The Troublesome Case of Reverse Logistics
Updated: Feb 3
The ‘headache’ of reverse logistics has become a bad migraine in the recent years.
Manufacturing today is much more spread out than it was 10 years ago. Different stages of manufacturing are being outsourced to different places, with the final plant just doing the menial job of assembly.
Links between service and manufacturing are thus becoming weaker and weaker, increasing the difficulty in reverse returns in case of repairs. This can have adverse effects on stockholding and product being obsolete soon.
With the advent of e-commerce, returns are costing supply chains $50 billion each year globally. Free shipments on returns is something which customers have come to expect from online shopping. Infact, it is the biggest determinant of a positive returns experience, with respondents saying that the returns experience influences whether or not they will purchase from the retailer again.
Logistics companies, like ours, are gearing up for this transformation.
Using third party services for reverse logistics is the new norm. 3PL companies are introducing efficient reverse logistics management systems that refurbishes a wide range of products within a less time and gets them back to the field after they are examined and reviewed. In some cases, this can even happen in a timeframe of 24 hours.
But, this step may not be useful in cases where the good requires a ‘pull and replace’ repair. In which case, new parts need to be ordered or the goods shipped to the parent company.
To streamline the reverse logistics operations companies, returns can be sorted based on types. Logistics companies can have checkboxes for customers to categorise the returns. This makes it easier to send the designated goods to their designated places quickly. The repairs can thus be sent to the inspector's office, the damage for dismantling and recycling and the returns taken back to the warehouse quickly.
Today, machine learning and data analytics have made it possible to get quick reports and analysis of reverse logistics data.
Backed by this data, manufacturers should look at the root cause of reverse logistics. If the volume of returns are high, companies need to look at where the damage is happening - whether it is on a manufacturing or shipment level.
Meanwhile, a greater wave of ‘headaches’ comes in the form of social media commerce. Social commerce is window shopping put on steroids. Nearly 34% of surveyed consumers will make more impulse buys as social media is making it easier to buy products through in-platform selling tools. 63% of these impulse shoppers will end-up sending more of their purchases back to retailers, accounting for a fifth of all online shoppers making more returns.
Omnichannel retailing has been evolving towards this seamless shopping experience and, for the consumer, returning items is becoming a typical part of their purchasing. This calls for quicker returns and refunds.
In the coming years it is expected that there will be centralized warehouse centers dedicated to reverse logistics operations. There are going to be employees dedicated solely to returns, delivering benefits to companies.
The time also calls for smart innovations to streamline reverse logistics processes.