When many folks see the term "service supply chain," they automatically think "reverse logistics." But lately, I have come to the conclusion that this is a case of bad terminology. For example, if you ask a child what reverse logistics is, he or she may say that it is logistics done in reverse.
But really, this is not the case. Product isn’t going in a backward direction – back up through the supply chain. It’s not like pressing rewind and seeing a product moving backward to its original state before it was created. On the contrary, it’s more like when you come to a fork in the road and have to decide which path to take.
The fork represents the place and time in the supply chain when a company has to decide what to do with
Servicing the products they have previously sold
Retrieving the products they previously sold
Retrieving inventory from the field – whether it’s returned, recalled, overstock, etc.
Service supply chains represents the options (or paths) for handling these product flows.
It’s not a new concept. But as the Tompkins Supply Chain Consortium found in a recent Service Supply Chain Hot Topic Survey, it hasn’t received much attention lately, especially during this recent ugly economic downturn.
The survey also notes the following challenges that companies and individuals in the service supply chain are seeing:
The low degree of outsourcing being done in service supply chain functions;
Inadequate management involvement in the process;
Lack of sound forecasting techniques for service parts;
The amount of wasted effort in the company processes; and
Inefficient and ill-suited IT systems to manage service supply chain activities.
As I’ve repeated over and over, now is a great time to make changes, and improving your service supply chain practices should at least be on your list of areas to assess. With improved practices in this area, you can reduce costs and improve customer satisfaction.
Also, many companies may be interested in the sustainability benefits of service supply chain functions. Product screening, recycling and resale, and remarketing of materials and products, as well as other functions, can help with green supply chain initiatives.
An interesting fact noted by the Consortium is that the companies leading the sustainability efforts are the same companies that lead in managing and executing service supply chain processes. (See the figures below from Tompkins Supply Chain Consortium report, "Service Supply Chain: The Growing Challenge of After-Sales Supply Chain Management," for more information on the disposition of returned product.)
I’m not trying to get philosophical on you, but when you come to that fork in the road, don’t you want to be prepared? Having your service supply chain in order (and not just thinking that you’ll run the logistics in reverse) will have great results for your company.
Do you share my view on the terminology: It’s service supply chain, not reverse logistics?
I would like to hear your thoughts.
Go!Go!Go!
Jim
Read more on reverse logistics in this article, Returns, Refunds, & Recalls: Reliable Reverse Logistics
See the scope of Service Supply Chain consulting services from Tompkins Associates (PDF).