In our last article, I discussed how current wholesale limitations force resale values lower. We also reviewed some tactics to optimize asset monetization recently. Today, we’ll see how internal process improvements help net recovery. Specifically, I want to discuss what happens between the time the product arrives in your warehouse (on dock) and when it is ready to sell / ship. Steps can include: receiving, data wiping, triaging, grading, flashing, QA, packaging & storing..
Back when I used to own the Samsung Trade-In process, my team was focusing very hard on improving our operating partners’ processes. If you’ve read any of my past articles, you also know I advocate a continuous, never-ending cycle of incremental improvements. Tactically though, there are things I always recommend my clients implement right away. Here are 10 for you:
- The floor manager should be a true believer in the lean method, and actually office on the floor. I have seen director of operations hide in the offices on the other side of the metal detectors… bad idea. This manager should be present on the floor, walking the aisles, testing assumptions and providing guidance all day long
- If the company running the floor is a third party, the client should walk the floor regularly and be visible. A solid book of SOPs is not enough, don’t outsource this. I was personally on the floors at least once a month. I’d have my team do the ‘official’ tour while I’d wander off on my own. Pretty soon, our suppliers knew to dedicate a floor manager to walk with me with a blocknote. Put the pressure! You can be friends again after walking out of the secure area
- Don’t surround yourself only with MBAs. Yes, I have one but go along with me here. I see too many leaders who are looking to outsource the operational headaches. Embrace them instead. You need people who understand operations, who aren’t afraid of looking under the hood. It is ok for a CEO to be a pure strategist, and the floor manager should be an operator – but the person between must be fluent in both languages
- If the Director of Operations isn’t good, make a change. Coach, train, reassign – or yes, part ways. This is never an easy decision, I get it. I have laid off, been laid off, asked to be laid off, and “mutually agreed” to resign. In the 21st century, most of us have been in one or more of these situations. Always a bit disappointing, but COVID also taught us that life is bigger than a job. Before you accuse me of being cold-hearted… I am often emotionally invested in the personal success of people working in my teams actually – at least the ones who try hard. Yet I recognize the wisdom in the “hire fast, fire faster” mantra. Look, someone who underperforms isn’t happy, and the performance drags everyone down. Besides, this specific position is especially critical. Everything comes down to leadership. If the floor leader doesn’t perform, coach or reassign; if that doesn’t work, separate
- Track your KPIs closely. How many products does each line / each operator review per hour? What is the fallout ratio? How are these metrics trending? The old saying is true, “what gets measured gets improved”
- On that note… focus on the right KPIs. Productivity is easier to measure than accuracy, but is it more important? I’d rather pay $1/product extra due to lower productivity if it takes my grading accuracy from 90% to 95%. The benefits from improved reputation and higher resale price will be 10X that
- Test & Learn. You are never done learning. Processes don’t stay optimal for long, even in a stable industry. The circular economy evolves very fast. A lot of people are now paying attention to reverse logistics. Your competition isn’t resting, you shouldn’t either
- Mistakes happen, that’s ok. Do full post-mortems to understand how to improve. The focus here is not on blaming but on learning. If anything, thank and reward those who come up clean and admit mistakes. This is how you foster a learning organization
- When clients complain, assume they are right and take action. I remember that time when a buyer mentioned the phone they had purchased had a SIM card in it, with actual pictures. Things don’t get much worse than that in our industry, the liability impact can be tremendous. My 3PL explained it was impossible. Rather than argue, my team and I jumped in our cars and hurried to the floor. We spent the next hours monitoring, asking questions and reviewing every scenario we could think of. Pretty soon, we had identified (and fixed) a couple of gaps. It would have been easier to dismiss the mistake as a ‘one off’. That would also have been the wrong approach
- When possible, choose a facility that’s within driving distance and always demand to be allowed on the floor at a moment’s notice. Don’t abuse it, the guys also have a job to do – but access should be non-negotiable. See #9 above, we wouldn’t have been able to solve the issue without instant floor access.
- Bonus tip: Leave your ego at the door, always focus on improving. No-one has a monopoly on good ideas, it’s ok to be wrong. The day you start making assumptions, the day you stop learning… that day is when trouble starts.
Active in the consumer electronics secondary space and have questions around reverse logistics, process improvement or business development? PM me, we’ll set up a call and figure out how I can help you.