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Moving in reverse isn’t always a good thing. But when it comes to supply chains, adding reverse logistics to your business strategy is definitely a good idea.
If the concept of reverse logistics is new to you, take a digital stroll through this helpful article compiled with details about what reverse logistics entails, why it’s important, and how, as a large-product retailer, you can use reverse logistics to boost your brand.
What is reverse logistics?
According to the Council of Supply Chain Management Professionals, reverse logistics is “a specialized segment of logistics focusing on the movement and management of products and resources after the sale and after delivery to the customer. Includes product returns for repair and/or credit.”
In essence, the concept of reverse logistics is to simply think backwards. Businesses normally give, or send, a product to consumers. With reverse logistics, the consumer gives the product back to the business. Typically, when a product returns in ‘reverse’ through the supply chain, it is to repair or recapture value. However, reverse logistics activities can take many forms.
Reverse logistics includes:
- Product returns by consumers
- Reusing or recycling packaging materials
- Refurbishment of goods or products
- Repairs or re-manufacturing of goods
- Recycling and disposing of end-of-life products
Why reverse logistics is important
In the past, the product lifecycle stopped as soon as a consumer happily skipped away from the counter with his or her purchase. Too often, returns were managed by seemingly separate cost centers with little knowledge of the brand’s products, processes, or true mission. Now that reverse logistics is increasingly becoming an integral part of business, there are more opportunities for value creation.
Benefits of reverse logistics
Sustainability. Reverse logistics can incorporate eco-friendly practices into your retail business. Practices like recycling, refurbishment, repair, and repurposing packaging are all impactful ways to add sustainability practices into your business.
Integrating a fluid reverse logistics system can also help reduce waste and improper disposal methods. For example, in the United States, more than 50,000 mattresses are discarded every day, according to the Mattress Recycling Council. By establishing a reverse logistics plan for mattress recycling and sustainability, mattress components in good condition can avoid going straight to landfills and instead, be used to create recycled goods.
Product data. While analyzing data from returned goods may seem more like a downfall than benefit, collecting and analyzing product data through reverse logistics can play to a business’ overall advantage. Gaining insight into product improvements and smoother return processes can maximize future quality and business efficiencies. In addition to having a reverse logistics plan in place, businesses can potentially reduce costs. Previously, costs for storage, shipping returns, and labor associated with returns were dispersed among various departments throughout the supply chain, but having an efficient reverse logistics strategy in place can reduce costs through accurate tracking and analysis.
Elevated brand reputation. With a solid and streamlined return process and reverse logistics plan in place, products can be refurbished or repaired, which can possibly result in increased revenue. Establishing a convenient and easy return process can also build a positive association between the brand and consumer, which could increase the potential for sales through returning customers.
How to improve reverse logistics
With the boom of online shopping, big-name e-commerce giants have mastered painless return processes. While this is extremely convenient and beneficial for consumers, businesses (big and small) now feel the pressure to match the streamlined return systems of e-commerce moguls. For many businesses, the thought of creating a full-fledged reverse logistics system seems tedious and exhaustive. As a result, it may not come at a surprise that reverse logistics is often ignored or overlooked in the shipping cycle. However, there are ways to develop, manage, and improve reverse logistics.
Optimize current return policies. A good way to refine your reverse logistics plan is to review and optimize your current return policies and standards. Knowing your business’ strengths, areas for improvement (within itself and with third-party vendors) is the start of creating a streamlined reverse logistics strategy. The key is to create a balanced policy that is easy enough for the consumer to use, while having the appropriate boundaries in place to prevent misuse.
Outsourcing. For many businesses operating at full speed, adding or refining a reverse logistics plan can take a hefty amount of time, planning, and resources. The complexity increases for large-product retailers dealing with bulky products—but there’s an easier way.
For large-product retailers, outsourcing to third-party vendors can ease the strain of the development and fulfillment of reverse logistics. These companies work with you to create customizable reverse logistics plans and provide the trucks and muscle you need to transport large products or inventory without the hassle. Aspects such as scheduling and on-demand delivery are all tailored to suit your business’ goals and preferences.
Having a solid reverse logistics system in place can be the differentiator between competitors. Not only does it add convenience and increased brand reputation from the perception of the consumer, it also creates value for the company whether it’s through process optimization or increased sustainability efforts.
About the author
Jay Sackos is vice president at Dolly. Dolly provides nationwide same-day and scheduled delivery of items. It works with major retailers, small businesses and individuals to schedule and deliver purchased items.