What’s 9% of Sales & Ignored by 93% of Companies?
24th February 2010
In a recent benchmark study of 175 companies, the Aberdeen Group found that among companies that measure the cost of their reverse logistics costs, between 9% and 14.6% of their revenue was spent on reverse logistics. However, according to the same study 93% of the companies surveyed were not even aware of the impact reverse logistics costs had on their companies bottom line. The study also found that best-in-class high tech firms spent over 3.7% of their revenue on warranty claims.
Today, many companies are looking to cut where ever possible, but they are missing significant opportunities to improve their bottom line by developing their reverse logistics capabilities.
The impact of reverse logistics and opportunities for improvement for consumer goods manufacturers and retailers is significant. Many companies will spend a lot of time and resources trying to get meager improvements out of their already optimized supply chain, while ignoring the costs associated with returned goods. If you are a supply chain executive who isn’t sure how your reverse logistics supply chain works or how it impacts your company, you have a big opportunity sitting in the dark recesses of your facilities.
What would be the reaction of the senior staff if they knew that between 9% and 14.6% of revenue is spent reverse logistics, but nobody is managing it? More importantly, how much of that money could drop directly to the bottom line if it were managed and resources were focused on improving the processes?
If your company is not focusing resources on reverse logistics, or not working to implement best reverse logistics practices, you have an untapped opportunity to dramatically improve your bottom line. Reverse logistics improvements will not only improve earnings but will have a dramatic impact on customer services and vendor relations.
If you are in the dark when it comes to how much it costs to process returns, you have a big opportunity waiting for to be discovered. Like Dr. Drucker said “If you don’t measure it, you can’t manage it.” If your company is part of the 93% doesn’t track reverse logistics costs, you have an opportunity to not only improve earnings but develop a significant competitive advantage over your competitors.
