How to Reduce Reverse Logistics Costs with Test and Screen Services

The traditional service supply chain model has too many links — and every single one of them adds costs. If your returns process seems clunky or confusing, don’t despair. That means you have plenty of room for improvement and cost savings. Flash Global has a proven history of helping established and emerging high-tech OEMs in a wide range of industry verticals lower costs and improve performance with our in-region test-and-screen solutions.

Interior of large distribution warehouse with shelves stacked with palettes and goods ready for the market.

Test and Screen: A Better Model for You and Your Customers

Imagine if a single process change could save your company $1.2 million in transportation savings in one year. That really happened after we implemented an in-region test-and-screen process for one of our partners.

The company was experiencing a high level of returns, as much as $5,000 a month. Field returns sat untested in a distribution center until packed for ocean shipment to the contract manufacturer in Asia. At times, air shipment was required because of shortages — which meant additional transportation costs.

The solution was an in-country test and screen diagnostic process that screened for No Trouble Found (NTF) and No Fault Found (NFF) returned units. The screening process revealed a 20% NTF rate, which meant that 20% of the products were returned to replenishment inventory within mere days rather than months.

This type of high NTF rate on returns isn’t unique. Depending on the industry, NTF and NFF rates range from 10% to 50%. An effective test-and-screen process that keeps the units close to your install base reduces transportation costs and increases customer satisfaction.

Why Single-Touch Testing Can Be A Gold Mine

The traditional reverse logistics model requires too much handling. Each time a unit is shipped, someone has to create the paperwork, pack/unpack the boxes and handle the unit. Each step incurs extra costs.

In contrast, the “single touch” model for test, screen, and repair lowers costs across the board. With single touch, the returned unit arrives at a regional service center for testing and screening. The NTF units go directly back into the field as needed. Failed units are repaired or scrapped on site. When this happens close to the install base, it reduces transportation and direct labor costs.

And even if your repair depot is not in the same location where in-region testing and screening takes place, you still save transportation costs because you’re not shipping perfectly functioning parts around the world.

Here’s a real-life example of how single-touch testing worked for one of our OEM partners.

Initially, all returns were going to a contract manufacturer in Mexico. There was no pre-screening and no visibility on NTF or failure data. We instituted a Go/No Go test at our distribution center and found NTF rates of almost 40%. Because we tested these units in-country, almost half of the returns could be quickly returned to the field — with no long detours to Mexico.

Our partner realized savings of $200,000 to $250,000 in the first year.

Do you struggle with similar problems? A service supply chain partner with global reach and experience can help improve your test-and-screen and repair processes while keeping the product as close to your install base as possible.

Better Inventory Management and Lower Freight Costs

Every company wants to expand, but not every company does the planning necessary to make expansion successful. You need a plan to provide service and support to all those new customers. No OEM wants a situation where customer service and support require air freight costs to avoid downtime and parts shortages.

Accurate data collection and analysis powered by in-region screen-and-test processes can be an ideal solution for many companies. When the returned product is tested for NTF upon receipt, a company can more accurately predict how many units will be out of service and for how long. You can meet or exceed customer SLAs and KPIs while controlling costs.

Every company is challenged by the task of carrying the right inventory mix. If you can leverage in-region test and screen processes at local distribution centers, it’s possible to move returned units back into the supply chain more quickly and minimize inventory levels, downtime, and transportation costs.

Buy less, hold less, and ship less — those savings drop right to the bottom line.

Achieve Higher Customer Satisfaction with Improved Performance

Anytime you shorten the supply chain, everyone wins.

In-region testing and screening means you can return usable inventory back to point of use more quickly. Customers will be thrilled when turnaround times shrink. That’s actually possible, with the right partner and the right processes.

A proven, trusted partner company who already understands the rules, regulations, and business climate in the country can also help propel growth with:

Faster expansion into new regions
Less risk of loss, damage, and theft
Quicker reactions to change
Lower carbon footprint with shorter transportation routes

That partnership also reduces risks and costs associated with trade compliance. It’s very difficult for a small to medium-sized company to maintain an in-house compliance department. The regulations are complex, constantly changing, and the penalties for non-compliance are severe.

With operations in 130+ countries, Flash Global is truly global. Our experts can help you mitigate customs problems, minimize import/export risks, and avoid/reduce tariffs.

In addition, our suite of end-to-end integrated services includes:

Spare parts logistics services focused on accuracy and on-time delivery.
In-region technical services, including product test and screen, configuration and repair.
Country-specific regulatory and trade compliance
Unparalleled solution design options.

If you’re ready to take a closer look at how test-and-screen solutions can help you control costs in your global service supply chain, reach out to a Flash Global expert today.