Barcelona, November 28, 2022.- Mahesh Nandyala, Chief Product Officer at CoEnterprise, has published a professional analysis on Reverse Logistics in Forbes magazine. The keys of it are interesting for any type of company:
Without a solid plan, you may not be able to handle all your returned goods effectively, causing chaos and a mountain of serious problems. However, if you have an adequate returns management system in place, you’ll be able to avoid those issues and stay one step ahead of the game.
When most people think of logistics, they imagine all business resources focused on shipping orders out to customers. But returns are just as significant as new sales. Moreover, returns management has increased in importance recently due to heightened regulatory requirements and buyers who demand a consistent return experience. When done right, reverse logistics makes it easier for customers to make returns while reducing business costs and enhancing customer satisfaction.
The key to a robust reverse logistics strategy is focusing on the right disposition guidelines. Disposition management includes accounting processes, product segregation, grading and assessing product conditions to efficiently prepare for a secondary marketplace.
Your reverse logistics management strategy should also focus on identifying the right disposition bucket (e.g., returned to the original manufacturer, returned to stock, recycled, sold on the secondary market, donated to charity or disposed of in a landfill).
Let’s take a look at some of the key benefits you can achieve by implementing a solid reverse logistics program:
Reduced Operational Costs
An efficient reverse logistics system can enable your business to optimize costs in several ways. With the right process in place, you can reduce costs related to transportation, administration, technical support, quality and disposal. The most cost-effective way to improve profitability is to save money and lower operating costs through recycling and resale. Remaining efficient in those operations will dramatically improve your bottom line as well.
Improved Customer Satisfaction
Without a doubt, one of the most critical factors impacting the success of your business is customer satisfaction. Attracting new customers is much more expensive and challenging than retaining the ones you already have. In fact, market research has shown that 95% of consumers are willing to buy from a retailer again if they have a smooth and positive return experience. To facilitate that, you should consider providing free return shipping and full refunds. It will keep them coming back.
You can set yourself apart from competitors by specializing in reverse logistics. With an efficient process in place, you’re able to react quickly to changing market demands and take advantage of opportunities. You can also avoid paying unnecessary expenses and eliminate the need to have resources dedicated solely to returning goods—allowing them to be reassigned to other departments or higher-value tasks.
The majority of goods that come back through the supply chain are not defective or ready for disposal—in fact, many can be reused. For example, if you discover a different use for goods you already have, you’ll be able to extend the life of those items. The proper use of reverse logistics will also shrink your company’s environmental footprint and reduce waste materials, helping to dramatically improve your brand image and loyalty.
Although you may be incurring returns on a frequent basis, odds are that most of the products are in ideal condition and can be easily resold. As a result, an optimized reverse logistics process can have a significant impact on your bottom line. Returned goods can be quickly received, inspected and repaired before returning to inventory to be sold again. And think about this: Even the revenue achieved from selling products at a discounted price is money you wouldn’t have normally seen if it weren’t for the secondary market.
When working on optimizing the process, there are several key factors to keep in mind:
• Profitability: By implementing a reverse logistics process, you can increase your profits by repairing or reselling products that would otherwise be written off as losses. However, at times it may be too expensive to repair or ship a product back to the distribution center. Therefore, you need to carefully consider product value compared to resale costs.
• Infrastructure: In order to make your reverse logistics process effective, you’ll need to have the proper infrastructure in place to collect data and track products throughout their lifecycle.
• Streamlined Returns: When you make it easy for customers to return unwanted products, it helps reduce return rates and keeps your reverse logistics processes running smoothly. On the flip side, you want to reduce high return rates and system violations. So, reviewing your return policy and making adjustments that protect your process while keeping your customers in mind is essential.
In the end, implementing a reverse logistics strategy can be vital to the success of your business.