Value Recovery Yields $1 Million per Year for ReSolve Customer

I can’t think of a better way to explain the true value that a well-managed reverse logistics program can bring to your organization than to share a real customer success story every now and then. This is a case study that perfectly illustrates ReSolve’s value recovery solutions – our ability to take a customer’s unused excess inventory (or even designated scrap) and test, harvest, reuse, and/or remarket those components to add money back to the bottom line. The results have been remarkable. 

Problem:

A ReSolve customer that manufactures and services security camera systems was receiving a large quantity of returned hard drives (HDDs) from the field each quarter. Some were normal-capacity drives, which the customer no longer needed; others were high-capacity drives, which the customer still used. The customer’s service center did not have the means to test each drive or to securely erase the data, so all of the returned drives were being scrapped. Meanwhile, the ongoing fulfillment demand for high- capacity HDDs required the customer to keep buying new drives at market prices. 

Solution: 

ReSolve’s customer solution team developed a custom tailored program that began with inspecting and testing the customer’s returned HDDs and found that a large portion of them were actually NFF, or “no fault found.” After a thorough and complete visual and mechanical inspection, the drives were erased to DoD specs. ReSolve was then able to redeploy the much-needed NFF high-capacity drives back into the customer’s service inventory. Instead of paying hundreds of dollars each for brand new drives, the customer is now paying a minimal service fee and reutilizing perfectly good drives from its own returns stream. In addition, ReSolve is also able to remarket the customer’s NFF drives that were no longer needed to support ongoing repair and warranty requirements. This has added more than $250,000 to the customer’s bottom line each quarter, bringing in a significant stream of unplanned revenue. 

Outcome: 

In the end, ReSolve helped this customer go from making pennies in scrap recovery to adding over $1 million to the service center’s annual bottom line. The customer gets the HDDs it needs to fulfill service demand in addition to receiving a substantial payment from drives that are remarketed by ReSolve’s global commodity sales team. It doesn’t get much better than that!

Are you ready to see how much value ReSolve can help your company recover from the reverse supply chain? It never hurts to ask! Email us to get the conversation started.

Does Your Excess Inventory Have Value Recovery Potential?

Carrying too much inventory is a risky situation, yet it’s a common occurrence for many OEMs and repair service providers. Excess electronic components are easily accumulated during the ebb and flow of the forward and reverse supply chains. Problems arise when overvalued, obsolete, or out-of-warranty products are no longer needed and become a fiscal liability. In the typical overstock scenario, excess electronic products are liquidated or recycled for pennies on the dollar. But before resorting to that option, companies should be asking themselves: Does this inventory have value recovery potential? 

Causes of Excess Inventory 

There are many reasons why inventory becomes a liability, but some of the more prevalent ones are purely driven by demand for excellent customer satisfaction – the product must be manufactured on time, shipped on time, and serviced on time. This means having the right service parts positioned in the right places for whenever they happen to be needed. What is typically lost in translation is the fact that although on-hand supply ensures total customer satisfaction, it also has the tendency to result in excess inventory accumulation. This is due in part to canceled orders, poor planning and forecasting, a lack of dedicated internal resources to monitor pockets of supply, and ultimately, overbuying. 

In addition, customer returns or materials returned from field service are not screened, tested, and recertified to ODM specifications for reuse in the service supply chain. This leads to an increase in spending for new fulfillment parts that companies may already have in their possession but are not leveraging. 

Value Recovery Potential 

ReSolve helps companies minimize excess inventory risk by implementing asset reallocation processes that sort, test, and authenticate surplus electronic components and products. 

If materials test “no fault found,” they often have enormous value recovery potential. If there is internal demand for the parts, they can be reintroduced into the company’s service spares inventory, which could save hundreds of thousands of dollars per year in new buys for service parts. 

If the inventory is no longer needed by the company to support ongoing repair and warranty requirements, it can be remarketed to bring in a significant stream of unplanned revenue. 

If the inventory is faulty but still under warranty, it can be submitted for RMA recovery.

ReSolve can manage all of these processes for our customers. The recovery potential is there, and there is no one-size-fits-all solution. The beauty of working with ReSolve is that you don’t need to know which solution is the right one for your company; our solutions team will work with you to understand your company’s unique situation and customize a path that will recover the most value. Then you can just sit back and enjoy the savings. 

Stay tuned for our next blog post for more on this topic. We’ll share a great case study detailing how ReSolve has been able to save one customer more than $250,000 per quarter using value recovery solutions.

R2 Solutions Releases R2:2013 Draft for Public Comment

On November 1, R2 Solutions (a nonprofit organization established to facilitate R2 principles) released the first draft of its proposed revisions to the Responsible Recycling (R2) standard for electronics recyclers. The R2:2013 Standard draft comes more than four years after the standard was originally released in 2008.

According to the nonprofit organization’s website, “R2:2013 seeks to clarify requirements of the R2:2008 Practices, improve the readability and understanding of the standard, provide additional best practices, and enhance the quality of certification.” The revisions are a collaborative effort of key industry stakeholders, including representatives from Arrow, and have been reviewed by the R2 Technical Advisory Committee (TAC).

The TAC will be accepting public feedback on the recommended changes until December 16, 2012. You can read the R2:2013 Standard draft here and provide feedback through the established form. Comments will be taken into consideration before the TAC prepares the final document for release.

R2 certification is designed for the electronics recycling industry, containing specific requirements for companies that dismantle, refurbish, or recycle end-of-life electronics. It is intended to maximize reuse and recycling, while minimizing environmental and data security risks. For more information about how working with an R2-certified reverse logistics provider can protect your business and provide peace of mind about IT asset decisions, please download the one-page report “Why Choose an R2-Certified Reverse Logistics Provider.”

A Cost Savings Model for EOL Service Parts Support, Part II

Managing service parts for electronic products on end-of-life (EOL) platforms can be incredibly expensive. Most OEMs just accept that fact as a fixed cost of managing a production line and a service parts supply chain. But what if the cost weren’t so fixed? What if OEMs could save significant money on the procurement of the exact same service parts? As it turns out, they can.

In our last blog post we started explaining ReSolve’s three-tiered component (or assembly) support strategy for sustaining EOL parts fulfillment programs for our customers. This diverse service parts supply chain enables us to support our customers’ EOL requirements at a significant cost savings over the traditional PO model. This is what our procurement model looks like:

In the previous post we focused on the different types of procurement sources for components. Now let’s talk more about engineering and full system procurement options.

Engineering may not always be top of mind for sourcing spare parts, but it can actually be a very effective solution. With certain commodities such as hard disk drives and LCDs, ReSolve can procure generic parts when specific part numbers aren’t readily available and build them up to mission-specific needs. ReSolve’s full suite of engineering capabilities enables us to offer both product upscaling and product reintroduction services.

• Product upscaling involves starting with a generic product that shares the same physical attributes with the target product and then applying proper engineering upgrades (hardware and software) to achieve the final target product attributes. Once an OEM-specified and OEM-approved product has been engineered, ReSolve affixes proper labels reflecting dual part numbers, revisions, and other proprietary information.

• Product reintroduction involves testing and screening products in unknown condition from a customer’s own field returns stream. ReSolve does this using OEM-approved processes and platforms. Products and components that test as “no fault found,” or NFF, can be recertified and reintroduced into the customer’s supply chain as service inventory.

And finally, an integral part of any end-of-life supply stream should incorporate the procurement, teardown, and compliant disposal of full systems. As a member of the Arrow Value Recovery Solutions group, ReSolve enjoys access to a large and predictable global pipeline of returned IT assets including laptops, desktops, servers, and other technology products. Coupling that finished good supply stream with our leading-edge engineering capabilities, we are able to recertify harvested components from torn-down units for the purpose of reintroducing them intelligently into the service supply chain.

ReSolve can also reuse full systems from our OEM customers’ own internal resources. For example, “Part 1x” may be needed at company unit A, and company unit B may have “Part 1x” in a full system – but unit B has no way of tearing down that system, getting to that part, and selling it to company unit A. ReSolve can facilitate the flow of materials within an organization. And last but not least, ReSolve can locate and buy full systems from the open market, where it’s feasible just for the purpose of harvesting the parts that our customers need.

The bottom line is that there are many more ways to support products on EOL platforms than just last-time buy purchase orders. And almost all those alternative options offer significant cost savings for ReSolve customers. At a time of high supply and shrinking margins, using a little reverse logistics ingenuity to dial back the “fixed” cost of doing business just might be the fix that gives your company the competitive edge.

A Cost Savings Model for EOL Service Parts Support, Part I

How does your company manage parts on end-of-life (EOL) platforms? It’s a universal problem that applies to any OEM that is managing a production line and a service parts supply chain.

Let’s say, for example, that your company decides to stop manufacturing an electronic product because you have a newer version coming down the pipeline. As soon as that decision is made, the product goes EOL. But you still have to support the product until the warranty period has expired for the last customer who purchased it. The traditional way to do this is to contact all the manufacturers for the product’s components and open extended last-time buy (LTB) purchase orders for spare parts, often with commitments to buy at a locked-in price point. Does it get the job done? Yes. Could the same job be done less expensively and with less inventory risk? Absolutely.

ReSolve runs a three-tiered component (or assembly) support strategy when it comes to sustaining EOL parts fulfillment programs for our customers. This diverse service parts supply chain enables us to support our customers’ EOL requirements at a significant cost savings over the traditional PO model. Our model looks something like this:

You can see that ReSolve utilizes three different types of service parts sources: We can buy the components; we can buy full systems and harvest parts from them; or for certain commodities, we can engineer generic parts up to a certain specification. In this post we will focus on component-level procurement; we’ll cover engineering and full system procurement in part two.

When it comes to component-level service parts procurement, the best way is to diversify the supply base. Unlike most reverse logistics providers, ReSolve is able to reliably use open market sourcing, thanks to our unparalleled market intelligence. We have a team of global commodity managers with 24/7 visibility into the electronics supply chain. Thus ReSolve is able to react immediately to spikes and fluctuations in overall market supply and demand to procure what our customers need when they need it. Since most parts needed for EOL support will see significant price reductions over a multiyear period due to market depreciation, ReSolve customers are able to take advantage of those savings. You can see the difference between the legacy LTB support price point and the real-time price point for a sample HDD in the chart below.

In addition, ReSolve utilizes state-of-the-art testing and inspection processes on all procurement orders to protect our customers from the threat of substandard parts.

ReSolve also has unique access to franchise procurement – thousands of device manufacturers and OEMs – that we can use to complement our open-market strengths. And yes, ReSolve does make traditional LTBs as well – but only in situations when franchise or open-market channels are not viable options. When you are buying a single-source part, such as the plastic bezel surrounding a computer monitor, traditional LTB procurement may be the only option. But if you’re also buying the computer display itself, over time you may see a cost advantage to purchasing a full system and obtaining the components through parts harvesting and teardown. To learn about ReSolve's full system procurement, along with our engineering services, read part two.

All-in-One Reverse Logistics Management

Many elements go into a robust reverse logistics program for an OEM. There is product returns management, which includes sorting, teardown, testing and inspection, and kitting. You may have repair vendors scattered all over the globe. Then you have your service spares inventory hubs and stocking locations, also managed by regional vendors. 

There is a great deal of time, logistics planning, and expense involved in getting components and finished good products from one location to the next. Often the same parts and products are shipped back and forth from point A to point B multiple times. With every shipment, the risk increases of something going “not quite as planned.” And let’s not forget to mention how the service fees from all those different vendors really add up! Wouldn’t it be ideal if you could hire one vendor to manage your entire reverse logistics operation – from beginning to end – all over the world? 

You can. It’s called all-in-one reverse logistics management.

ReSolve offers this service to large OEMs. The idea, while complicated in practice, is quite simple for the customer. ReSolve manages the company’s entire reverse logistics operation, creating a single point of contact for any other needed vendors. In addition, we create an all-in-one, strategically placed operations center of excellence and – when needed – move your other vendors in with you. 

With all-in-one reverse logistics management, all your product returns come back to the same location. Even better, they are repaired in the same location. If there are services that ReSolve needs to outsource to specialty vendors, the vendors can set up shop in the same building. So the routing of parts for repair is no longer a process of calling a freight carrier and getting a truck. It is instead simplified to handing the part to another cage inside your location and then taking it back when the repair is done. 

What are the benefits of such an arrangement? For starters, your company saves significant money on shipping charges and freight management. In addition, all-in-one reverse logistics management helps your company improve compliance and reduce risk. After all, whenever you ship materials outside your building, the chance of mishaps (such as data theft or environmental violations) necessarily increases. The more outside vendors you have to use, the more risk you are taking on. When you are able to keep all materials within the same location, there is much less exposure for your company. 

To sum up: All-in-one reverse logistics management can help your company save money, improve efficiency, and better manage compliance and risk – all while simplifying the process and workload for you. Sounds like a good plan to me.

New Options in Reverse Logistics: Product Recall Management

By now OEMs are starting to realize the substantial gains made by implementing (typically by outsourcing) efficient product returns and service spares management programs. Most industry reverse logistics program case studies show that the benefits to company finances, productivity levels, and customer satisfaction rates are undeniable. 

Now some third-party reverse logistics providers are starting to offer additional services that don’t necessarily fall under the normal product returns or service spares management umbrella. For example, how would you categorize a proactive product recall campaign? It does involve an element of product returns coming back from the field … but there is much more to it than that. It requires notifying customers, monitoring their responses, answering their questions, and ensuring that the part/product replacement process is seamless (i.e., as painless as possible) for the customer base. What department of a large OEM is designed to manage this operation – especially when it is a massive recall? 

The answer for most OEMs is that there isn’t a dedicated internal department whose main function is product recall management. Would it make sense to employ a full-time team for an event that might happen three times a year – or not at all? So when it becomes necessary to quickly organize such an operation, OEMs have to divert focus away from their core business to create a crisis team to temporarily focus on the recall. This can easily become an operational and HR nightmare – scaling up and scaling down in terms of staffing needs – depending on the changing recall management needs. It’s inefficient, and it’s a financial drain on the company. 

Now OEMs can outsource the product recall management function to a third-party reverse logistics provider such as ReSolve. For example, let’s say Company A manufactures and sells desktops. Company A gets an “engineering advisory” from one of the desktop’s device manufacturers that there is a serious problem with the part and they should replace it – as soon as possible – for all 10,000 customers who bought the product. Company A needs to take action, but it doesn’t have a team designed to handle that project at all, much less in short order. The company then comes to ReSolve for help. 

As soon as Company A notifies ReSolve about the recall, we immediately go to work on its behalf. We create a product recall website under Company A’s logo and brand specification where customers can find more information about the recall and fill out a form to start the replacement process. ReSolve has the technology infrastructure to automatically filter order forms to our own warehouses, so Company A never has to address them. Then we fill the replacement orders, which requires a global footprint with strategic stocking locations in every major business region of the world – something that few reverse logistics companies can offer. Then we manage customer interactions, track the entire process, and provide Company A with detailed reports at the end of the recall operation. 

At the end of the day, outsourcing product recall management differs from a normal product returns management program in that OEMs aren’t expecting to recover lost value and add it back to the bottom line. Recall operations cost companies lots of money … there is no getting around it. However, by outsourcing the operation to a third-party provider that is equipped to handle the situation as efficiently as possible, OEMs can significantly keep costs down while allowing employees to continue their primary focus on designing, building, and marketing new products. And the money saved by not upsetting customers with a poorly managed recall program? That’s a figure we can only speculate about – but we’re sure that you'd love to be the OEM that finds out. If you have a product recall management project, contact ReSolve to find out how we can help.