When most people talk about logistics and the supply chain, it’s usually about how to get items to the end consumer. That includes the path of getting materials to the manufacturer, finished products to the retailer, then delivery to the customer. A piece of the supply chain that isn’t as visible to those outside of the logistics industry is reverse logistics. Reverse logistics is just as important to the overall supply chain and sustainability of business as the more visible, first parts of the supply chain.
Reverse logistics is becoming an increasingly important aspect of the supply chain for retailers and manufacturers of all sizes and industries.
What is reverse logistics?
The overarching definition of reverse logistics is monitoring the lifecycle of products after they are received by the end user, including how it might be returned, reused or discarded. The more common definition of reverse logistics refers to the process of dealing with items that are returned to the store and/or the manufacturer for whatever reason. That more refined definition is the focus of our discussion today.
As last mile delivery professionals, we often hear many reasons a customer might want something returned. Either the manufacturer or retailer did not send the complete order, the wrong item was sent, or the customer simply changed their mind once about the purchase once the item arrived.
This latter reason seems to be most often true for large items such as furniture or electronics that were ordered online. According to the Consumer Electronics Association, the electronics industry sees an estimated $10 billion annually in returned items—just as an example. Depending on which study you look at, reverse logistics overall costs between $550 annually and $750 billion annually.
Why is efficient reverse logistics important?
The short answer is, any gained efficiencies along the supply chain are a good thing. It saves everyone involved money and frustration. And, a more efficient, well-managed supply chain can even help grow business as it helps gain consumer trust.
By adopting a few basic strategies, companies of all sizes can improve their return logistics process, effectively reducing the volume of reverse logistics.
How can reverse logistics become more efficient?
There are several potential reasons that your supply chain might not run as smoothly or efficiently as it could. Figuring out where the problems are is vital to success and that can become possible by examining all aspects of the reverse logistics process. Here are a few components to consider:
Gain and use key data
Most companies realize that gathering some sort of consumer data is important. But it’s important for the right data to be gathered, and for accurate interpretation of the data be used to make decisions. For example, by monitoring volume, you can determine if the same items are being returned repeatedly. Monitoring the reason for returns will help you know if the product is failing after a certain point, or perhaps the product description is not living up to the actual product and the description simply needs to be adjusted.
Examine your return policies and procedures
Many returns policies were created before the e-commerce boom. Do your policies and procedures reflect the current shopping and consumer trends? We realize that generous return policies are important for customer retention. Some companies, like Amazon, are simply taking more intense steps to stomp out abuse of those generous policies. For example, the online retail giant reportedly shut down a number of accounts of customers who return too many items.
Another way that some manufacturers and retailers are changing their policies is to no longer require return of an inexpensive item that is reported as defective before a replacement is shipped out.
Reconsider your logistics practices and partnerships
Do you sell large items online? If so, is it worth paying for unclaimed deliveries to be returned? Or is there a way that you can combine both pickup and delivery in the same system? By partnering with a qualified 3PL provider in your area, you can create efficiencies that make life easier for your customer and reduce your costs.
Need help?
We are a premier 3PL logistics provider that specializes in last mile delivery. We service the Northwest Arkansas, Little Rock and Tulsa metro areas. Are you looking for a way to make your reverse logistics more efficient? Give us a call and we’ll discuss how we can help.