One aspect of an ecommerce businesses supply chain that often receives less operational scrutiny is reverse logistics. Reverse logistics is commonly thought of as “just the cost of doing business”, and when left unmonitored, could become severely inefficient. To stay competitive and efficient, it is becoming more important than ever to perform a thorough evaluation of your company’s reverse logistics process.
Businesses that successfully optimize their reverse logistics process will benefit from a supply chain that is easier to manage and carries a lower-cost burden as well.
It is integral to evaluate your reverse logistics operations in order to make a few key adjustments for growth and success.
What is Reverse Logistics?
When most people think of logistics they picture the process of moving a product from a seller to a customer—all the steps along the way to get goods to consumers. What isn’t obvious at first is what happens when those items need to be returned. This is reverse logistics (also known as returns management)—any time products are sent to a final destination but need to be returned for any number of reasons—and it is a huge aspect of logistics that is as intricate as it is important. A secondary aspect of reverse logistics process involves how products are dealt with once returned: reused, refurbished, disposed of, recycled, etc to extend their lifecycle. Because reverse logistics can be a very time consuming and costly aspect of doing business, many companies choose to partner with a third-party logistics provider (3PL) to handle both the supply chain process and help handle the returned products as well.
Double Down on Asset Utilization
In business operations, it should always be a goal to do more with less. Utilize your forward logistics assets to support your reverse logistics system. By finding ways for your logistics assets, whether you rent them or own them, to do double duty will reduce your asset spend. This makes your company’s operations more efficient on a per-asset basis.
Do It For Your Customers
Happy customers are loyal customers, it’s really that simple. Ordering goods online and having them delivered is becoming ubiquitous. As more and more purchases are made this way, customers are demanding hassle free returns that are convenient and painless. Efficiently processing return orders could be the difference between a one-time customer and a returning one. With this mindset it’s clear that being successful in reverse logistics not only helps control costs, but also impacts revenue. Therefore, it’s prudent to invest in IT systems and order return processes that reduce inventory cycle time and keep customer satisfaction levels high.
Improve Your Inventory Investment
It’s no secret, inventory costs money. The more inventory you have in the system, the more of your investment it’s locked up in. Taking steps to increase the speed of returns, and goods replacement, will reduce the system’s inventory requirements. This will reduce the amount of capital tied up in inventory, which increases your ROI.
Go Green
One major area with ample opportunity for improving environmentally sustainable standards is reverse logistics. It’s becoming common practice for industry-leading companies to ensure they are reducing waste, and tracking their environmental footprint. By honing in on your reverse logistics efficiencies, you’ll reduce the burden on logistical assets and the resources to keep them running. Plus there are many new ways to reuse, resell, or recycle materials that would otherwise end up in a landfill—a great solution for the environment and your company’s reputation.
Open Up Supply Chain Transparency
Many supply chains stop measuring success once the product is delivered. While this is sometimes an accurate measure of customer satisfaction and profit, it doesn’t account for all situations. Once you can see all traditional forward logistics as well as reverse logistics processes, your operations will be transparent across your network. This benefit allows you to track performance across the entire life cycle of a product, and better identify opportunities for improvement. Without this transparency, it is impossible to fully oversee and holistically manage your supply chain operations.
Bottom Line
No organization is ever above reviewing its processes and operations, and the best ones evaluate a few core aspects on a regular basis. Reviewing your reverse logistics system and looking for ways to optimize it, should be on that list, it is especially important after the holiday sales rush. The benefits are clear—make your supply chain more efficient by re-evaluating your reverse logistics system.
If you are looking for help managing your reverse logistics, send us a note to connect about how we can help your company grow. You can read DCL’s list of services to learn more, or check out the many companies we work with to ensure great logistics support.
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