Pause: Services Supply Chain Is Not the Same as Rewind

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 its unwanted inventory -- whether it's returned, recalled, overstock, etc. Service supply chain represents the options (or paths) for disposing of or reusing these unwanted products and materials.

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 since companies haven't had the resources and capital available for process improvements.

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 service.

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.

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.

Jim

Tompkins Associates