Designing a reverse logistics operation for short cycle time repair services

Abstract

An important means for companies to differentiate themselves, as well as increase profitability, in highly competitive environments is through the use of service management, i.e., those activities and interactions which follow a product's sale. One of the most important service management activities is repair services. And the existence, effectiveness, and efficiency of service management activities, such as repair services, depend heavily on effective reverse logistics operations. Because reverse logistics operations and the supply chains they support are significantly more complex than traditional manufacturing supply chains, an organization that succeeds in meeting the challenges presents a formidable advantage that is not easily duplicated by its competitors. This paper discusses the competitive value of service management activities, particularly repair services, as well as the importance of the supporting role of effective reverse logistics operations for the successful and profitable execution of repair service activities. In addition, the manuscript presents a case study of a major international medical diagnostics manufacturer to illustrate how a reverse logistics operation for a repair service supply chain was designed for both effectiveness and profitability by achieving a rapid cycle time goal for repair service while minimizing total capital and operational costs.