Companies that have a reverse logistics process in place can recover value and have a neat and efficient value chain that trumps their market competitors. Ecommerce is continuing to grow at a breakneck pace, making up for 8% of all retail sales in the US. Although the COVID-19 pandemic dealt a heavy blow on industries worldwide, the resultant increase in online sales has generated an equivalent increase in returns and the need for a tight, efficient reverse logistics program.
The increase in online sales has led to increase in competition and businesses must do everything to ensure The increase in online sales has led to increasing in competition and businesses must do everything to ensure customer satisfaction. How to implement reverse logistics is one of the most important decisions a company can make. The failure to implement a consumer-friendly and cost-efficient returns process will likely affect overall profitability.
Because of the importance of reverse logistics, many brands have made a strategic move to outsourcing to streamline internal operations and improve overall efficiency.
Many businesses might feel that staying in-house for their reverse logistics program is the best decision. 74% of shoppers choose to buy from a retailer again based on a pleasant shopping experience. This might influence businesses to keep their reverse logistics program in-house to have better control their brand reputation and maximize customer retention.
According to several supply chain executives, there are certain advantages of an in-house reverse logistics strategy.
When an organization chooses to handle its own reverse logistics program, it has complete control over its operations. Complete control of a reverse logistics program can ensure customer satisfaction.
Having an in-house team for your reverse logistics operations can help improve communication. An in-house team can better understand the values and systems of the organization so they can better represent the brand. As a result, the loss of important information from poor communication is minimized.
When an organization starts growing, the in-house reverse logistics processes can experience significant issues. Scalability is one of the primary issues that compels a company to look outside for help with their reverse logistics processes. Reverse logistics have a need for a wide range of resources. Internal competition for those resources can result in reverse logistics processes becoming strained. Customers have an expectation regarding hassle-free returns driven by companies such as Amazon regarding returns. Not having a strong, hassle-free returns process has a negative effect on customer satisfaction and brand image.
According to a report by Tobin Moore in Multichannel Merchant, deprioritizing reverse logistics can create an insurmountable problem for retailers. Irrespective of the demand for fair return policies, the reverse logistics process is not only a customer experience concern but also a contributor to a $1.75 trillion headache for companies.
The report says that every year, an average of 15% of goods are returned or deemed excess. Because a lot of retailers do not have the necessary infrastructure in place to manage this flood of returns, a lot of returned goods don’t end up in the hands of another consumer. The returned inventory can lose value along the way and a whopping 30% of returns end up in landfills.
Another pressing issue that exists with the management of internal reverse logistics programs is the amplified need for moving goods. A report by DC Velocity shines light upon a recent study conducted by CBRE. It shows that companies that decided not to outsource their reverse logistics program ended up needing 20% more space. Expanding current facilities or moving to new, larger ones can greatly reduce profitability.
There are several clear benefits that a third-party logistics (3PL) provider can deliver to your business. Outsourcing your reverse logistics program to a capable 3PL provider can improve profits, flexibility, customer service, level of control, and many more.
As noted above, 30% of all returned goods end up in landfills, meaning there is significant value to be recaptured. Outsourcing helps a company to streamline operations and handle resources efficiently. The simple model of outsourcing minimizes hassles in managing reverse logistics operations with several advantages:
Finding a quality provider with efficient reverse logistics management can be a challenge. Organizations looking to outsource their reverse logistics program should look for the following in a provider:
Outsourcing different aspects of a business helps the business to become stronger by allowing them to maintain focus on their core operations. This results in improved profitability and better customer service. That is why outsourcing your 3PL program to an experienced provider like PTS Corp can make a lot of sense for many businesses.
Innovating a backward step in the supply chain has provided value to businesses beyond measure. Transporting the product or resource from the customer back to the warehouse or the distribution center has several positive implications, starting from capturing value to proper disposal.
The cost of return deliveries worldwide has amounted to USD 642 billion in 2020, while the same for North America has amounted to USD 363 billion. This goes to prove the immense power of reverse logistics for indigenous American businesses as well as their global counterparts.
An optimized reverse logistics process delivers every sustainable benefit to a business by turning waste into sales. This helps in building customer trust and retaining them. Apart from waste prevention, businesses resell, recycle and reuse returned products, thereby minimizing storage and distribution costs.
According to research by Gartner, sensational data has come forward. More than half the returned goods are resold at their full price! The retail business B-Stock solutions sold USD 70 million worth of returned or excess goods in 2019.
Using reverse logistics boosts the efficiency of the traditional supply chain and offers benefits to everyone. Along with financial benefits, there is an array of environmental benefits as well. It also positively impacts the business culture, maximizing the productivity and efficiency of the workforce. While some businesses combine the forward and reverse logistics components, others keep them separate. However, both processes maximize the profitability ratios of the entire supply chain.
An optimized reverse logistics process improves the visibility of the supply chain. As a result, there occurs an array of benefits that can be enlisted below.
Strategies to optimize reverse logistics processes for businesses:
Companies need cohesive strategies to optimize reverse logistics processes by enhancing speed, cost, and efficiency. Paul A. Meyerson, the author of Lean Supply Chain and Logistics Management, emphasizes the essence of a well-oiled reverse logistics procedure. According to him and other industry experts, every business should focus on the following factors to develop an optimized reverse logistics process that results in their healthy financial bottom line.
Businesses need to use lean tools, employ automation and AI, and ensure better quality control to minimize the volume of returned items. This scenario helps in optimizing the existing reverse logistics operations.
Return Merchandise Authorization (RMA) ensures the process of receiving a refund, replacement, or repair while returning a product. Avoiding processes that cause RMA delays optimizes the reverse logistics process.
Businesses can outsource their reverse logistics processes to an acclaimed 3PL service provider to enable seamless and efficient management. This would result in a more optimized reverse logistics process.
The process of dealing with returns and repairs creates competitive differences for a company. Reviewing policies and agreements result in streamlined and more transparent versions of the same, thereby minimizing the root causes of returns and repairs.
Close collaboration with suppliers results in a seamless and integrated experience for customers. A disjointed one creates a lot of challenges for the customers that they struggle to navigate.
Collecting data on the returned products helps companies understand the cause of returns. It also helps them understand the psychology of buyers to a considerable extent. As a result, adjusting product design, sales, and forward logistics help companies optimize the entire supply chain, including reverse logistics processes.
Creating a centralized return center helps businesses sort products better effectively determine how to reclaim product values. Streamlining these resources ensures improved reverse logistics operations.
Evaluating the entire returns process and identifying potential sources of waste helps to understand the intricacies of product cycle times. In turn, this creates efficient and optimized reverse logistics management.
Tracking, measuring, and controlling the reverse logistics process is essential to create a more optimized approach. Investing in the ideal tools and technologies will ensure this.
Apart from ensuring sustainable business processes, an efficient reverse logistics process improves customer satisfaction by making them feel that they are purchasing from companies with integrity. This will then optimize the reverse logistics process helps enhance the reputation and bottom line of businesses.
While it was mostly considered an afterthought, reverse logistics are being leveraged to massive potential by companies these days. Optimized reverse logistics operations are helping companies address the insufficiency of their supply chain and figure out cost-effective processes to address such shortcomings.
Partner with PTS Corp today to ensure your logistics processes are as scalable and efficient as your business is growing. Let us handle the details so you can focus on reaching your business goals.
Ready to see how your business can improve with PTS Corp? Sign up for a preliminary consultation with one of our experts today!