HOW TECHNOLOGY BRINGS TRANSPARENCY TO THE REVERSE INVENTORY SUPPLY CHAIN
By Giridhar K Chief Innovation Officer MBA - IIM-A and MS - IIT, Chicago
When dealing with high-value goods like electronics in the Indian secondary market there is a significant trust deficit. Consumer protection is almost non-existent and any redressal is a matter of chance, left largely to the whim of the seller or manufacturer.
By its very nature this market is unorganized, which makes it difficult to assess the right procurement or liquidation price. Reliable sales data by region, date, seller and buyer is next to impossible to source, as bulk of the transactions are cash-based and conducted between parties that may not declare or possess formal documentation to do business.
Any platform that bridges this trust deficit by providing a transparent, end-to-end process from procurement to liquidation has great potential.This must be achieved using technologyto providediagnostics, pricing guidance, warranty servicing, curating channel partners,matchingbuyers/sellers and enableseamless transaction capability from order to cash.
"As companies strive to wring every cent out of their logistics costs, they’re increasingly taking a hard look at their reverse logistics practices. And no wonder -- they may find a motherlode waiting to be mined."
- Leslie Hansen Harps, Author and ex-CIO, in Inbound Logistics Magazine, December 2015
Productivity gains by increasing throughput of devices tested and graded are key to improving the bottom line.This will need consistency in test results and use of that information in deriving a grading assessment. Usage of this grading assessment will become critical input for repair versus refurbish versus recycle decisions.
Pricing depends on a large number of input parameters, which vary depending on whether it is the procurement or liquidation price that is being computed. Sub-optimal pricing calls can lead tosignificant revenue and margin leaks. Use of analytics and machine learning to infer patterns of buyer/seller behavior becomes critical in a market intrinsically difficult to model mathematically.
A partner registration system which helps curate the channel network by considering parameters related to their organization, statutory documentation, certifications and creditworthinessis a must. Internal operations must betightly monitored using inventory management and financial control systems. Optimizing spares usage is also key to cost optimization.
Using technology to integrate channel partners with ecommerce marketplaces, payment gateways, logistics partners and notification providers will make for a rich transaction experience. The latter will enhance timely information dissemination through multiple channels like email, mobile, SMS and push notifications, critical to the secondary market.
All transactions will needsophisticated authentication and authorization. This is to ensure there is data privacy and security. There should also be a high degree of auditability and non-repudiation built into the technology platform. Multi-level access control should allow users to perform the tasks they are allowed to and see data they are entitled to, no more no less.
"The idea that software is important is true for everyone. Even if what you do is manufacture T-shirts there is still digitization in that. The digitization happens in stitching together the supply chain, working on issues like forward and reverse logistics, or maybe customising certain distributions depending on demographics. All of it is tied together."
- ErezYarkoni, CIO Telstra, in Financial Review, May 2015
We have seen ways in which technology plays its part in rendering a high degree of transparency and ease to doing business in this market. A platform like the one abovewill bring together all these capabilities under one roof while putting control in the hands of the channel partner network. Definitely a great opportunity up for grabs.