Recovering lost profits through reverse logistics

10/4/2012 2:16 PM EDT

Due in large part to outsourcing, electronics OEMs are no longer well prepared to handle returns, repairs, refurbishment, and redeployment of many electronics products. Logistics providers handle most of the administrative tasks of identifying, shipping, tracking, and managing product sales and returns. A wide variety of companies, ranging from retail outlets to full-fledged repair depots, provide technical services and product support. The disconnect between these two core competencies--logistics and technology--drew Jabil Circuit Inc. to UPS's logistics and distribution division.

"Companies are finding it hard to integrate these functions into a single service model," Hertel said. "In 2010, we had an opportunity with an OEM in Europe that wanted to combine the process of logistics with technology support. That brought us to Jabil, and what started as an alliance has evolved into a more formal structure between the organizations."For example, a global PC manufacturer uses UPS and Jabil to manage several segments of its supply chain business, he said.

Segment 1 is what we call hub-based inventory, which includes activities such as ownership of spare parts, materials planning, warrantee management, managing component vendors, and the distribution of spare parts to repair sites. Segment 2 is what we describe as the field-stocking network that holds parts close to the site of consumption, managing two- to four-hour service agreements, transportation to and from customer sites, depot returns, and the deployment of spare parts out to technology centers and end users.

Jabil manages the first segment of this OEM's business. UPS manages the second. "It's all about the optimization of these resources and managing the cost structures most effectively," Hertel said.

He and Chuck Henry, senior director of business development at Jabil Global Services, will be our guests at a Webinar, Reverse Logistics: Reclaiming Value in the High-Tech Supply Chain, on Tuesday, Oct. 9, at 2:00 p.m. EST. They will discuss the strategic advantages of their relationship and how OEMs are recapturing value in their consumer and industrial products.