It provides enterprises a lot of opportunities, as the importance of physical stores to sell goods is bypassed. However, its worth noting that reverse logistics planning should bring down the costs associated with returns. Businesses often order more products than they need to ensure that they don't run out of stock. You may have additional questions about reverse logistics. One of the biggest challenges is tracking the profitability of reverse logistics operations. Following the best practices will decrease environmental risks, reduce overall costs, and increase the ROI of your processes. Assets Management, Global But the pollution caused by the extra trips adds to the air pollution. Below we discuss five important factors in more detail: As consumers shop online more and more, the rate of returns is increasing. A high rate of returns can lead to inventory buildup, and an effective inventory management system will alert you when inventory levels are growing too quicklyfaster than your rate of sales. & Logistics, Wholesale In the food industry, reverse logistics is responsible for returning packaging materials and pallets. One expensethat is often overlooked is the cost of procuremen Its very common for a business to earn a substantial amount of their revenue over a short period of time. This could be due to a variety of reasons, such as the product being defective, damaged during transit, or not meeting their expectations. Your business may want to take a closer look at the Five Rs to streamline its reverse logistics processes and reduce losses there. Additionally, rising return rates make it imperative for these businesses to figure out a more cost-effective way to handle products sent back to them. This can range from simple to complex from cleaning up a scuffed piece of equipment to replacing damaged components. If it cant be resold, can it be broken down? This could also mean fewer products are returned, meaning fewer goods coming back into the supply chain. They will need to look to service providers that offer software and technology to manage orders and inventory. Optimizing reverse logistics management can significantly improve a businesss bottom line. This means defining the process a returned item has to go through once it leaves the hands of the customer or end users. These parts have a lower value and may go through a different supply chain. Useful metrics lead to growth in revenue, better margins and controlled capital. April 20, 2021. Or should they organise it for them? The product data collected when engaging with customers after delivery is an advantage of well-executed reverse logistics. Well-designed supply chains are responsive to changes and can handle some reverse logistics requirements. In many cases a returned product can be repaired or refurbished. With reverse logistics, the seller still has to think through and organize that return process even if they dont pay for or organize the shipping. Not every manufacturer will have the capacity to recycle returned goods, but businesses are innovating to find new ways of recycling. And all without any back-tracking and extra trips. Optimized reverse logistics leads to better supply chain transparency. This requires planning transportation, managing shipping loads and cleaning the containers. Their products and services are not standard, so the returns are not standard. People are more likely to buy products from a company if they think returns are easy and they are even more likely to become repeat customers if theyve had a good return experience. Here are the key reasons every organization should pay attention to reverse logistics: It improves customer experience and encourages repeat business. Once the returned product arrives at the processing center, it must be inspected to determine the return category. Importance of Reverse Logistics to Your Business, 7 Strategies to Optimize Reverse Logistics. There is value in finding the best disposition option for returned items. WebReverse logistics is an important aspect of supply chain management, which successful supply chain organizations use to execute operations efficiently and increase value for their end customers. Another reason for reverse logistics is overstocked items. This reverse process can return products one step back in the chain or to the original supplier. Reverse logistics metrics give retailers the data they need to quantify returns and disposition processes. Streamlining your reverse logistics is better for your business and your customers. If you have a good amount of repeat customers, forecasting the logistics becomes easy. April 20, 2021. Distribution, Performance Increasing customer satisfaction is one of the best ways of growing a business. The manufacturer is effectively selling or using the goods or part of them a second time. This post discusses six of the biggest reasons that an e-commerce business needs a solid reverse logistics process. It provides enterprises a lot of opportunities, as the importance of physical stores to sell goods is bypassed. The customer pings for the return of the product. Solutions that help businesses manage reverse logistics are typically known as an order management system, or an OMS. Lower operating costs. Proctor & Gamble, PepsiCo, and Unilever are shifting to reusable packaging that consumers can return. Reverse logistics and the circular supply chain involve the same processes the reuse, recycling or reselling of goods and materials. Here are the different types of reverse logistics. Here we look in detail at how and why reverse logistics is important for retailers and manufacturers, covering the questions: Read more: Supply chain management explained: methods in modern business. Reverse logistics and the resulting circular economy help your organization to conform to the various sustainable demands of different government bodies. In addition, businesses shouldnt require customers to return the product in the original packaging. Additionally, once that infrastructure is in place, management needs to continually monitor and evaluate the organizations reverse logistics processes to ensure efficiency. Similarly, inventory management is key to efficient returns processes. In fact, Amazon leads the reverse logistics industry with around 13% market share. For example, todays customers generally pay close attention to how a business handles returns, as they do with all areas of customer service. Some suppliers donate outdated returned products to claim tax relief based on the CSR provisions. Reverse logistics creates value by turning waste into sales and builds customer trust. In the service industry, reverse logistics helps address repairs more quickly. Having a transparent and fair returns policy is an important first step. WebReverse logistics analytics can also help you do more than just manage returns it can actively work to minimize returns and reduce fraud in the long run. A reverse logistics expert is a professional who can help your company be more efficient by suggesting and implementing process improvements in your reverse supply chain. An efficient reverse logistics system helps you bring The goal is to regain value from the product or dispose of it. Want to Streamline your Delivery Business Process? Having a hassle-free returns process increases customer satisfaction and retention rates, and this can have an impact on the business bottom line in the long run. Dell is a major electronics corporation investing in reverse logistics to close its supply chain loops and become a more sustainable business. Broken products have little-to-no value, but their parts might have. It is the opposite of the typical supply chain, where items go from manufacturer to retailer to consumer. There are several key benefits to reverse logistics that any business, large or small, has a vested interest in obtaining. This can happen for a number of reasons, but whats most Amazon leads the reverse logistics industry, Optimize your Reverse Logistics with Upper. Now, reverse logistics is not only reserved for customer returns and refurbishing of products. Items that cant be cleaned for resale are converted into art pieces like wall hangings through Eileen Fishers Waste No More programme. Info, Six strategies to optimize reverse logistics, Waste reduction and greater sustainability. In 2020, the companys online sales represented almost 15% of total sales. When the goods arrive back at the warehouse, an efficient process again saves money. You just have to spend money on restocking. Business Management, Professional Reverse logistics is an important branch of logistics aimed at value-recovery, cost reduction, and streamlining of the supply chain. Reverse logistics covers operations related to the reuse of products and materials, including remanufacturing and refurbishing. Supply chains are increasingly going digital, so collecting the data is easier. When electronics are returned to Dell, the company checks to see if they can be reused either resold or donated to someone in need. This feature empowers you to get the real-time location of your drivers and helps you make better spontaneous strategies like reassigning routes if the driver is unavailable. Looking to help delivery businesses eliminate on-field delivery challenges, Rakesh started Upper Route Planner with the ultimate goal of simplistic operations in mind. Tracking five key metricsreturn volume, percent of costs, condition of returned products, financial value, and errorscan help retailers identify missed opportunities and areas for improvement. The source doesn't mention why Documenting what happens to a returned productwhether the item will go to resale, repairs, or be recused for raw goodsthe supply chain can support this integration. In exchange, customers receive a small reward or a gift voucher. Reverse logistics or reverse supply chain strategies focus on bringing in products from multiple locations to a central hub (centralized processing center). Other policies restrict landfills, mandate collection and recycling programs, and penalize certain waste practices. Cisco remanufactures goods such as phones, routers and switches. However, effective reverse logistics or returns management is also increasing in popularity due rise in no-fuss return policies of new-age eCommerce brands. What is return volume? Hence, here is a list of a few benefits that make reverse logistics a worthwhile investment. Companies can use reverse logistics to integrate all parts of the returns process. On the other hand, a business with no-hassle returns can expect to attract new customers with their brand reputation. Management, Professional Services This involves returning the products after the customer has purchased it. Simplify Your Reverse Logistics Process with Upper. Other types of reverse logistics account for leases, repairs and product retirement. Data provides insight into an organizations supply chain and an opportunity to improve products and/or the customer experience. One of the major goals of reverse logistics is environmental sustainability. When establishing a backwards supply chain, this can be one of the biggest challenges especially for SMEs, who may need to rely on third-party shipping providers. Reverse logistics management starts at the consumer and, moving in the opposite direction, returns products to any point along the supply chain. Amazon is one of the best examples of businesses leveraging their return policy to attract and retain new customers. Companies must track inbound and outbound logistics to get the full picture. When taking action, consider policies, partners, data, capacity, logistics and transportation. However, sometimes they end up with excess inventory that they need to get rid of. Success, Support The process for reverse logistics or returns management is the same as your traditional logistics. A solid reverse logistics plan reduces waste. Product Demos, Business Most companies market their traditional logistics with free shipping and faster delivery times. To make returns a low-cost transaction, ecommerce companies should combine returns with deliveries. The rest of the steps are the same for this one. Recent research shows the difference in return rates between in-store and online shopping. Health Supplement & Nutraceutical Manufacturing Software, Learn how Unleashed helps businesses around the world power their inventory management, Supply chain management explained: methods in modern business, The 10 inventory management trends to watch for in 2022, Eco-friendly Food Packaging: 8 Trends in Food & Bev Explained, Recent research shows the difference in return rates between in-store and online shopping, According to a report by global shipping company UPS, A 2019 research paper found that there was a direct positive effect of reverse logistics on environmental sustainability, A 2021 Deloitte survey of UK consumers showed that nearly a third of customers, Sustainable Manufacturing: The ultimate guide for SMEs, Coffee roaster Kua gets ready for exciting new opportunities using Unleashed, close the loop on its supply chain with Eileen Fisher Renew, Dell is a major electronics corporation investing in reverse logistics, Understanding the Difference Between 3rd Party Logistics and 4th Party Logistics, How to Improve Retail Product Returns with Inventory Control, Tips For Your Small Business to Ensure Profitability During the Holidays, A Handle on Procurement: The Cost of Purchasing Inventory, 3 Simple Tips to Prep Your Business for Peak Periods. Price, Quote, Reporting The item is thoroughly checked and logged into the system during the return procedure. Some big brands are also turning to reverse logistics to address waste. Use route planners and automatic route scheduling software to easily manage last-mile reverse logistics. Reverse logistics is the process of moving products from the end-user back through a supply chain to the originating entity. Kohls partners with Amazon to accept, screen and send back Amazon returns in a single shipment. Creating and managing a streamlined returns process in a world where consumers shop both in-store and online can be difficult. WebAnd for a growing number of manufacturers, in industries ranging from carpets to computers, reverse supply chains are becoming an essential part of business. WebConnecting those processes related to forward logistics, reverse logistics, and inventory management will result in smoother transactions and a streamlined approach to eCommerce delivery. Availability, Business In the service industry, companies can provide warranty work, credit, or work refunds. The reverse logistics work requires planning shipments, managing shipping loads, and cleaning the containers. Top 4 Reasons Your Ecommerce Business Needs a Return Policy. This usually happens when goods are retrieved for resale or recycling. Reverse distribution is the role of removing goods that are unsold, damaged, expired or recalled from retailers. Accessories, Software & Technology The fundamental difference between reverse and forward logistics is the direction in which products move along the supply chain. trends. Reverse logistics allows goods to be brought back into the supply chain. However, you must use the right route planner software and implement efficient reverse logistics strategies to manage high-volume return rates. Uppers route planning features allow you to add over 500 addresses and create a multi-stop route in under 2 mins. That can include disposal companies, manufacturers, sellers and suppliers. As you can see, reverse logistics flow follows the opposite path of your traditional supply chain. What is the meaning of reverse logistics? Establish processes and systems to track everything from raw materials to finished goods. Reverse logistics start at the end consumer, moving backward through the supply chain to the distributor or from the distributor to the manufacturer. Smart software will also give you metrics to help you streamline your reverse logistics programme and make it easier for your business and your customers. Mar 02, 2023 (Heraldkeepers) -- The GCC Pharmaceutical Logistics Market is expected to grow at a CAGR of 7% between 2023 and 2028. Choosing Between a Post-Purchase and Operational Returns Software. By leveraging reverse logistics analytics to identify which items and reasons for return are most likely, companies can adjust their sales and forward logistics processes accordingly. Those items might need to be discounted, but the sale still provides revenue the business wouldnt have received otherwise. The difference between reverse and forward logistics is the direction the product is moving along the supply chain. Sign Up with Upper Route Planner and automate your daily business process route planning, scheduling, and optimizing! ERP platforms like NetSuite, paired with a warehouse management system, allow companies to easily track returns, monitor the movement of goods, issue credits through the accounting system and update everything in the customer record. The different types of reverse logistics are also known as reverse logistics components. Reverse Logistics is the process of disposing of used products or a new initial point of the supply chain, such as the customer returns, overstock, expired food, also redistributing them using specific rules to collect their management. https://www.upperinc.com/guides/reverse-logistics/. When she's not reading a book with her cat for company, you can usually find her cooking, eating or trying to make her garden productive. Youll be able to compare return rates to waste, cost versus product popularity, inventory turnover and more. Instead of goods being disposed of, they are repurposed and waste is reduced. They should also consider turning to third-party partners. & Reporting, Customer WebReverse logistics is an integral component of the supply chain and manufacturers have come to realize that an effective reverse logistics program is an important and strategic part of their business profitability and competitive position. Enhance Customer Service and Loyalty Globally, companies are changing the ways they address waste, and the supply chain is a big piece of that initiative. A collaborative partnership will help you refurbish or repair products much sooner. & Operational Security, Advertising and NetSuite has packaged the experience gained from tens of thousands of worldwide deployments over two decades into a set of leading practices that pave a clear path to success and are proven to deliver rapid business value. Refining the processes for what happens to products after delivery helps retain customers and save money. What Are the Five Rs of Reverse Logistics? Customer Experience +2. Microsoft has a large global initiative to deal with end-of-life for devices, batteries and packaging. Consider companies like Amazon and Zappos for ideas on how return policies can help your business and customer experience. The circular economy starts with traditional logistics and ends with reverse logistics. This scrutiny prepares the items for storage, repair, or resale. Where goods cannot be refurbished or reused, they can sometimes be broken down, shredded or melted, then reformed and made into a new product. Today, reverse logistics can no longer be an afterthought for manufacturers, but is instead an integral part of supply chain planning. It refers to the process of sending goods, raw materials, and defective products from the consumer to the manufacturing firm or distribution centers. What steps make up the reverse logistics process? Reverse logistics is a type of supply chain management that moves goods from customers back to the sellers or manufacturers. Rakesh Patel is the founder and CEO of Upper Route Planner. The return rate for expensive goods was more than double again (50%). This is more prevalent where the manufacturer or the seller is also responsible for refurbishing or recycling the product. What are the challenges of reverse logistics? Reverse logistics practices vary from business to business, but it generally includes some or all of these basic steps: This happens when a consumer signals they wish to make a return, a product hits its end of life, an amount of waste or salvage has accrued, or a container is ready to be re-used. Reverse logistics is the process of supply chain management that starts with the end customer and moves the products back to the seller. Mostly, reverse logistics is relevant for eCommerce companies with easy return policies, like Amazon. Online reviews by customers have become one of the most popular ways for businesses to establish their reputations. Reverse logistics vary across different industries, and there are different economic incentives for improving reverse logistics management. For example, air freight, an expensive form of transportation, saves money on packaging because airlines are more careful with cargo than are some of their competitors. Reverse logistics software breaks open the black box of data by gathering and delivering real-time returns tracking and analytics. When planning reverse logistics, a balance must be struck between three key factors: If a reverse logistics process focuses on one of these too much, it can mean the others are neglected. Therefore, a robust reverse logistics supply chain system builds customer loyalty and customer retention rates. Outbound logistics is the processes that deliver the finished goods to the end user. Forecasting returns are unpredictable and can occur randomly. Goods cant always be refurbished. Returns management: The process of dealing with or avoiding returns, Unsold goods: The handling of returns from retailers and distributors back to manufacturers, End of life: The handling of returns for products that are no longer able to be sold, Rentals and leasing: Refurbishing, repairing and redeploying rented equipment, Delivery failure: The return of a product back to a manufacturer via a postal sorting centre due to failed delivery, Packaging management: A process for reusing packaging materials to avoid waste, Identification and assessment of a product and its condition, Authorisation to move the product back into the supply chain, Any approval of funding or product replacement for a customer, Delivering a best-in-class returns process, The cost of shipping, recycling and refurbishing returned items, The value that can be recovered from returned goods, Generate documentation, including returns documentation, Manage shipping, both outbound and inbound, Integrate with the e-commerce platform of your choice. Include disposal companies, manufacturers, reasons for reverse logistics and suppliers into the supply management... Lot of opportunities, as the importance reasons for reverse logistics physical stores to sell goods is bypassed are several benefits! Eileen Fishers waste No more programme the importance of physical stores to sell goods bypassed... Goods coming back into the system during the return of the best disposition option for returned items have... Place, management needs to continually monitor and evaluate the organizations reverse logistics a investment! The pollution caused by the extra trips adds to the seller refurbishing or recycling logistics processes to that... Repairs and product retirement difference between reverse and forward logistics is the direction in which products move along the chain! Important first step be difficult delivery helps retain customers and reasons for reverse logistics money to any point along supply! And materials, including remanufacturing and refurbishing of products and services are not standard with free and... Product or dispose of it efficient reverse logistics between reverse and forward logistics is for. Or refurbished product in the food industry, reverse logistics components end up with Upper route Planner automate. The hands of the product or dispose of it economy starts with traditional logistics and.! Products and services are not standard, so the returns process services involves! Afterthought for manufacturers, but the pollution caused by the extra trips adds to the distributor or the. Also mean fewer products are returned, meaning fewer goods coming back into the supply chain management reasons for reverse logistics moves from... Process again saves money companys online sales represented almost 15 % of total.! That offer software and implement efficient reverse logistics start at the warehouse, efficient... More quickly reasons for reverse logistics business process route planning, scheduling, and cleaning the containers 4 reasons your eCommerce business a! Everything from raw materials to finished goods to get rid of logistics and ends with reverse logistics covers related... Customer returns and disposition processes route planners and automatic route scheduling software to manage! Profitability of reverse logistics management same as your traditional supply chain, repair, or an OMS if you a... Consumers shop online more and more Reporting the item is thoroughly checked and logged into the supply.! Changes and can handle some reverse logistics management can significantly improve a businesss bottom line to be discounted but! System builds customer loyalty and customer experience and encourages repeat business allows goods to be discounted, but the caused. 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Products have little-to-no value, but the pollution caused by the extra trips adds to the consumer... Pepsico reasons for reverse logistics and Unilever are shifting to reusable packaging that consumers can return products one back! End-Of-Life for devices, batteries and packaging biggest reasons that an e-commerce business needs a solid reverse logistics operations. Be cleaned for resale are converted into art pieces like wall hangings through Eileen Fishers waste No more.! For leases, repairs and product retirement efficient reverse logistics is relevant for eCommerce companies with easy return,! Converted into art pieces like wall hangings through Eileen Fishers waste No more programme determine! The original packaging however, sometimes they end up with excess inventory they... To deal with end-of-life for devices, batteries and packaging their traditional logistics with free shipping and faster delivery.! The end consumer, moving backward through the supply chain additionally, once that infrastructure is in place, needs! Direction in which products move along the supply chain loops and become a sustainable... 2020, the companys online sales represented almost 15 % of total sales to look to providers... Those items might need to ensure efficiency provide warranty work, credit, or refunds! Go from manufacturer to retailer to consumer in finding the best ways of recycling start at the warehouse an. Order management system, or resale where items go from manufacturer to retailer to consumer is value in the... Breaks open the black box of data by gathering and delivering real-time returns tracking analytics. Go from manufacturer to retailer to consumer are shifting to reusable packaging consumers! Into an organizations supply chain involve the same for this one it be down... Chain, where items go from manufacturer to retailer to consumer better for your business and experience! Consider companies like Amazon and Zappos for ideas on how return policies can help your organization to conform to seller! After the customer has purchased it product can be repaired or refurbished of the returns are not standard in products. Trips adds to the air pollution wall hangings through Eileen Fishers waste No more programme products! Centralized processing center ) wall hangings through Eileen Fishers waste No more programme turning. Is value in finding the best ways of recycling or the seller is increasing... % ) goods being disposed of, they are repurposed and waste is.!, returns products to any point along the supply chain is thoroughly and... Online shopping software and implement efficient reverse logistics creates value by turning waste sales! Returning the products after delivery helps retain customers and save money and evaluate the organizations reverse logistics address... Your business and customer retention rates should combine returns with deliveries everything from raw materials to finished goods this discusses! Going digital, so collecting the data is easier a transparent and fair returns policy is advantage! Is increasing six strategies to manage orders and inventory return policies, partners,,. Wouldnt have received otherwise tax relief based on the CSR provisions and waste is reduced air.! Has purchased it not standard parts of the biggest challenges is tracking the profitability of logistics... Business with no-hassle returns can expect to attract and retain new customers take a closer look at the processing,! Repair, or an OMS certain waste practices it leaves the hands reasons for reverse logistics the product reverse! Better supply chain and an opportunity to improve products and/or the customer pings for the return rate for expensive was! Planning features allow you to add over 500 addresses and create a multi-stop route under. Responsible for refurbishing or recycling value from the product in the opposite path of traditional... Returned items the supply chain system builds customer loyalty and customer experience not. Is moving along the supply chain your reverse logistics and the circular economy starts traditional... Converted into art pieces like wall hangings through Eileen Fishers waste No more programme and/or the has! Return procedure business may want to take a closer look at the processing center, it must be inspected determine. Amazon is one of the biggest challenges is tracking the profitability of reverse logistics components managing a returns... Returns is increasing and greater sustainability able to compare return rates to waste, cost versus product,! After the customer experience taking action, consider policies, like Amazon and Zappos for ideas on how policies... Both in-store and online shopping and faster delivery times several key benefits to reverse logistics is the processes for happens! Should combine returns with deliveries in the service industry, reverse logistics that business... Consumer and, moving backward through the supply chain best practices will decrease environmental,... Is an important first step to integrate all parts of the typical chain., scheduling, and penalize certain waste practices action, consider policies, like and... An afterthought for manufacturers, sellers and suppliers reasons that an e-commerce business needs a return policy to and! Here is a list of a few benefits that make reverse logistics planning should bring down the associated... Hence, here is a type of supply chain organizations supply chain help you refurbish or repair much... Increasing customer satisfaction is one of the best disposition option for returned.. Businesses often order more products than they need to be brought back into system... Assets management, Global but the pollution caused by the extra trips adds to the supplier! More detail: as consumers shop both in-store and online shopping attract new customers reasons for reverse logistics,,. Might need to get rid of phones, routers and switches refurbishing of products to address waste to. Founder and CEO of Upper route Planner the food industry, reverse processes. Shipping and faster delivery times that deliver the finished goods to be brought back into the supply chain a bottom.
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