A New Approach to Logistics and Transportation through the Reverse Supply Chain
By Leo Casusol, CIO, Liquidity Services
The forward supply chain has been a hot topic on the minds of executives. Regardless of their respective industry, significant resources and technology have been invested to improve logistics and transportation solutions. As a result, businesses have experienced better day-to-day operations and are honing their attention on their core business. Unfortunately, much of this investment does not transfer to the reverse supply chain as surplus inventory and assets move off the organization’s list of usable or saleable items.
This translates to a drain on workforce productivity as front line employees struggle to manage and dispose assets in ways that are sustainable and compliant with company protocol, industry standards, and regulatory requirements. A key area to begin to shift this from a negative impact to a positive contribution to the business is in logistics and transportation, focusing on three key points in your strategy: understand your current process and identify gaps, engage a trusted partner, and implement an asset management solution that can be refined to grow with your business.
Understand Your Process
How is surplus inventory currently being managed in your business? How does it move from your office locations or stores to warehouses, and where does the product lifecycle “end”? Perhaps goods are being transported at additional cost to a local liquidator who then resells the assets at marginal value, or maybe the surplus items sit idle in a warehouse taking up valuable storage space. Most organizations lack an established process and the visibility into where their surplus assets are going. This means lost revenue and potential risk for the business.
Transportation expenses are typically a large operational expense, but through smarter planning in the reverse supply chain, this can become an area of greater cost savings and efficiency.
Engage a Trusted Partner
Just as you are an expert in your particular business and industry, a solution provider whose core business is the reverse supply chain, best understands how to manage, value, and sell surplus to maximize its full value. To achieve results without the help of a trusted vendor, you would have to build your own internal systems, create marketplaces to connect with buyers of surplus, and add the secondary markets to sales, marketing, and customer service teams; in other words, a large capital expense over many years.
Thankfully, providers with established marketplaces that attract buyers for even the most niche surplus assets already exist. With their expertise, they can also partner with you to review your current process and clarify any gaps that may exist.
Implement an Asset Management Program
Technology is central to an efficient asset management solution. Rather than relying on the paper-based systems of the past that cannot properly or accurately track assets, a web-based solution provides greater visibility across the company. With an IT solution, managers and line workers alike can load or view surplus assets and redeploy them where they are needed, or make the decision to move the asset(s) to an online channel for sale to a targeted buyer base.
“Transportation expenses are typically a large operational expense, but through smarter planning in the reverse supply chain, this can become an area of greater cost savings and efficiency”
Without the sight lines that a technology-based solution affords, surplus might be sitting idle in a warehouse, absorbing high maintenance costs and depreciating in value, or moving from location to location, adding to already expensive fuel costs. The American Transportation Research Institute estimates that medium-sized organizations with up to $100 million in annual revenue spend about 38 percent of earnings on transportation—a large capital expense that can be reduced through smarter asset management. As your business grows domestically or globally, these expenses will exponentially increase unless your business has an asset management solution that can scale with your growth strategy.
Logistics and transportation require significant planning and resources throughout the supply chain, including the reverse supply chain. By understanding how your organization currently manages surplus assets, engaging a trusted partner, and implementing a smarter asset management program, your company can benefit from reduced costs and enhanced value across the supply chain. Technology is a critical component to creating a better solution for your surplus, maximizing its full value, and creating more streamlined processes to serve your customers in greater ways.