How Does Reverse Logistics Create Value?

How Does Reverse Logistics Create Value? - Banner

Traditional logistics and supply chain operations see your networking equipment flowing in a very straightforward manner. You get equipment from a manufacturer or reseller, you then either sell it directly to a customer or install it on your network, and the process comes to an end when the equipment is put into service.

You move from the original to the final use in a network where it is serving your customer either directly, as is the case with dark fiber sales, or as part of a broader service, where it helps maintain your larger network’s uptime and reliability.

Now, think of your equipment flowing in the opposite direction.

You’ve bought and paid for it already and used it through its working life or through your need for it. Your equipment will move back through your supply chain to warehouses and storage options, this time owned and controlled by your company. Sometimes you’ll reinvest this equipment in your network in new locations where it can be useful. This process is what we refer to as “reverse logistics.”

Reverse logistics becomes valuable when it flows out of your supply chain altogether. This time, you’ve assumed the role of the equipment provider and are now selling it or scrapping it for revenue — which can be cash if sold or can be parts and components if scrapped.

The better you are at creating and using a reverse logistics program, the more value it can add and the more it can improve your customer service.

What is Reverse Logistics Value

How Does Reverse Logistics Work?

Before you can understand how reverse logistics creates value for your telecom business and the health of your network, you need to understand what it entails and how to achieve it.

Reverse logistics covers the entire process and series of steps businesses use to reuse products and equipment in their existing operations or put out-of-use equipment toward the development and improvement of their network.

Essentially, you’re working to make the most out of every purchase by keeping materials and equipment in use or by putting them into a cashflow situation by selling to a partner when the equipment is not actively contributing to your company’s growth.

For some, this is mainly about recycling and selling equipment when it ceases to be useful. For others, it is about the smart use and allocation of resources throughout their entire lifecycle, from the point of being raw materials through finished products, always moving forward to a final destination.

The final destination of equipment always depends on your business and your supply chain. For telecom companies, it can be a permanent installation to support network backhaul or in a remote location to provide support in case parts of your network go down.

Or, the end from your standpoint can be the sale of an older microwave radio system to a third party like Worldwide Supply. This scenario plays out when your network can no longer use the equipment and there’s no reason for you to continue paying to store the goods. Instead, you can sell it and squeeze out one last bit of revenue to maximize the return on that initial purchase so long ago.

The good thing about working with a partner who buys used telecom equipment, like us, is that we also sell it. You’re able to generate revenue and immediately put that toward the purchase of equipment you do need to maintain growth and network viability.

How reverse logistics can create value really depends on the goods and equipment you have, the strength of your existing network, current customers, growth potential and where you need cash flow to meet that potential.

Make the most of every purchase

How Can Reverse Logistics Add Value to My Telecom Business?

Your work in the telecom and network space will make reverse logistics look a little different than other sectors. You’ll have two elements of reverse logistics, both of which are equally important and will take an investment to operate properly.

The first leg of your reverse logistics operations looks like the more common applications: essentially, it’s how reverse logistics can add value for your customers. This element of reverse logistics deals with the services and equipment you provide to businesses who are buying services and equipment from you or are relying on your installed equipment in co-location operations.

You’ve got to keep everything up and running, so you can’t have inadequate servers or equipment failures that cause downtime.

Think of it like running a store. You’ve sold your customers equipment and sometimes it doesn’t work. So, you need a way to process the returns and replacement of that equipment. Using a reverse logistics process will allow you to get equipment back from the customer and send it through your supply chain in the other direction so it is stored and able to be reviewed.

You might ultimately send this back to the manufacturer if you can’t repair it. Or, you may need to scrap or sell it if the equipment has been in the field for a long time. You are figuring out what to do with equipment when your customer is done with it.

Reverse logistics adds value to your telecom business here by giving you a clear path to accept returns and replace equipment quickly so you can keep your network up and customers happy. It’s driven by the customers themselves and will ultimately provide you with equipment that needs to be repaired, broken down into parts or sold.

The second side of reverse logistics that is somewhat unique to the telecom space is that you’ll need a secondary supply chain to manage your network internally. You’ve already got this in place, showing you where your equipment is, tracking its status and monitoring network performance relative to current demand as well as forecasted demand.

All the tracking you use to monitor your network can be leveraged to identify elements and equipment that are underperforming and need to be repaired or replaced. There’s no direct tie to an individual customer, so you’re working on the benefit to your business as a whole.

We suggest that, in this situation, you put your field teams in the role of the customer. Are you giving them what they need to be successful? Is there equipment that needs to be returned or replaced to help them grow? Can you keep up with their increased demand for what you have in play?

Growing your network and moving to the next line of equipment is a natural progression. A reverse logistics network creates value by giving you a clear path to understanding your network and improving it before things crash. The eventual handoff of equipment for repairs or replacement to a third party will give you a way to generate some final income or savings for your company.

Are There Indirect Benefits of Reverse Logistics?

Three Areas of Impact - Reverse Logistics

Reverse logistics can impact three specific areas of your business — economic, environmental and operational — according to a review of industry research.

Economic and operational impacts are relatively direct and easy to see, from better use of your funding and maximizing ROI of a purchase to increased network uptime and greater levels of customer satisfaction.

Beyond those more direct business applications, there are a few ways reverse logistics can add value to the reputation, impression and quality of your company.

That same literature review found that implementing a reverse supply chain can make it easier for businesses to achieve more international certifications — especially those that focus on ecologically friendly design and business operations. The same efforts may assist you in being compliant with updated environmental standards by reducing your impact on the planet across your entire supply chain.

A reverse logistics effort can also be a strong boost for your PR and public image.

By selling equipment after use instead of sending it to the scrap heap, you’ll be contributing to lower carbon emissions and higher recycling rates that many partners are now seeking. It matters to your success in running a business because it encourages other companies to work with you. It might even increase your chance of winning a bid on your next RFP because your customers can count some of your emissions reductions as part of their overall green business practices.

Businesses have long known the benefits of going green. According to leaders and owners themselves, here are the biggest drivers for addressing and adding sustainability, in order of importance:

  1. Company or brand image
  2. Cost savings
  3. Competitive advantage
  4. Employee satisfaction, morale or retention
  5. Product, service or market innovation
  6. Business or process innovation
  7. New sources of revenue or cash flow
  8. Effective risk management
  9. Shareholder relations

Many of your customers, shareholders, investors and employees will have personal feelings on going green, often feeling it is the “right thing to do” in terms of running the business and because of a larger desire to care for the environment.

Reverse logistics makes it easier to achieve these benefits and more by giving you a process and a partner to handle the disposal or resale of equipment. You ensure that telecom gear has an extended life instead of going to the dump, but you don’t necessarily have to do any of the complex sourcing or repairs to keep it that way.

How Important Is Reverse Logistics?

Data Spikes and IoT Devices

Reverse logistics is extremely important to most businesses because it can help you tackle some of the greatest threats the industry will face by 2020.

There may be as many as 30.7 billion IoT devices in use by 2020. That will put a significant strain on all networks as data spikes exponentially and approaches zettabyte levels annually. A reverse logistics program can help you prepare for this swing by giving you a clear path to replacing old equipment affordably and having the last bit of revenue you need to buy new gear that can keep up with demand.

In the same light, reverse logistics’ revenue opportunities can also help you transition your network to address the massive threat of mobile devices. As more equipment goes mobile, you’ll need to offer a greater level of fixed network options as well as increased mobile bandwidth so you have a way to manage, move, offload and route traffic accordingly.

And don’t forget to look at how important reverse logistics is relative to the world’s population — and in particular to aging countries. In developed economies facing the “Silver Tsunami,” predictions say that people will turn to technology for experiences and interactions as they become less mobile. As a result, residential and metro demands will increase significantly.

To address these spikes, you again need a way to quickly and affordably replace and repair networking equipment that can handle the increased throughput. Being a simple, smart solution allows reverse logistics to add value to your network.

Does Not Using Reverse Logistics Put a Business at Risk?

There’s one aspect you might not think about when it comes to reverse logistics protecting your business and reducing risk: data security and related customer satisfaction.

Supply chains are growing ever more complex and the amount of data collected in equipment and systems is keeping pace with that growth. Protecting customer data plays a leading role in keeping customers satisfied. In the same light, reducing your expenses and being a green supply chain partner also keeps customers happy.

If your business suffers in either realm, you are going to impact profitability and hurt your chances of maintaining positive customer relationships.

Pure logistics companies, such as Cerasis, have seen that data breaches can impact a brand’s ability to retain customers. And in the fight to keep the business alive, they often start to ignore reverse logistics. This can drive up costs and further damage brand reputation.

By creating a robust reverse logistics and asset disposal or return management policy and enforcing it in a way that it becomes second-nature, you’ll limit the impact that something like a data breach can have on your overall company success.

For data breaches specifically, you can point to a reverse logistics program that guarantees it destroys or removes customer information from old equipment whenever it is sold, processed or recycled.

If your new lead or potential customer is switching network providers because of a data breach or poor security, you can also point to your reverse logistics program as an added benefit and safeguard.

We’ll Show You How Reverse Logistics Can Create Value

Worldwide Supply offers a comprehensive reverse logistics service for network providers and telecom companies. We do the heavy lifting of sourcing, repairing, dismantling and managing all of that excess equipment while all you have to do is go to one partner with what you have and no longer need.

You’ll cut down on costly and complex asset return management while we support your operations anywhere on the planet. You get a straightforward process to provide information and needs while our professionals build out a custom reverse logistics program with warehouse support to handle the flow of equipment.

Saving money through reverse logistics is easy. We just make setting up your process, building out storage and executing your plan easier. Our complete reverse logistics care also includes testing and audits, custom sourcing programs if you need replacements or new equipment, materials return management, in-transit services, optimal route and network selection tools, carrier relationships, tracking and much more.

It’s everything you need to handle old equipment and returns, get new equipment to grow your network and save significantly compared to OEM pricing on each step.

Contact us to discover how reverse logistics adds value to your telecom operations right now.

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