How much attention does your company pay to the handling and management of returns from your customers?
For many supply chain companies, reverse logistics performance is placed way down the list of priorities. Many are the warehouses with piles of returned products occupying seldom-visited corners or racking sections.
Given that returned goods expenses can make up as much as 15% of an organization’s top line costs, efforts to improve reverse logistics performance can have a significant impact on cost reduction, as well as improving the customer experience. In some cases, reverse logistics can actually be turned into a way to generate revenue.
If your company puts some of the following tips into practice, you should be able to make a positive impact on reverse logistics and realise an overall improvement in supply chain performance as a result.
Implement a Track and Trace System
Returns from customers are less likely to wind up gathering dust in a warehouse if your company’s supply chain managers can see exactly what products and packaging materials are in the reverse logistics pipeline. Visibility is a critical factor in improving reverse logistics performance.
There are a few ways in which you can improve returns visibility. Perhaps the least expensive solution is to provide customers with return labels incorporating barcodes, as long as you have the means to scan the labels at appropriate stages in the reverse logistics flow.
Process Returns Immediately
Once you have adequate visibility into your returns activity, you should map out and implement specific processes to evaluate the status of returned items and move them on up the supply chain, or out of it. Ensure that those processes are designed in a way that doesn’t allow returned stock to languish in a warehouse.
If a returned item can still be sold as new, get it back into sales stock. If it’s damaged, repair it or dispose of it. If it’s in good condition but obviously used, see if you can sell it through a secondary channel at a discounted price.
Reverse logistics performance will not improve if you allow returns to sit in storage for indefinite periods. In some cases, returned goods which might otherwise have been resalable can end up obsolete, robbing your company of the chance to realise some revenue.
Consider Outsourcing Reverse Logistics
If your company operates in an industry where returns are a frequent occurrence (Omni-channel fashion retail is a good example of such an industry), you might want to think about outsourcing your reverse logistics operation to a 3PL provider. Specialist reverse logistics providers are growing in numbers as market demand increases.
By partnering with one of these providers, your company can improve reverse logistics performance by getting returns out of your own warehouses and leveraging the economies of scale a 3PL operator can provide.
Finally: Don’t Forget Prevention
Of course, if at all possible, the best way to tackle returns is to eliminate as many as possible. This can only be done by carefully investigating the reasons for finished goods or raw material returns and taking measures to address the problems at the source.
Whether your company decides to outsource reverse logistics or keep it in-house, the one thing not to do is treat it as a nuisance child that must simply be endured. By getting smarter about reverse logistics performance, you can reduce overall operating expenses and improve customer service at the same time.