Reverse logistics are essential for any business, particularly those that sell online (which is pretty much everyone these days). But not all reverse logistics services are created equal. When returns are processed and managed elsewhere, organizations are free to focus on other areas of business. 

When you’re thinking about outsourcing some or all your supply chain, let’s look at the five major risks. Then, we’ll explore how you can protect yourself from the potential fallout and ensure that your returns process is not broken. 

There is lots to cover, so let’s dive in!

1. Increased Costs

This is one of the reverse logistics challenges that’s frequently overlooked. 

Many businesses turn to outsource to increase profit and save money, so this may come as a surprise.

However, sometimes hidden costs can have you losing out on a lot more cash than you bargained for. When you’re looking for a reverse logistics solution, choose one with transparent and fair pricing.

Make sure you consider exit costs, redundancy provisions, and relapse charges – these are the ones that are most likely to put you out of pocket. 

2. Risk of a Privacy Breach 

If you outsource to third-party logistics, you may be opening yourself up to a confidentiality breach. A customer’s personal data (or your personal data) could be at risk.

All the confidential agreements your company has with vendors, suppliers, clients, and more will be leaving your company – something which never happens without outsourcing. 

When you sign your confidentiality agreement with your chosen provider, you’ll need to do your research and ensure they have adequate internal procedures to handle sensitive info.

One of their biggest responsibilities will be to safeguard your data – so make this a top priority if you choose to outsource. Find a provider that puts security first and has invested in making sure that privacy and confidentiality are a priority.

3. A Lack of Focus on The Customer Experience

Company culture and ethos are at the heart of any organization. As an organization, we expect the people we work with to share that. You should be considering the same thing if you outsource your reverse supply chain. 

The provider you choose to manage your returns processes will essentially extend your business to your customers. In one way or another, your chosen reverse logistics partner will represent and reflect you in the returns process. 

Be careful not to choose an organization focused solely on meeting the terms of a contract at the lowest cost – this could compromise customer experience and reflect poorly on you. Lowering your standards should never be an option. 

Instead, focus on choosing a reverse logistics provider that understands the importance of how smarter returns processing can improve customer experience and increase brand loyalty.

4. Lack of Proper Documentation and processes

This can be a big problem for your business. 

The returns process is complicated and multifaceted. This complexity can range widely depending on the sort of products you’re handling.

Without it, the process can become a lot more complicated than it needs to be, and it can be challenging to keep track of returns and their value. This could also negatively impact your customers, so choose wisely. 

If a product recall or return is handled poorly, it can impact your business for many years.

Outsourcing reverse logistics can be a powerful tool for businesses 

When the right partner is selected, the benefits of reverse logistics outsourcing can outweigh the risks. Outsourcing can allow you to address these issues with expertise and speed, but only with the right provider. Yes, outsourcing does come with its risks. However, there are also significant benefits for your business, including:

  • A streamlined returns process
  • Increased customer loyalty (if the provider is efficient)
  • Support and expertise from industry professionals
  • You’ll have more time to focus on other areas of your business

However, by being aware of the pitfalls and asking yourself some important questions before making your choice, you’ll be aware that the perks do outweigh the risks. 

Outsourcing Reverse Logistics: The Right Provider

If you’ve weighed up the risks of outsourcing reverse logistics and you’re ready to minimize the stack of returns that are piling up, contact G2 Reverse Logistics

We’re the providers of unparalleled expertise, and we put people first, so you can be sure your reverse supply chain is in expert hands.


Written By:

Eric’s 25-year career has been entirely centered on supply-chain management, starting as an intern from Middle Tennessee State University, as an Inventory Control Specialist at the nations largest private-label healthcare manufacturing company.