Case Study #1 – Third Party Service Provider

Situation

Greve-Davis was hired by a third party service provider (3PL) to help develop pricing models and sales materials; review and benchmark operations; and review their reverse logistics systems.  The 3PL had a good base of business but their business was virtually flat for the last three years.  They also wanted to benchmark their return center operations and reduce processing costs.

Our work included the following:

• Review existing sales materials, presentations, and marketing plans
• Review operations processes, product flows, and parts management

Approach

We spent time in all facilities, flow charting both systems and physical processes. We also spent time with the sales team reviewing their existing sales materials, approach to prospecting and proposal development.  In addition, we lead the team in developing a response to a major manufacturer’s Reverse Logistics RFP.

Working with the operations team and the sales team enabled us to taylor a pricing model, develop a framework to be used to demonstrate the 3PL’s value proposition, as we worked to develop a best-in-class response the RFP.

Results

Our client won the RFP.  This one new customer increased their business by over 15%, on a three year contract.  We also provided assistance and guidance on facility design and new customer start up planning.  In addition, we provided contract language and coached the team during contract negotiations.

Working to win the business was only one of our objectives.  We also provided the 3PL with a tailored  pricing model and other sales tools they use today in their sales efforts.  We worked with the senior team to develop a strategic sales and marketing plan, and we worked with their operations team to incorporate best practices into their processes.

The best indication of our impact on this customer was when we asked the CEO, at the end of the engagement, if he was satisfied.  He said “I have never liked consultants. But you guys are not consultants, you are partners. We need good partners. I’m very satisfied.  I look forward to working with you again in the near future.”  Since our initial engagement, we have maintained a close relationship and work with this client on an ongoing basis.

 

Case Study #2 – Manufacturer’s System Design

Situation

Greve-Davis was engaged by a major computer component manufacturer to help identify gaps in their existing reverse logistics system used to credit customers for returns and to process inventory that is sent back. Our client had a number of different warranty programs that drove a lot of complexities into the processes.  Their back office administration ran on Excel spreadsheets and emails. To add insult to injury, their internal audit department had written them up for having poor controls and quality issues.

The client hired us to complete the following:

• Review the existing system design and make recommendations for improvement
• Review the existing warranty programs and help rationalize these programs
• Review back office support processes and make recommendations to improve controls and quality
• Broker a meeting with a large retail customer and help improve return terms and conditions

Approach

We began the engagement by conducting a survey of key, cross-functional personnel, followed by a series of systems review meetings. With this feedback we were able to clearly identify the areas of concern and gather recommendations from across the company.  The next step were to review the existing documentation and work with employees responsible for returns administrative functions.  We conducted weekly review calls to keep key stakeholders updated and ensured our understanding of the issues was correct.

Results

After completing our analysis and due diligence, we produced a report of our findings with specific recommendations for improvements in our clients reverse logistics systems, back office administration, and warranty programs.  For each recommendation we provided a “road map” that detailed specific steps that needed to be taken to get from the current state to the final desired state.

We also facilitated a conference call with their largest retail customer that resulted in a meeting at the customer’s home offices.  By establishing this relationship and helping our client understand the options in negotiating their product returns terms and conditions, our client was able to negotiate much more favorable terms that reduced their return consolidation fees charged by the retailer.  The new arrangement also dramatically improved customer satisfaction with their largest customer.

A  few months after the conclusion of our engagement, our client contacted us to tell us that their internal audit department had just reviewed their new processes and controls, and they not only received a “clean audit” but were recognized  by their CFO for doing a great job with their corrective action plan.

 

Case Study #3 – Retailer’s Vendor Agreements

Situation

A multi-channel retailer engaged Greve-Davis to review their existing vendor agreement language for returns terms and conditions, and benchmark key vendors with their competition.  The retailer had just rewritten their vendor agreement language and thought there was an opportunity to improve their standard returns terms and conditions.  They were also concerned that they were leaving money on the table, when negotiating with their vendors, because of their returns terms and conditions.

For this retailer, we completed the following:

• Reviewed vendor agreements for all of their major vendors
• Analyzed the returns terms and conditions and benchmarked key vendors, as well as their “standard program.”
• Worked with the retailer to negotiate improved terms and conditions with key vendors

Approach

Initially we took the retailer’s standard vendor agreement language and their customer returns policy and benchmarked that information against eight different competitors. We worked with our client to identify the top 20% of vendors that accounted for over 80% of their total returns volume. For each vendor, we benchmarked their specific vendor agreement terms and conditions and identified areas for improvement.  We then worked with their merchandising team to support their efforts to renegotiate vendor agreements that we had identified as having significant upside potential.

Results

As a result of our efforts to improve the retailer’s returns terms and conditions with key vendors, the reverse logistics division went from a cost center to a profit center.  We were able to establish a standard set of terms and conditions that were generally acceptable to their vendors, and that were in line with other best-in-class retailers.  We conducted training classes for the retailer’s merchants and reverse logistics team on what options are available when negotiating return privileges, ranges for consolidation fees, how to address transportation costs, and how to leverage liquidation.  Today, our retail client considers their returns terms and conditions a competitive advantage that their vendors embrace and support.

 

Case Study #4 – Developing Liquidation Capabilities

Situation

Greve-Davis’ client had a significant amount of liquidation product that they were regularly selling on the secondary market. Their asset recovery department started out almost by accident and the company put little or no money into developing their liquidation capabilities.  Over time the amount of product flowing into liquidation grew substantially. The client realized that they did not have a good process in place and that it was probably costing them money in more ways than one.

Greve-Davis was asked to complete the following:

• Review and benchmark recovery rates for product sold on the secondary market
• Review the processes and systems used to sort and sell salvage
• Conduct and analysis on specific categories to determine if it would be cost effective to repair and sell, or sell “As Is.”

Approach

We reviewed the current processes, organization, controls, and financial systems used to sell product on the secondary market.  We also looked at the previous quarter’s liquidation recovery rates and benchmarked them against the industry standards.  We worked with the team and reviewed the current sortation processes and developed financial models to determine if specific items should be repaired or simply sold “As Is”.  Finally, we reviewed their current list of buyers and what the process was to award products to the winning bidder.

Results

We quickly identified that there was significant opportunities to improve recovery rates by improving the existing sortation process and expanding their program to include specific key secondary market buyers.  We determined that there was an opportunity to increase net recovery values by repairing a small set of items, but that they should outsource the actual repair process.  As part of this we developed an RFP for repair service providers and assisted in the selection and contract negotiations with the ultimate winner of the business.

When all was said and done, we were able to increase our clients net recovery on liquidation by over 20%.  This net amount included additional costs for repair and other support costs.