Cisco Returns Logistics

• Why did Cisco change their returns process?

Until 2005 Cisco reverse logistics department only aimed at their recycling process of returned products in a more efficient and environment friendly way. Each year Cisco’s return department was receiving 6 million pounds of returned gear from which less than 5% of which was used. Some of the equipment’s that were returned were from new trade-ins and these were simply recycled into trash and were thought of to be scrap. The much of the emphasise was given to recycle things in more convenient way and the department was not laying stress on strategies which could help in reducing the number of things that can reduce the volume of recycled products due to which the returns department was costing company money. This non-value adding cost centre was costing Cisco 8million a year and it was only after 2005 that the company started thinking of changing their returns process and go green, however biggest change was seen in the management under the leadership of Dan Gilbert and the department treating their return as a virtual business. Company transformed its returns department totally which is now giving them 100 million dollars in net profit.

The returned products that were previously thought of having a zero value were actually containing a lot more life and because of company’s returns process which automatically placed these products in a default recycle mode, the products were not given a second chance to utilise their potential through repairs. By changing this process of returns the products life was increased was increased immensely to several years whereas before this change in returns process the same product was put to an end by just recycling it which meant that the whole manufacturing cost that the product had incurred in its production process was taken in by the company as a loss. The value of the processed returns was amounting to 119 percent in 2005. So With each returned product the company was making a...