Fact of the Month

A recent KPMG study suggests that companies can recover up to 0.3% of annual sales by using reverse logistics.

Source: Bloomberg Businessweek

Feature of the Month: Reverse Supply Chain

If you ask a business owner about their supply chain, they would most likely be able to give you a detailed plan of how their products get to customers and the many ways they are working to increase they system's efficiency and save money.  However, if you were to ask that same person what the company does if the customer does not like the product and wishes to return it, the answer would probably be much less eloquent. The idea of designing your supply chain to incorporate returns is a relatively new idea and many companies are currently forced to either discard extra items or heavily discount them to remove them from their inventory. New logistics companies have formed to help solve this problem and have in turn created the new industry of Reverse Logistics.

Reverse logistics historically meant selling unwanted goods through local auction houses, but these sales suffered from small buyer reach and resulted in sellers receiving low rates. New firms are attempting to create worldwide marketplaces for buyers and sellers and a few have been very successful. Genco, a privately held company in Pittsburgh, has had tremendous success with the rollout of its Genco Marketplace which connects sellers of unwanted products with potential buyers. Global companies such as Best Buy, Sears, and Target all use the service to sell returned or overstock items. The marketplace continues to grow very quickly and today moves $5 million a day in merchandise.

Liquidity Services is another firm that initially focused on government surplus, but has expanded into Retail Reverse Supply Chain in the United States and Europe. Liquidity Services has been growing rapidly by developing multiple niche websites and market places. For example, their European offerings for businesses include UK-Liquidation and LiquiBiz and they recently started a consumer-focused electronics portal called Willen Trading. Large retailers have been drawn to the company not only because of its quick turnaround and high recovery rates, but more importantly, the auctions offer brand protection by distributing products to many small buyers who are outside typical sales channels. Liquidity Services has also added considerable value by placing its own employees at client locations to better manage the processing of customer returns.

Global companies have already sensed how much money they can save by incorporating reverse logistics into their current supply chains. Many of the companies continue to ramp up the use of these new services and considering the benefit companies receive, it is likely that many more companies will seek to add this efficiency.

From the globalEDGE Blog

When products are not at the end of their useful lives, they can be sold through wholesale by firms such as Genco and Liquidity Services. But what happens when the product can no longer be used and no other consumer wants it? It must either be disposed of or recycled. Click on to the globalEDGE Blog to learn more about the Disposal Supply Chain Industry around the world.

Featured Resources

Logistics Management
As the web version of Logistics Management magazine, this site serves professionals in the field of logistics and supply chain management. The site provides an array of information such as current news, logistic, research, company and warehouse directories, and an event calendar. User is also able to subscribe to a variety of free newsletters on logistics and supply chain management.
Category: Logistics

Centre for International Sustainable Development Law (CISDL)
The mission of the CISDL is to promote sustainable societies and the protection of ecosystems by advancing the understanding, development and implementation of international sustainable development law. The site presents research, publications, and projects of the CISDL and is available in English, French, and Spanish.
Category: Social Responsibility

Featured Academy

Methods and Channels
This module was created in cooperation with the U.S. Commercial Service and is the fifth chapter of the book A Basic Guide to Exporting. In this module, we will cover: Finding the best approach to exporting your company; different techniques when exporting; separating international from domestic business; finding overseas partners, agents and distributors. A case study on the business LightStream Technologies is also included.
Category: Exporting

globalEDGE Business Review

"The Health and Economic Effects of Counterfeit Pharmaceuticals in Africa"
by Jeremy M. Wilson and Roy Fenoff (Volume 5, Number 6, pp. 1-2, 2011)

Pharmaceutical Counterfeiting in Africa remains a serious threat to quality health care and the African economy. An impairment to public health, counterfeit pharmaceuticals used to combat malaria and tuberculosis have been blamed for up to 700,000 deaths in Africa each year. They reduce the sales of legitimate drugs, reduce tax revenue, deter innovation and growth, discourage foreign investment, and require significant resources to combat them. Without empirical data on the different dimensions of the effects, the sheer magnitude of the problem is currently unknown because the estimates are not very reliable. Greater information on the problem is needed for developing evidence-based policy and decision making.

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