Great reverse logistics programs are becoming vital for businesses: with ecommerce driving the volume of returns up, efficient reverse logistics programs can both positively affect customers’ opinions of a brand and improve bottom-line performance overall.
The key to this is the overall returns flow – how returned goods are processed, collected, and introduced into the reverse supply chain with minimal touches. Nailing it requires a combination of strategic smarts and technological savvy.
This article explores several key factors businesses need to consider to make reverse logistics programs more of a competitive commercial advantage. But first, let’s look at how the reverse logistics process has changed in recent years.
Finding the right partners
Traditionally, retailers and other businesses would turn to a third-party logistics provider (3PL) to process returns. The provider would handle the transportation, warehousing processes, return to vendor processes, and potentially getting the returned goods into a secondary channel. The upstream challenges, such as generating a return merchandise authorization (RMA) and inducting the return from a consumer, would be left to the business. This system may still be necessary depending on the product line and the final destination or consolidation of products and agreements with suppliers.
In today’s reverse logistics ecosystem, however, customer experience is increasingly reliant on high-quality processing and the nature of returns is far more complex. This has made it critical for businesses to find a provider that can drive real value and partnership in developing an efficient, customer-friendly process while remaining cost-effective and maximizing the value of each returned item.
So what areas should businesses be focusing on when examining their reverse logistics processes?
1. Customer convenience
Customers want returns processing to be easy and convenient. This can be achieved in a variety of ways, but generally, it’s about providing more options and flexibility.
For example, grading and dispositioning are processes that were typically performed in the warehouse or at a customer service desk. Today, however, initial grading can be done while generating the RMA through a self-service, digital interface for consumers, which can then guide the consumer to an induction point.
The blending of physical and digital channels to handle returns has even led to some unorthodox partnerships between pure-play online sellers and traditional brick-and-mortar retailers. Regardless of the tactics deployed, the trend is evident: Online sellers want to make it convenient for consumers to make a return, whether it is through the retailer’s storefront, or through a third-party access point.
2. Cost-saving opportunities
There are a huge range of opportunities for most businesses to make their reverse logistics process more efficient, either saving money or adding value.
Let’s consider grading and dispositioning again: as long as you have the right technology platform to enable it, they can be pushed upstream to help reduce transportation and labor costs. In some cases, a final destination for the returned item can be determined during the RMA generation process by understanding the grade implications and vendor policies associated with the item.
Over the last couple of years, pushing dispositioning upstream to reduce transportation costs, enable consolidation, and provide other value-added services, has meant expanding the physical network with additional return merchandise induction points. This trend mirrors micro-fulfillment, which involves building out logistics networks close to population centers, and it has led to an expansion of some existing supply chain partnerships.
3. Technology and data
Making use of cutting-edge technology and data is key to unlocking efficiency within the reverse logistics process. Sure, returns processing may not reach the same level of automation as a fulfillment center might, given the high variability of items and conditions, but there are many other means of automation that can be highly impactful.
Vision technologies are a great example: they will increasingly be used to grade returns as they enter a facility and make faster, more effective decisions. As the technology becomes stronger and cheaper to deploy, this will drive significant cost savings and added value for businesses.
The use of data and analytics along with advance grading and dispositioning combined with additional inductions points will allow businesses to move their returned merchandise a minimal number of times thus retaining as much of an item’s value as possible.
If you’re looking to improve your Reverse Logistics process, bottom line and maximize the recovery from your returns, G2’s team of experts can help.
Learn how G2’s reverse logistics solution and technology can help your business and discover if we’re a mutual fit.