Reverse Logistics – Poor Relation or Big Business?

  • 9 May 2017
  • Number of views: 7757
Reverse Logistics – Poor Relation or Big Business?

Outsourcing of non-core business

Outsourcing the logistics operation to a third-party logistics provider is nothing new and it makes a lot of sense. If you are good at manufacturing something, you are not necessarily good at running a distribution and logistics operation. So you give it to somebody who has specialised in doing so and who can do it at a more attractive cost whilst achieving a consistently high service level.

Part of any logistics operation – 3PL or in-house – is reverse logistics. Customers return goods for one reason or another and as our preference for buying things online increases, returns become more and more frequent.

When we talk to our clients about their logistics and warehousing operations, reverse logistics is typically mentioned with a sigh and slumped shoulders.

A couple of client statistics put reverse logistics into perspective: “25% of all items sold are returned” or “10% of our traffic is returns”. These numbers are significant and are only likely to rise. Each business – click or brick – will have its own statistics, which should not be ignored, but used as a call to take action.

Behind the scenes, a lot of work goes into managing the logistics operation in reverse order. The last mile becomes the first mile, the dispatch operation now receives back what it has already shipped, and the seller effectively becomes the customer, buying back their own products. Of course, the financial transactions need to be reversed too.

Create your own Third Party Reverse Logistics Provider

How about making reverse logistics a department within the logistics operation. A department with its own identity – something to be proud of? Your own 3PRL (Third-party reverse logistics provider). Apologies for adding to the acronym jungle.

Reverse logistics is not going to go away, so why not make it a super-efficient specialist operation. Simply dragging staff away from picking or replenishment duties to do returns is not the answer. Stock coming back needs to be on the shelves again in record time in order to chase another sale. This can only happen if treated as a priority.

You know the sinking feeling of the sad looking pallet in the corner full of stock in varying states of repair. From the pristinely bagged, boxed and labeled item to the item bulging out of its split box barely held together with a piece of string.

This is not a sexy thing to get on with, but it can and should be done

Without focus, returns get out of hand.

Start with the producers’ returns policy and make sure it covers more than the B2C element and one or two KPIs for the logistics operation.

As a logistics provider, work with your clients to agree on every aspect of how to get their products back into circulation. Who makes decisions on the quality of the returned product and if a refund is due or not? What to expect from collection centres, couriers, and other carriers, sortation centres and distribution centres. Do you have stock of fresh packaging, labels, user guides and everything else required to make a returned item appear brand new and untouched to the next buyer? The list is long and should cover every step in the logistics process.

How about having a client representative work with you in your department to help make business critical decisions and shorten the processing time. This is quicker than endless email debates about the interpretation of Ts&Cs and more or less acceptable judgment calls.

The longer it takes to get a product back on the shelf, the less it contributes to the bottom line so logistics clients will have a great interest in making returns as quick and cost effective as possible.

To find out how WBS can assist you in optimising your logistics operation contact us for an initial FREE no obligation consultation.

You can also read more about our specialist supply chain assessments on our website

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