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In a maturing market, HPs attention moved from Return on Sales to Return on Net Assets. Mismatches between demand and supply, aggrevated by a long supply chain, were a burden on profit. HP realized that conventional logistics costs (warehousing, inventories, transport) were only the tip of the iceberg. Hidden underneath were large costs due to price protection, material devaluation, returns and obsoletes (Inventory Driven Costs). Uncovering all true demand/supply mismatch costs allowed HP to redress the situation and restore competitiveness.

The flow of product returns is becoming a significant concern for manufacturers. Typically, these returns have been viewed as a nuisance, resulting in reverse supply chains that are designed to minimize costs. These minimum cost reverse supply chains often do not consider product return speed. The longer it takes to retrieve a returned product, the lower the chances that there are financially attractive reuse options. Unlike forward supply chains, design strategies for reverse supply chains are unexplored and largely undocumented. The most influential product characteristic for reverse supply chain design is the marginal value of time. Responsive reverse supply chains are the appropriate choice when the marginal value of time for products is high, and efficient reverse supply chains are the proper choice when the marginal value of time for products is low. Product returns and their reverse supply chains represent a potential value stream and deserve as much attention as forward supply chains.

In the quest to reduce waste on production lines, managers often find that the harder they work at improving their manufacturing processes, the more elusive the benefits become. The authors' study of data provided by Belgian manufacturer N.V. Bekaert S.A., the world's largest independent producer of steel wire, showed that only a quarter of process improvement projects delivered factorywide benefits; half had no bottom-line impact, and the remaining 25% had a negative impact on the plant's overall productivity. But it's possible to design projects that are more likely to improve the plant's bottom line. The key is making sure they deliver both conceptual and operational learning. Conceptual learning yields know-why: acquiring a better understanding of cause-and-effect relationships through statistics and other scientific methods. Operational learning yields know-how: implementing a theory and observing results. Projects that delivered high levels of both learning approaches were the only ones that enhanced the global rate of quality improvement. In such projects, teams drew on scientific insights to implement changes and produce replicable results.

Companies should make design and manufacturing decisions with eventual recycling and reconditioning of their products in mind. Here are the five key activities for establishing a reverse supply chain.