Merger and acquisition (M&A) is a closely watched segment in the business world these days. More strategic relationship building is expected in the coming year, versus the quick buy-ups of distressed companies of the previous few years.

Recently, I had a discussion with some of the experts at Tompkins Associates about M&A and reverse logistics – specifically the service supply chain. This is a topic that I often perceive as having a great deal of benefit to companies who do it correctly, even though many times those benefits are hidden.

The cost savings on improving the returns process, as well as the parts management and repair process, hold huge potential for cost savings. Many industry players are on to this revelation, as we found in the survey conducted by the Tompkins Supply Chain Consortium on M&A in the service supply chain industry.  But the survey also shows that private equity companies are not getting involved to a great extent.

So, why are private equity companies missing the potential for investment in the service supply chain? Is it they don't know the potential exists? Or is it just that they are not interested or don't think the time is right for making an investment?

I think the big missing piece of the puzzle is that private equity companies don't know about the profitability of reverse logistics. I would advise leaders of companies in this area to leave no stone unturned when it comes to service supply chain.  Don’t overlook or ignore reverse logistics opportunities while investments are made elsewhere.

What do you see in future trends for the service supply chain? Are you and your customers reaping the potential cost savings of reverse logistics?

GoGoGo!

Jim

Resources:

M&A in the Service Supply Chain Industry

Service Supply Chain

Photo Credit: Aleatoric Consonance