Reverse logistics is fast becoming an important area for manufacturing companies. This is leading to some interesting relationships between manufacturers are forming
innovative arrangements with third party logistics service providers. To take
care of the laptops made by Toshiba that are under warranty, UPS has created a tailor
made reverse logistics system. The parts warehouse of Toshiba is located next
door to the technical repair-center of UPS hub in
In fact, the repair
technicians are also provided by UPS. Toshiba has been able to dramatically
improve the customer service level by leveraging the UPS
stores and transportation services across the country. Customers can use the
airport hubs of UPS that are open for 19- to 20-hours. Under the express model,
the total shipping and repair times have been reduced from seven to eight days
to three days. The repair facilities and technicians that UPS offers is quite
unique among third party service providers. Other service providers, such as FedEx
and DHL, have preferred to focus on shipping and transportation, which is their
core area of business.
costs associated with maintaining a repair center by the third party logistics
provider. The revenue justification for maintaining these repair centers would
also be worthy of further investigation. Which strategy should a third party
service provider choose?
value-added services or,
B) Focus on the core competencies of
shipping and transportation and let the repairs be handled by contract
manufacturers