How to Cut Your Reverse Logistics Costs in Half
It may be self-evident, but the easiest way to reduce the transportation & rework costs of warranty and non-warranty repairs is to reduce or eliminate the product returns themselves.
While we may not be able to claim perfection on product life in the field “yet”; Sonic Manufacturing can claim a return rate of less than half the industry average. Most of our customers report that they have experienced return rates of 1%-3% elsewhere. Sonic Manufacturing regularly reports return rates of under 0.40% across all customers. How do we do it? DFM, DFT and the technical dialing-in of stable, reproducible manufacturing processes. We can reduce your costs by eliminating them.
Manufacturing Offshore? Cut Your Reverse Logistics Costs in Half Again
Are you currently manufacturing offshore, or considering offshore at this time? Don’t forget to add Reverse Logistics into the Total Cost of the decision.
If your manufacturing solution is out of the country, how are you repairing that product? The typical options for Reverse Logistics when using an offshore manufacturer would be:
- Return product to the offshore manufacturer either by boat or air: The OEM will typically pay freight in one or both directions; but if the CEM covers this, it is embedded in the product price you are paying.
- Hire a regional repair center in the market the product is sold to: This tends to be a higher-margin business model and someone needs to pay the costs. Billing the original EMS only causes this cost to be embedded in their product price to you; amortized and very real. Otherwise, it is paid out of pocket by the OEM.
- Have your own engineers repair it at your facility: There is probably no more expensive of a solution to an OEM than taking their design engineering talent off of the next generation product to have them debug last year’s model.
- Scrap the product: The international impediments are not worth the time, cost and hassle of managing; or no one is available to actually get the job done.
Reverse logistics & repair are not free. The costs are either openly declared & billed as a separate line-item; or hidden & amortized into the unit costs being paid. Cut your offshore costs in half again by using “Profitable Proximity” to your advantage: Build and Repair in the region you are selling to.
The Sonic Value Proposition
Sonic can budget far fewer dollars to “warranty repair expense” than the competition; keeping our costs low. On non-warranty repair, our work is performed at the same labor rates as our manufacturing— no premium. Add back in the savings from the elimination of International transportation costs, and you have the lowest-cost option. Cut the volume of returned product in half through improved quality, and you have the Best in Class solution. Come by and check out our large functional test area extensively staffed by technicians performing schematic-level debug.
Do you have products that were built elsewhere? No problem. Sonic Manufacturing will be the Repair Depot for all of your products regardless of their original place of manufacture or age in the field. We want to partner with you and offer a total value-chain solution.