Traditionally, the logistical layout in many warehouse facilities have been organised to deal with the outgoing shipment of goods to be delivered in a timely and efficient manner. However, the rise in e-commerce has led to a change in the services customers expect, forcing logistic providers to adapt their infrastructure to meet demand.
Reverse logistics is playing a bigger role than ever in the supply chain of a successful business. With routes to market increasing all the time, mass personalisation of products and services, and the need to continually exceed quarterly and yearly performance, business owners are looking for ways to create more efficient and streamlined reverse logistics operations.
What is reverse logistics used for?
Many will be familiar with the common reasons customers decide to return an item after purchase:
Commercial returns: End-user customers returns goods that do not meet expectations, such as straight forward refunds or faulty goods.
Overstocks: Retail, distributors or resellers send back excess products that they are unable to sell.
Take-back returns: End-user customers send back items or products they no longer use.
Service returns: Products in need of service or repair are returned by end-user customers.
The difference between logistics and reverse logistics
It may sound like reverse logistics is a simple case of working back through the same supply chain channels used to ship the product in the first place, but there are a number of issues to overcome to create an efficient operation:
Return reason: Why the customer has returned the item varies from case-to-case, from refunds, exchanges to repairs. This is completely different to the single reason it was shipped out to the customer initially, with their expectations also changing along with it.
Planning: It is far easier to organise an outbound shipment as the movement of the product can be planned from the moment a sale is raised by a customer. Due to the various reasons mentioned above it is much more difficult to organise and plan manageable routes of return.
Shipping: You have full control of how the order is shipped out to the customer, managed by the warehouse staff who are following a tried and tested procedure. More often than not, when an item is returned the customer is the one in control of how this is done.
Product condition: Customers can expect to receive a product manufactured to a high standard. When it is sent back, however, there is no way of knowing its condition until it physically arrives and is verified.
Packaging: Products are packaged by warehouse staff to ensure they can be transported while maintaining the integrity of the item. In many cases, customers do not own the correct packaging material which can have a huge effect on what is received at the warehouse after transit.
Finding the right reverse logistic strategy
Given the variety of ways and reasons which products can be returned, and with much of it out of businesses control, you should always expect the unexpected. However, there are procedures that can be implemented to make management of reverse logistics much easier.
The key to a successful strategy is ensuring the process is made simple for the customer which will provide more control on the logistical end. This will also mean the merchandise can then be processed and available for re-sale as quickly as possible.
It is important to create policies that enable customers to return their purchases at either drop-off points or any retail store (if applicable). This will allow POS systems to process the returns with far more efficiency regardless of where the item was purchased. This can be complemented by a dedicated reverse distribution channel to separate damaged goods from those that can either be re-packaged or immediately put back into circulation.
Capturing data is also extremely valuable in much the same way products are analysed within the warehouse environment before shipment. Once you understand the types of goods more likely to be returned you can plan and streamline inventory management. This is particularly useful during peak periods of the year when sales and returns are often at their highest.
2H Storage Solutions are warehouse and distribution experts and can help you find the right reverse logistic strategy for your business. Give our team a call today on 01937 585057