manufacturingtechnologyinsights

Powering the Reverse Supply Chain through Big Data and IT

By Leo Casusol, CIO, Liquidity Services

Leo Casusol, CIO, Liquidity Services

The reverse supply chain has taken a backseat to the forward supply chain when it comes to technology and innovation. However, with increased complexities in the business landscape, such as corporate regulation, sustainability pressures, and need for cost reductions; streamlined and thoughtful processes for your surplus can go a long way toward enhancing total supply chain value.

Every business has surplus it needs to manage and dispose of. Incorporating best practices, such as big data and analytics, into the reverse supply chain improves the ability for an organization to correlate complex data in real time, matching demand to inventories in a global basis, while ensuring that the final disposition of the assets is in compliance with usage and export regulations. Once these strategies are effectively implemented, businesses can benefit from greater efficiency, performance measurability, and generation of financial results.

 A More Efficient Reverse Supply Chain

Organizations typically invest their time and resources in creating a streamlined forward supply chain. The same benefits they receive in acquiring equipment or creating products are often lost when it comes to reverse logistics. Surplus is left idle or stored, taking up otherwise valuable space, or in the case of many organizations dealing with excess inventory, added onto the plate of operations teams as another task on their already long laundry list of “things to do.” Just as IT has served as an instrument of changein the forward supply chain, technology plays a key role in the reverse supply chain.

Traditional warehouse management systems are fine tuned to reduce the risk of shortages, optimizing reordering points and quantities, and providing reliable accounting valuations for assets. Similar technology innovations for warehouse management, when applied to the reverse supply chain, enable the enterprise to work more efficiently and drive greater recovery values by serving. Other critical tools are asset management systems, such as AssetZone, a web-based tool that allows employees across the enterprise to dispose of and procure surplus from multiple locations. This scalable tool holds a breadth of data on surplus and allows the appointed project manager to set criteria, such as security authorization levels and the time range that surplus is available for internal redeployment before being moved to an external marketplace for sale.

Measuring for Success

It’s hard to “know before you go” when lacking a baseline for measurement in the reverse supply chain. Just as efficient processes can play a role in streamlining the total supply chain, measuring Key Performance Indicators (KPIs) in the reverse supply chain can guide the way to improving overall performance for the business.

With a world-class asset management system with complete descriptive information and photos for each item, employees have the ability to track and manage surplus assets, as well as to pull data for KPIs. The disposition process is also more simplified with enhanced asset data within the technology platform, making it easier to market the item. Rather than relying on antiquated disposal methods, tapping into trusted, online marketplaces run by an expert partner, allows for greater scale and reporting. Working with one provider creates the opportunity for a single point of contact for surplus needs and facilitates consolidated reporting against the allocated KPIs. With higher levels of transparency in the reverse supply chain, the organization will also have stronger data taxonomies on assets with the ability to identify buyer and seller affinity groups to continue to grow the program.

Creating Financial Value

With greater efficiencies and evaluation in place, surplus assets are no longer a burden to the bottom line, but an opportunity. Big data can help to maximize that value through greater depth of information about specific assets and industries. Working in partnership with a vendor that sells surplus globally with a large warehouse of transactional data; your business can leverage in-depth knowledge on valuation of assets for that particular industry. Knowing what assets are worth allows the business to set more accurate goals for results in its reverse supply chain and achieve higher recovery.

Another key way that technology is powering this industry is through established, online marketplaces which reach a greater number of buyers across the globe. By marketing assets to a large buyer base, your assets receive higher site traffic, more bidders, and as a result, achieve maximum value. In addition, the transactional history that an expert provider brings will provide better results. Technology innovation can guide overall sales strategy for surplus, determining optimal sales channels and methods for each asset based on previous sales of similar items.

Conclusion

Applying the same strategic thinking to the reverse supply chain, as you would in your forward supply chain, yields results. Technology is a clear way to innovate and big data holds great potential for the total supply chain of an organization. A more programmatic, holistic approach with a trusted partner is a best practice for companies looking to achieve a competitive edge. As companies look to their own strategic planning process and how they can utilize IT to drive value in their business, the reverse supply chain is a clear place to start to create greater efficiencies, measure performance for success, and generate financial results