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Managing Reverse Logistics in BRIC Nations

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Unique Challenges and a Case Study

By Jeff Larson & Debojit Das, OnProcess Technology, Inc.

The value of an effective reverse supply chain can be tremendous to an organization.  A well-managed process improves defective return rates, increases inventory turns, and reduces the need to purchase new inventory.  Designing and managing a reverse logistics solution is not always easy.   The United States has the advantage of a well-developed highway and rail system, airports in every major city, shipping companies across the nation, relaxed shipping regulations, centrally located warehouses and repair centers, and nationwide cell phone coverage.  However, as organizations continue to expand their operations globally, especially in the BRIC nations (Brazil, Russia, India, and China), many of these advantages do not exist and subject matter expertise is limited, leading to inefficient operations.  Despite these challenges, implementing an effective reverse logistics solution in these developing regions is still very possible.

Let’s take a look at India.

India’s current population is 1.2 billion.  That’s four times the population of the US in an area that is one third of the size, leading to an array of shipping challenges.   India is home to one of the world’s largest rail systems, but inefficient operations have led to frequent delays.  Carrier services are regularly sourced to bike messengers or individuals with transportation.  Many of these carriers do not own a smart phone restricting the updates they can do in the field and the information they can receive. Frequent power outages have increased the reliance on manual processes and have limited the dependency on technology.  All of these factors have had a major impact on our clients but OnProcess continues to drive success.

A few months ago we implemented a reverse logistics solution for a Global 500 company based out of India.  This company has over 800 Field Engineers, both in-house and contractual and services parts across the APAC region.  In India, the client was dispatching replacement parts using a local courier and assigning a technician to meet the courier onsite.  The courier was contracted to stay at the location for 30 minutes to allow the technician to make the repair and promptly return the defective equipment.  Given the challenges discussed earlier, the coordination of tech and part was not synchronized and the technician was left with limited options to return the material.  The ageing of parts due to non-returns or late collections resulted into substantial CapEx spends and the value of outstanding material was growing at a rate of $10,000 per day.  With OnProcess’ support, our client was able to modify their current operating procedures and substantially reduce the amount of defective inventory in the field.

India Client Background:

Our client dominates with more than 80% market share in the Automatic Teller Business. With Mumbai as their India Head quarters, they manage business across all four regions and Bangalore as their Central Warehouse. They have >800 Field Engineers both in-house and contractual serving almost all the major banks of the sub-continent. The field engineers visits the site against a work order to service / repair ATM machines. The parts that are replaced or defective need to be collected back and sent to their central warehouse. The ageing of parts due to non collection or late collection results in CapEx spend and affects working capital. OnProcess was engaged under circumstances when the outstanding inventory of non-collected parts touched $1.6 MM, with an addition of $10K with every sunset.

OnProcess Solution:

OnProcess’ solution to the problem started with tracking the client’s inventory, which was in the field awaiting recovery by the client’s logistics partner. The inbound logistics plan of the day is prepared and route against the same is shared with OnProcess team by the logistics partner. Once OnProcess receives the collection plan for the day, the operations team would feed the data in our RL360 platform. The platform would place calls to the drivers by regions and OnProcess executives would reach out to the drivers of the logistics partner every two hour to get pick up status of the parts mentioned in the collection plan. The status against every part number is codified and updated. An automatic email is generated every two hours with the status update and reaches client and its logistics partner. Apart from the bi-hourly reporting, a daily pickup summary is also mailed to the same distribution list. In addition to the parts pick-up OnProcess also tracked extra inventory picked up from sites, and proactively reached out to the client’s field engineers in case the site address was missing.

By doing so, OPT was able to increase the visibility into the correct location of the parts; enabling more complete and more rapid asset recovery for the client.

Results to date:

The engagement has started with a regional pilot program, where OnProcess had significantly helped recover inventory worth $ 273K in <20 days’ time. The impact to the client has further multiplied when OnProcess resources took the initiative to recover excess (non-accounted) parts worth $42K. The journey continues with OnProcess thriving to bring in more impactful results for the client.

Would you like to learn more about how OnProcess Technology can solve your global reverse logistics challenges? Contact us today!

 

 

 

 

The post Managing Reverse Logistics in BRIC Nations appeared first on OnProcess Technology.


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