
RT Outsourcing Services Ltd.
Teleplan
Test Technology
Total Return Solutions
Unipart Technology Logistics
Issue9.indd 58-59
www.fieldcentrix.com
www.bmionline.us
www.cvi.canon.com
www.chicagotag.com
www.choicelogistics.com
www.compuvest.com
www.comtekcomsys.com
www.cratersandfreighters.com
www.cycleon.eu
www.dex.com
www.freeflow.com
www.frs-europe.nl
www.intechra.com
www.jabil.com
www.litong.com
www.mktalt.com
www.metechgroup.com
www.montechinc.com
www.mynvc.com
www.PelicanOEM.com/rlo
www.RTOutsourcing.com
www.teleplan.com
www.testtech.com
www.totalreturnsolutions.ca
www.unipartlogistics.com
48
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53
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9
15
25
Strategic Partnerships Now

Available at the Touch of a Button
RL Quote empowers manufacturers
and retailers in search of the right
partner.
Send RFIs anonymously to our
worldwide database of suppliers
Screen your 3PSP responses
Find the right partner
Asset Recovery
We always try to achieve the highest

asset recovery rate possible says
Sciarrotta. To monitor this, Philips
tracks the Asset Recovery rate. Also
tracked are returned goods that are sold
as is and the returned goods that are
sold with a warranty. In addition, Philips
tracks the performance of the refurbished
products to ensure quality standards are
maintained.
Improve Your KPIs
Gate keep to ensure only authorized

returns are handled. . Obtain good
product data to find out why goods are
being returned. Get the highest Asset
Recovery rate possible. These are the
three key areas and some of the related
Reverse Logistics Key Performance
Indicators that Tony Sciarrotta uses at
Philips to help organize, monitor and
manage product returns. Use his insights
to get started with improvements to your
KPIs.
Free Industry Expertise The RFI responses from

RL Quote come from the top executives at 3PSPs
who are on the frontlines of the industry everyday.
Anonymity During the RL Quote process, your
companys identity is kept confidential so you
maintain control over who you allow to contact
you.
Wider Selection RL Quote allows you to broaden
your search at no cost and is a perfect companion
to your usual resources.
New Technologies The technologies for Reverse
Logistics are evolving everyday. The best way to
stay ahead of the technology curve is to allow the
industry experts to evaluate your objectives and
offer alternative solutions.
For more information visit RL Quote at
www.rlquote.com
POST RFI
Good Luck!
Paul Rupnow shares Reverse Logistics
best practices, insights and strategies at
ReverseLogisticsProfessional.com
www.RLmagazine.com
12/24/07 8:11:54 AM
Issue9.indd 60
12/24/07 8:11:57 AM

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Reducing Returns, Maximizing Loss Prevention and Validating

Reverse Logistics Financial

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Reducing Returns, Maximizing Loss Prevention and

How to Avoid the Risks of Donating Used Computers

Extended Producer Responsibility by Cradle2Cradle?

Replacement Parts Supply: Opportunities for Vehicle

President & Founder Gailen Vick

Reverse Logistics Financial Model

RecallsWhen the Worst Happens

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