What is Reverse Logistics?
Reverse logistics is a supply chain process in which items are moved from the customer to the vendors or producers. When consumers get a product, they must either return it fully or recycle it.
A well-thought-out reverse logistics strategy for your company may help you make educated choices throughout your operations.
Table of Content
- 1 What is Reverse Logistics?
- 2 Types of Reverse Logistics
- 3 Reverse Logistics Process
- 4 Benefits of Reverse Logistics
Types of Reverse Logistics
The following are the most common forms of reverse logistics:
- Returns management
- Returns policies and procedures
- Products that have not been sold
- End of service life
- Failure to Deliver
- Equipment for rent
- Maintenance and repair
Returns management, the most frequent reverse logistics activity, deals with regular customer returns and should provide a smooth, hassle-free experience to increase customer loyalty and brand image. Ensure you work with a good logistics company like ShipNetwork for a seamless return process.
Returns policies and procedures
This is the policy against which all customer returns are judged, and both consumers and workers must adhere to it consistently. Making these rules prominent and easy to find for consumers is best practice.
Returned items are reconditioned to prevent organizations and merchants from losing profit (or money) on damaged products while minimizing needless waste.
Organizations with package management practices may reuse packaging to decrease waste and save money on new packaging for returned products.
Products that have not been sold
Returning unsold goods is a procedure that is directly focused on returning things from end users or fulfillment centers back to producers. It is frequently the consequence of delivery rejection, low sales, or other circumstances.
End of service life
Some items must be returned at the end of their useful life so that producers can handle their correct environmental disposal.
Failure to Deliver
If items cannot be delivered, they are returned to fulfillment centers and may be returned to the manufacturer; however, effective businesses may control delivery failure by resolving the problem and resending.
Equipment for rent
Rented or leased items are returned to the manufacturer at the end of a certain period for disposal, recycling, or redeployment.
Maintenance and repair
Products like numerous consumer electronics (laptops, for example) may be returned for repairs or warranty service.
Reverse Logistics Process
The technique used to handle the return of items is determined by the kind of reverse logistics in issue and the type of company and industry in which the organization works. A garment merchant, for example, will often deal with generic consumer returns, but a coffee pod maker may give customers a mail-back recycling program for worn pods.
Breweries employ reverse logistics to recover their keg canisters so they may be cleaned and refilled for future distribution. Each company should lay out its process to achieve optimum efficiency and take advantage of any incentives for optimizing its reverse logistics operations to promote environmental sustainability.
Reverse logistics’ five phases
- Return processing
- Choose a return category
- Carry out the repair procedure
- Items that cannot be fixed or resold should be recycled
When a consumer requests a return, the company must commence the return process and implement its standard operating procedure. Every organization that deals with returns must have a systematic approach to beginning returns. This entails detailing the step-by-step procedure that returned things will go through after they leave the customer’s or end user’s hands. Defining this step may assist businesses in reducing waste and pollution caused by uncoordinated shipping.
Choose a return category
When items are returned, they must be evaluated to identify where they should be put next in the process. Following the return of goods, there are a few alternatives for future actions. It may need to be refurbished, recycled, or prepared for resale to meet another order.
Organizations with efficient reverse logistics operations will have mechanisms in place to detect the problem and classify the return before it arrives. For example, when initiating a return, Amazon asks consumers to specify the reason, which might be that the incorrect item was received, the item is faulty, the delivery materials were damaged, or another problem. This allows the organization to handle the return as soon as possible.
Carry out the repair procedure
Items moved to the repair department should be handled as soon as possible so that any required end-of-life preparations may be completed. Repairable objects should be mended as soon as possible and reintroduced into the organization’s inventory or disposed of if irreparable.
Specific pieces or components that are still useful should be sold to manufacturers to be employed in constructing new goods.
Items that cannot be fixed or resold should be recycled
It must be disposed of properly if it cannot be repaired or split out. Businesses must exercise caution when recycling and disposing of products that cannot be fixed.
This entails considering environmental sustainability and resolving concerns caused by discarded items. Any component that may be recycled should be handled appropriately, which may need the whole or partial disassembly of the product.
Benefits of Reverse Logistics
Following are the benefits of reverse logistics:
- Decrease waste
- Cost Savings
- Satisfied customers
- Increased Profits
- Increased Sustainability
- Improved Brand Reputation
Keeping returned things in motion continuously may assist in reducing the amount of waste created when products sit for extended periods. Items that need to be repaired should be transferred swiftly to the repair department so they are not left hanging.
The same is true for things that need to be disposed of or resold; they should be relocated to the right designated location where they may be controlled and continue on their trip through the rest of the supply chain as needed.
Having a well-structured reverse logistics system might help your company save money. Being adequately staffed and executing the appropriate procedures may help your company save money on transportation, administration, maintenance, and quality assurance.
Your company may readily assess cost savings by analyzing the total cost of ownership, and recovering value from resold or recycled equipment can boost your bottom line.
Beginning to concentrate on client retention is one method your company may use to accomplish its existing objectives efficiently. Studies suggest that about 96% of consumers are likely to shop from the same merchant again if they have had a pleasant experience.
However, working to acquire new customers might take more work than working to retain existing ones. As a company, you can help satisfy your clients by offering free return shipping and refunds.
One of the essential advantages of improving reverse logistics is its influence on your bottom line and decreasing expenses for your organization. Your items may be returned for various reasons, including having the wrong color, size, or model number, and can be sold again, provided they are in excellent condition.
It is critical to have a solid reverse logistics process in place so your company can receive the product, properly check it, make any required sales, and seamlessly place it back into your inventory for sale.
Many people believe that anything that finds its way back into the supply chain is worthless and should be discarded; nevertheless, many goods may still be utilized. By remanufacturing/refurbishing these materials or finding another purpose for them in your company, you can keep them out of the trash for as long as possible.
Another way to improve sustainability across your organization is to offer to recycle or properly dispose of specific objects, such as electronics, to reduce their environmental effect.
Improved Brand Reputation
How your company handles returns may make or break your brand’s image. It is critical that your company develop a simple return policy that enables your consumers to feel comfortable speaking with you and returning things. Making it difficult for consumers to return an item might leave them dissatisfied, ultimately harming your company’s reputation.
Reverse logistics may help your company enhance customer service while being more ecologically conscientious.