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Rethinking Reverse Logistics in the Supply Chain

Reverse Logistics

Increasing online sales also means an increase in the importance of reverse logistics. According to Deloitte, online purchases are being returned three times more often than purchases made at physical stores. This unprecedented level of consumer returns poses many challenges for businesses and the supply chain. 

As return rates skyrocket, sellers must rethink how they approach their processes. Retailers can save significantly on the costs of handling all these returns–if they prioritize streamlining their reverse logistics processes.


Regular Logistics vs. Reverse Logistics — What’s the Difference?

Forward logistics involves the process of moving goods from the manufacturer to the consumer, such as sourcing materials, manufacturing, warehousing, and order fulfillment. Reverse logistics is what happens when a customer returns a product for any reason, such as damage, defects, fulfillment mistakes, or recalls. The product moves in reverse through the supply chain after it has been delivered to the customer. It can involve the product return process, inspection, asset recovery, recycling, and product disposal.


Why Your Business Should Care About Reverse Logistics

It may be tempting to ignore reverse logistics or just try to set up a small table in the corner to deal with returns. This would undoubtedly be a mistake for several reasons. Here are some top reasons why your business should make reverse logistics a priority:


1. Cost Reduction

Handling returns more efficiently allows your business to reduce a number of related costs, including shipping, administration, handling, and waste. These cost reductions will result in a boost in profitability for your business.


2. Improve Customer Satisfaction

return itemConsumers have become much more picky about the businesses they choose to support. According to the National Retail Federation, 86% of consumers say they make a point of checking a seller’s return policy before purchasing. By offering hassle-free returns, businesses show customers they value their business and build long-term loyalty and trust.


3. Enhanced Brand Reputation

When customers have a positive return experience with a seller, they are more likely to purchase from them again and recommend the business to others. Positive online reviews and word-of-mouth recommendations can significantly impact a brand’s image and differentiate it from its competitors.


4. Greater Sustainability

Reverse logistics plays an essential role in promoting corporate sustainability. It allows businesses to recover value from returned products through repairs, refurbishment, resales, and recycling, which extends product life cycles and reduces waste.


How Reverse Logistics Impacts the Supply Chain

Reverse logistics has a significant impact on the management of the supply chain. Proper management of every aspect of the supply chain, including reverse logistics, will help your business deliver a better customer experience and improve profitability.


Failing to consider reverse logistics as a vital part of the business and supply chain, however, can have dire consequences. Customers will be frustrated, your costs will increase, and it can take valuable resources away from other parts of your business.


What Effective Reverse Logistics Programs Look Like

Due to its massive influence on the supply chain, there is a great benefit to determining the best way to process reverse logistics. Here is what the most effective reserve logistics programs look like:


1. Perfecting the Basics

The reverse logistics process can be broken down into a few simple steps that every business should understand and perfect:


  • Product Returns initiation — When a customer decides to return a product, your business should have a simple and clear process in place to handle this. Can they process the item immediately online, or do they need to email or call you first?
  • Inspection and Sorting — Once items return to the warehouse, they will be inspected and sorted. Based on their condition and your internal policies, you can decide where those items go next. 
  • Processing and Disposition — After inspection and sorting, it’s time to clean and package items that will be resold. Other items will be set aside for recycling or disposal. 
  • Reintegration and Disposal — In this last step, you are either placing the item back into your inventory or responsibly disposing of it. Reintegration could include reselling an item as new, refurbished, or repaired. Disposal might include recycling materials or reusing certain parts.

2. Automating Some Processes

230606-the-future-of-reverse-logistics-3Integrating advanced technology solutions into your reverse logistics system can significantly enhance accuracy and efficiency. For example, automation within the supply chain can also transfer to your reverse logistics system.


Using a warehouse management system combined with RFID tags allows you to automate many tasks, such as inventory management and automated labeling. These can relieve some of the burden of repetitive tasks from workers and improve return accuracy.


3. Leveraging Real-Time Data

Businesses can meet many of the challenges of reverse logistics by taking advantage of the real-time data available. Using RFID tags, online management systems, and AI-powered insights, a business can maintain real-time visibility throughout a product’s life cycle. This can reduce damage and return rates. It can also elevate the customer experience from fulfillment through the return process. Finally, these insights can help businesses make more informed decisions, which can save costs and improve overall results.


4. Adjusting Returns Policies

While consumers want to deal with brands that have a generous return policy, there should be limits if it is adversely impacting profitability. In fact, some major retailers, including Amazon and Walmart, have adjusted their return policies to try to discourage unscrupulous behavior. Some organizations also prevent the return of certain items, such as hygiene or personal products.


5. Aligning With Industry Trends

Your business should be ready to align with any industry trends related to returns. For example, more customers are becoming interested in eco-friendly and sustainable business practices. They are more likely to support your brand if they learn that you collaborate with organizations and recycling partners that specialize in eco-friendly methods.


The reverse logistics process has become an essential component of many streamlined and successful supply chains. Real-time analytics, automated returns, rule sets for system settings, machine learning to discover and make improvements, and keeping current with supply chain logistics trends can have a huge impact on these programs. These, of course, go beyond the basics of inspecting products and lining up recycling programs.





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Topics: Cost Reduction Automation RFID Reverse Logistics