Reverse Logistics. What Exactly Are We Talking About Here?
Updated: Apr 16, 2020
When a niche embedded in an entire industry is estimated to reach over $600 billion within the next five years, we must ask ourselves, “why is it sitting on the backburner?” Let me explain.
Reverse logistics is essentially the return of a product back to the manufacturer – in other words, fulfillment in reverse. The logistical movement and cruciality for optimized procedural implementation will indefinitely remain a constant, but this entire process is often overlooked and underbudgeted within a company’s supply chain overview.
The continual rise and demand for eCommerce has simultaneously increased the demand for return shipments and the evolutionary adaptation of reverse logistics on a comprehensive and rapid scale. What does this mean for your warehouse?
That it is time to implement qualitative and repeatable processes within your warehouse operations SOP’s.
Optimized reverse logistics initiatives will complete the entire logistics procedural flow. Improving this single sector of your supply chain will not only speed up the entire process but will mitigate any unforeseen risks by essentially acting as an ongoing continuity plan.
Reverse Logistics – a Benchmark
An efficient reverse logistics model can increase returns while simultaneously increasing customer and client retention. Unfortunately, the predominance of manufacturers and suppliers report little to no interest in properly investing in streamlined management regarding the flow of commodities being returned. While the majority propagates reverse logistics to be a vital part of any supply chain, only 3% classify it as a key area noteworthy of attentive optimization.
Returned products are mis-conceptually categorized as waste – or an unprofitable byproduct of the supply chain process. This is simply a missed opportunity for heightened optimization through customer feedback, data collection, and evaluation. By properly analyzing metrics derived from reverse logistics, a manufacturer can alter the burden of a return into an opportunity for profit.
“Ultimately, all data collected about a returned product can be used to determine how best to reclaim its value and, in turn, where it will be sent next for proper reuse, recycling or disposal. Manufacturers can enhance customer satisfaction by preventing the mishandling of returns. At the same time, they can ensure that each return is mined for its value in the most effective manner possible and it’s reintegrated into inventory…
The predominance of businesses are neglecting the return process within their current operations. However, the numbers are telling another story completely. Certain industries have return rates ranging for 30-50% of all previously purchased inventory, while some forecasted estimates sit closer to 60%. These percentages create an emergent opportunity to implement standard operating procedures and consistent processes to deal with the logistics of returns while maintaining a heightened level of customer service and overall satisfaction throughout.
Optimized Reverse Logistics Workflow and Expectations
Accurate inventory data and real-time communication are key to ensuring that the sorting process runs smoothly, and that items are guided quickly through the return process. At this stage, it’s necessary to take inventory of returned items and keep tabs on the location, status and destination of each individual component, in order to move the logistics process forward” [Jim Dempsey, SCB Contributor]
Reversal data processed through the return supply chain allows for transparency and information to be readily available and accessible. Continual adaptation and supply chain evolution are vital to the health and longevity of any business model. Do not sleep on the efficiency that a fully optimized reverse logistics procedure can have on your company’s bottom line.
The residual aim of optimizing your reverse logistics warrants minimizing both cost and time associated with the return process. An efficient reverse logistics platform fully implemented within your company’s system will streamline the entire process thus resulting in increased customer satisfaction and return shoppers. And let’s be honesty, this type of predictive and forward thinking typically returns massive dividends in the long-term.
Simplifying, optimizing, and initiating and comprehensive step-by-step process that can be replicated by any team member will mitigate risks by navigating directly through any previous complexities that may have otherwise occurred on a continual basis.
Develop a plan and consistently adapt and evolve the process. This ensures warehouse operations optimization every single time. Can certain processes be automated? Would automating basic steps increase accuracy? These are important assessments to cross off during the plan development structure or restructure.
Reasons for the Reverse
Your warehouse team is busy enough – throwing in complicated return procedures will only bog down an already efficient crew.
A warehouse will typically have five different operative scenarios to cipher through:
· Is this a general return? If yes, follow the previously implemented workflow for returns.
· Is this a product recall? If yes, follow the previously implemented workflow for recalls.
· Is this a need for product repair? If yes, follow the previously implemented workflow implemented for repairs.
· Is this a repackaging issue with the shipper? If yes, follow the previously implemented workflow for repackaging.
· Is this a product recycling project? If yes, follow the previously integrated workflow for recycling.
Do you see the importance of having procedures set in place and fully integrated into the operational systems before issues arise? If your team understands the checklist, the work is fast-tracked, and a solution is offered in real-time.
As a cross-functional team of logistics experts, we help clients navigate all areas of transportation, distribution, returns, Customs, and regulatory compliance. Our focus in not on an individual product group or service offering but rather a comprehensive approach to effectively managing and optimizing the supply chain and a company’s international side of business.
Our Single Source Global Management System provides the visibility, structure, and continued support to drive industry leading performance and results from each of our service areas.
If you have any questions regarding the valuable information offered in analyzing reverse logistics metrics, or would like to discuss your current supply chain disruption and alternative solutions with our around the clock team, feel free to reach out to us HERE for a comprehensive supply chain consultation. We look forward to working with you.
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