Reverse Logistics: "How to Realise an Agile and Efficient Reverse Chain Within the Consumer Electronics Industry"

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Integrated Supply Chain Solutions May 2008

Reverse Logistics*
How to realise an agile and efficient reverse chain within the Consumer Electronics industry

*connectedthinking

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PricewaterhouseCoopers

Foreword

Welcome to PricewaterhouseCoopers’ first Reverse Logistics report in the Consumer Electronic industry. This report is designed to help companies in the Consumer Electronics industry to better explore, understand and share the ideas about today’s pressing business and strategic topic: Reverse Logistics. Our unique combination of a broad, web-based survey sent to supply chain managers and their tax/finance counterparts throughout Europe, one-to-one interviews with subject matter experts and field visits to industry leaders has allowed us to gain insights to current reverse chain strategies, organisations and processes. In this report, we will focus on examining the value drivers that trigger companies in setting up a reverse chain strategy and also how they embed this strategy into their processes, technology and organisation. A special focus in this survey was on how these drivers relate to a company’s tax policy and processes. Not surprisingly, environmental challenges, customer satisfaction, cost reduction and being compliant to increasing and complex regulations are driving companies to explore Reverse Logistics as one of their strategic challenges and opportunities. Our conclusion is clear: operational as well as tax & financial considerations must form an integral part of the reverse chain strategy to realise a “best practice” reverse chain. We hope this report provides interesting and useful reading to you and your colleagues and that it evokes discussions within your company about your reverse chain strategy and processes. We welcome your thoughts on the issues and ideas we have addressed herein as well as your ideas for future topics towards Reverse Logistics.

Sincerely, Mathieu Rosier Partner Advisory Performance Improvement PricewaterhouseCoopers Bertjan Janzen Partner VAT and Customs PricewaterhouseCoopers

Reverse Logistics

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PricewaterhouseCoopers

Key Observations

We captured our key observations on trends & developments and barriers concerning managing the reverse chain in the picture below. They combine our vision on supply chain and tax complexity and show which key success factors are essential in realising an agile and efficient reverse chain.

Main trends in the consumer electronics market
Consumers become more powerful Shortening product development cycles Supply and demand markets become more global

Barriers
Little recognition of Reverse Logistics in creating competitive advantage Unquantified Reverse Logistics costs Lack of reverse chain collaboration Lack of appropiate management systems Limited forecasting & planning Lack of clear return policies & guidelines High rates of non-fault found returns Time of claim and credit processing Dissatisfaction information technology support Non-recoverable Value Added Tax payment Aministrative and financial burden of tax Customs formalities Permanent establishment issues Difficulties in customs tariff application

More outsourcing and off shoring of production activities

Key succes factors
Top management awareness and support Balancing cost effciency with customer responsiveness Simplified and standardised processes Detailed insight in cost and performance Cross-functional collaboration Strategic collaboration with reverse chain partners

Complexity in managing the reverse chain

Aligned policies and processes Strategic focus on avoiding returns Perceive returns as perishable goods Reverse Logistics as part of sustainability program Reclaiming value from returns Control over turn around times Optimal tax structuring Full tax compliance and control

Main trends in the managing Reverse Logistics
More strategic focus on Reverse Logistics Intensifying collaboration between reverse chain partners More...
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