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

1. Paul Kelly
pkelly9@me.com
T: +44(0)7801 671 741
T: +44(0)7801 671 741
T: +44(0)7801 671 741
What does an efficient Reverse
Logistics Operation look like ?

2. ∀ Defining a role and goal for Reverse Logistics which is "fit
for purpose"
∀ Using end-to-end Performance Indicators (Measures)
Reverse logistics, and specifically product returns, represent
significant costs and, if properly managed, the opportunity for
significant benefits.
■ Average return rate for online retail sales is 5.6%, although it varies
by product and time of year
∀ From efficiency to effectiveness ■ Cost of processing a return can be 2–3 times that of an outbound
shipment
■ The average cost of processing per return for items bought on the
Internet is $30–$35
See Reference on Slide 5

3. It's "purpose" should link to Enhance Revenue
the business strategy
Enhance Profitability
Reduce Operating
Costs
Supply Chain Value
Reduce Working
Capital
Reduce Invested
Capital
Reduced Fixed
Capital

4. Should we avoid them*
- if so how?
Improve the experience?
What value
information?
How to increase
efficiency/effectiveness?
* Is there is some other value/driver
Some additional questions > Buyback/Recycling
to think about first > Returns policy and contribution to sales

5. Reference:
Receive “Managing Product Returns for Competitive Advantage”
James Stock, Thomas Speh and Herbert Shear
MIT Sloan Management Review FALL 2006 VOL.48 NO.1
Sort and Stage
Reverse Logistics:
Receiving products &
maximising their value
Process
Analyse
“Support” - Repair, Refurbish, Dispose
Analyse

6. Its just another
“transformation” process !
Resources Inputs “Transformation” Outputs Outcomes
Economy Efficiency Effectiveness
(including cycle times)
Operational Measures “Business” Measures

7. Drivers to effectiveness Spend € “Return on Returns” €
Basic “Screening” Financial Benefits Indirect Benefits
Receive
Minimise cycle time
Sort &
Stage
€ Total € Total
Improve process capability (yield)
Process
Ratio 1 Ratio “N”
Consider the value of
information, the benefits of
Minimise cycle time “Value add” activities Financial Benefits
Analyse the policy & the impact of
the Customer Exp.
Support Improve process capability (yield)
- Repair € Total € Total
Refurb.
Dispose
Enhance or extract value Ratio 1 Ratio “N”
Operational Measures “Business” Measures

8. ∀ Conclusions & Implications
• Reverse Logistics can can and should contribute to the business strategy
• Use measures that look at outcomes as well as outputs
• Economy = Procurement Use to align and incentivise
your teams and your
• Efficiency = Operations suppliers
• Effectiveness = Everyone!
• Encourage a “ROI” approach to budgets and investments
• Promote " joined-up-edness"