OEMs Call Reverse Logistics a Competitive Differentiator

July 1, 2013
Transportation and processing costs are driving the trend to replacement and swap-out in consumer electronics.

Declining product prices in consumer electronics and increasing transportation and processing costs for repair are driving a trend toward replacement or swap-out instead of repair, according to a joint study carried out by arvato and Deloitte. Researchers surveyed executives at 25 global high-tech companies and concluded that more OEMs are realizing the strategic importance of the aftermarket and reverse logistics practices as competitive differentiators.

Another broad trend highlighted in the report is the rising importance of social media in after-sales strategies including using user-communities, facebook and twitter to perform first-level support tasks. Changing consumer behavior was also highlighted as increased device usage, interconnectivity and higher user dependency are all making the returns and repair processes a more involved and urgent event for end users.

The most common pain points highlighted were the setting up and managing of aftermarket and reverse logistics operations in emerging markets and the increasing challenge associated with the requirement to provide fast and efficient delivery of spare parts globally. Significantly the report also revealed that while in past years cost efficiencies were the most important objective in after-sales strategies, this has now been replaced by customer satisfaction as a main objective.

The study found that high-tech companies are increasing their efforts in e-channel solutions and social media in order to further improve and integrate customer interaction and to help them gain greater control of the returns process as early as possible in the returns cycle. Additionally the report highlights the fact that cross-selling and up-selling opportunities can provide a major revenue driver for OEMs—however, many lack the capabilities to take advantage of those opportunities with current channel conflicts also helping to keep them out of focus.

The report found that the best-in-class aftermarket operations are those that enjoy a high level of IT systems integration within their organizations’ after-sales value chain resulting in end-to-end process transparency, optimization and efficiencies.

“The study results are consistent with our experience,” said Marcus Karten, vice president of global business development at arvato Hightech. “Best-in-class aftermarket services are now an essential element for high-tech companies to differentiate themselves from their competitors and ensure successful long-term brand loyalty in the marketplace.”

The survey results also revealed that customer satisfaction and total cost of ownership can be improved at the same time, if all elements from first customer contact through returns qualification and filtering to reverse logistics and remarketing are fully streamlined and integrated, concluded Wolfgang Kurz, manager of Deloitte Consulting.

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