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As the name suggests, reverse logistics is the opposite of the typical supply chain. Many of us can understand and imagine the complexities of getting items to the consumer but forget the logistical realities of managing returns. Reverse logistics is a key part of the day-to-day running of many businesses and is every bit as important in the supply chain as delivery and order management.
As e-commerce has exploded, reverse logistics has become more important than ever before. Consumers demand quick and easy returns and so businesses need to have tight processes in place to ensure fast turnarounds. Here’s what you should know:
What is reverse logistics?
Reverse logistics refers to the process of getting goods from the consumer back to the retailer. This is the opposite of traditional logistics which usually involved sending goods from the retailer out to consumers.
How does it relate to returns management?
Returns management is basically the process that most companies follow to manage and process returns from their consumers. It basically involves anything to do with returns, which encompasses reverse logistics itself.
When might reverse logistics be used?
Reverse logistics can come into play for a number of reasons. Items may need to be moved from the consumer back to the retailer because they don’t meet the needs of the customer and they want to return them or because of some other issue. An item may for instance require refurbishment, need to be repackaged, need to be recalled or reached the end of its life. Items that were unsold may also need to be returned, as do products that need repairs or replacement. Sometimes products reach the end of their life and need to be taken off the shelves and often hire or rental products need to be moved around.
So, what about integrated logistics?
Inbound activities refer to products being transport, delivered or stored for a business whilst outbound activities refer to getting products to the end user or distributor. Fully integrated services handle both and can be a great option for maximising efficiency and simplifying the supply chain process.
What kind of impact does it have on the supply chain?
This part of the supply chain process is extremely important for businesses and involves a number of key business processes like return policies, repairs, replacements, warranties, value recovery, recycling, redistribution and much more.
Why is it important to have in place?
The law requires many businesses to handle returns and manage their stock. Leaving a faulty product on the shelves could have serious consequences and so it’s very important that there is a process in place to reverse the flow of goods and bring them back to the retailer when necessary. This process can help businesses remain compliant and can also assist them with recapturing value and profits.
Is it costly?
This process can be costly for retailers to manage. Usually, the most cost-effective way of managing it is through a third-party. Most third-party logistics management companies will have extensive experience with all areas of the supply chain and will have the necessary resources and framework in place to manage returns and other processes in a quick, timely, and cost-effective manner.
If you’re looking to implement a formal process then it is a good idea to speak to local providers. Keeping it in-house can be time-consuming and will take resources away from your core business processes. There are a lot of benefits to streamlining this part of the supply chain and it could help your business to recapture profits and save on costs and losses.
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