Are your reverse logistics working for or against you?
We often talk about supply chain management and the logistics involved with managing an e-commerce component to your business. It’s equally important to talk about reverse logistics, including the effect that having poorly managed reverse logistics will have on the company bottom line.
What is ‘reverse logistics’?
First, let’s better define reverse logistics. Reverse logistics is used to plan, execute and control the most cost effective and efficient ways of consumption to the point of origin so as to see the value or proper disposal. This concept is increasingly vital in world where customers purchase items online and then return them for various reasons.
Reverse logistics is used for many things, including remanufacturing and refurbishing, as well as managing and sale of surplus, and returning items. Traditional logistics is much like reverse logistics, except it does not travel back to the distributor or manufacturer after it reaches the customer.
Value of reverse logistics
Although reverse logistics have been around for a few decades, many companies have not realized its importance. It is viewed as an expensive headache due to the high volume and the cost of processing returns.
According to cerasis.com, the cost of returns can take up three to five percent of a company’s total revenue. Additionally, returns are three to four times as expensive as outbound shipments. Anywhere from three to 60 percent of shipments are returned among all industries.
Making your reverse logistics work for you
While it’s true that reverse logistics can be the most expensive aspect of e-commerce, it’s important to invest in customer-friendly procedures and policies. What you might lose in the initial process will be made up for in customer loyalty.
Customers who are annoyed by the returning process will not be repeat customers. Customers will return if they feel like the company cares and is making the process convenient for them.
Fortunately, there are ways to make reverse logistics more efficient. We suggest conducting an operational audit of the process and using customer feedback to your advantage. Listen to your customers. They will always know better than you on the consumer end of things.
Ask yourself these questions:
- Where can your system be made better?
- Where are the proverbial kinks in the supply chain?
If this seems like a lot or you don’t understand completely, consider hiring a logistics provider to assist with the reverse logistics process. Just as your last-mile delivery provider can make or break your business, so can your reverse logistics providers.
How can we help? We are experts at logistics along all aspects of the supply chain, especially last-mile delivery. Give us a call to discuss your needs in the Northwest Arkansas or Tulsa area.