I, again, noticed this disconnect in a recent event – Conquest 2013. Conquest is a wonderful endeavor by the EXIM publications to bring together experts from Supply Chain, Logistics, Transportation, Custom Brokers fraternity, and most importantly state representatives.

From Cost Reduction to Value Creation:

This year’s Conquest2013 was one such event that saw a confluence of Senior State representatives (Indian Customs, DFC, Concor, Indian Railways, JNPT and Kandla Port, etc) and high profile dignitaries from 3PL MNCs and Indian companies from Supply Chain, Transportation, and CHA fraternity.

The theme of Conquest-2013 was Integrated Logistics and Supply Chain. It was a good knowledge-sharing platform and panelists spoke well about various elements of the supply chain including Warehousing, Transportation, Infrastructure, Rail transport, Auto Logistics, etc. However, as an audience, the general view that I gathered was that while few of the panelists talked about Integrated Supply Chain, a substantial chunk of it was emerging from the ‘cost’ school of thought and that too the transactional/absolute cost. It is good to know the macro aspects of cost, as one of the panelists puts forward, “India’s logistics cost stand at about 13% of the GDP which is one of the highest in the world”. One can hear these macro aspects often in most of the discussions at a political, academic, or business forum and also in the industry reports along with ways to bring this cost down, which is logical as Logistics Costs impacts the competitiveness of the countries and organizations alike.

It is also important to look at cost at the micro level but without having a larger view of the cost and more importantly, the view of the value it delivers, the view can be detrimental. In a supply chain scenario that is made up of many elements including, transportation, warehousing, distribution, inventory carrying, transit times, visibility, etc, it is important to know the delivered benefits of all the cost elements put together.  A broken-down supply chain element (e.g. warehouse or transportation) will only be portraying the part of the picture. This fragmented view of the supply chain was apparent as some of the panelists put forward, “Customers would not pay more if we build better warehouses”. Considering the country’s dismal warehousing infrastructure, one would easily interpret then that if we improve the warehousing infrastructure, our logistics cost would go up further than 13%!

But that can be inferred only through the ‘cost’ (fragmented) school of thought. If customers pick such fragmented elements from different sources to create their own comprehensive supply chain, the value proposition of the ‘warehouse’ would largely be restricted to ‘rental’. And beyond a limit, one would not be able to reduce the rental.  Further this fragmented view also conveys an element of asset ownership and possibly emerges from owning warehouses, trucks MHz, etc. But owning an asset and putting it into innovative use are two different things. The asset would, generally, be seen as something having an attached cost, but its usage, linking different elements of the supply chain would carry an element of value. And when a customer’s perception of value in a company’s product or services decreases, revenue and profit fall, and eventually customer goes.

In my view, the integrated supply chain is an integral part of the overall business model. And one has to see its contribution in terms of value creation for the overall business and not merely from a ‘cost’ perspective which generally is transactional or itemized in nature. Unless the supply chain is considered, seen, or shown as an integral part of the business model, it is difficult to be seen as value-creating. And that’s where the disconnect is. It is this fragmented view of the supply chain, especially from the service providers, that let many manufacturers consider the so-called 3PL providers as Asset Aggregators (or manpower aggregators).

In nutshell, it would be appropriate to say, that unless we integrate our thoughts on the supply chain, it would not be easy to integrate the physical supply chains.  And integration of thoughts would, perhaps, be the only way to move from ‘cost’ to ‘value’ and move supply chain from a ‘cost center’ to a ‘profit center’!

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Mr. Supply Chain Manager (Mr. SCM) is always under pressure from Mr. CFO to reduce inventory levels while balancing the needs of Mr. Sales & Services Manager to reduce and fulfill client downtimes. So where must Mr. SCM draw the line?

Role of Reverse Logistics Solutions in India

Reverse Logistics helps Mr. Supply Chain Manager to keep both his clients happy. He now has the wherewithal to deliver parts to clients for service within agreed SLA’s while incorporating a process to get the faulty part back to the mother warehouse, thus helping Mr. CFO.

India, due to its large geography and complex regulatory environment, has always posed a monstrous challenge for the movement of spare parts across states and far-flung regions for Mr. SCM. So how can he set processes to work in such an unorganized sector?

The ANSWER lies in working with the right partner – one who offers specific solutions through set systems and processes.

Industry experts speak of the following benefits through reverse logistics: Reverse logistics done properly can decrease returns processing costs by 25%, increase productivity by at least 10%, increase asset realization by 2x to 4x, increase customer satisfaction by 100%, and increase profitability by 2% to 5 % apart from being compliant with waste management, especially e-waste regulations.

One of my recent experiences with a leading OEM for home networking products (Wi-Fi Routers to be precise) was less than pleasing once the router was declaring faulty by the call center executive. I was provided with the phone number of their service center in Andheri – East. Andheri – East! There goes my day. I had to go over to Saki Naka and give my faulty router and collect the good one. The exercise was simple but I dedicated an entire half-day to this process thus ensuring that my work suffered. This company could have easily offered this service: Field SWAP, where:

• A 3PL Logistics like Genex carries the fresh part to the client (me)
• Asks for the faulty part while handing over the good part
• Carries the part back to a repair center and if repairable does so and return it for managing warranty cases
• Faulty equipment scrapped as per company or e-waste guidelines

We at Genex LogiSolution cater to this large un-tapped need at the client’s place in the Indian market. We offer customized solutions that fit the need of every client without increasing their costs. Come tap into our network of warehouses and Logistics Centers spread around the country and an established distribution network (partly owned). Genex Logistics offers Warehousing & Distribution services across industries to Time-critical After Sales, Production Logistics, Finished Goods, Promotional material and reverse Logistics, etc.

Genex Logistics currently manages more than 500,000Sq Ft of space and is likely to add another 500,000 Sq Ft in the next few months time frame. The industry segment that we are catering to for warehousing is Apparel & Fashion, Retail & FMCG, Power Electronics, High-end office furniture, high-end automation spare parts, high-end cosmetics, drugs & pharma, Industrial batteries, wine & Liquors, Precision Engineering & Automotive.

FAQs of Reverse Logistics

Q: What is Reverse Logistics? Reverse Logistics involves the movement of goods from their final destination back to the manufacturer or a designated disposal point.

Q: Why is Reverse Logistics important in India? In India, Reverse Logistics presents an untapped opportunity to recover value from returns, promote sustainability, and open new revenue streams.

Q: What challenges does Reverse Logistics face in India? Challenges include inadequate infrastructure, regulatory complexities, and the need for consumer awareness.

Q: How can technology help in Reverse Logistics? Technology like IoT and data analytics can optimize processes, improving efficiency and reducing costs.

Q: What is the role of consumer engagement in Reverse Logistics? Consumer engagement is crucial in encouraging responsible product returns and recycling through incentives and awareness campaigns.

Q: How can businesses collaborate for successful Reverse Logistics? Businesses should form partnerships with logistics providers, recycling firms, and regulatory experts to streamline operations and ensure compliance.

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