Analytics can be used to improve operations throughout the entire supply chain, but the role of analytics is often applied to warehouse operations and forward logistics. In other words, analytics are associated with today’s warehouses and supply chains in the direction of a supplier to customer. However, reverse logistics can benefit from analytics as well. Managers need to understand the role of analytics in reverse logistics, and how they can provide significant benefits throughout the entire supply chain.
How to Build the Business Case for Integrated Supply Chain Systems
The Issue: Analytics in Reverse Logistics Are Often an Afterthought
Reverse logistics make up a significant portion of any modern enterprise, and reverse logistics may be subject to increased use depending on how a customer purchased a product. By some accounts, reports Stacey Rudolph of Business2Community, online purchases may have a 30-percent return rate. This return rate directly affects reverse logistics costs. In other words, up to 30 percent of all warehousing costs could be reduced by simplifying and streamlining the reverse logistics management process. The only way to gain insight into anything in a modern warehouse, to understand what is happening and apply this on a global scale, warehouses must use analytics for this purpose.
The Solution: Analytics Enable Reverse Logistics Cost Recovery
Analytics provides a means of using data across tens of thousands of points, as well as internal and external factors, to understand what is happening. But, the use of analytics can be applied to gain a view of what is likely to happen, what needs to happen to avoid poor outcomes, and why certain events may lead to a given outcome. It sounds complicated, but cloud computing technology has enabled a new generation of analytics which can be applied to reverse logistics.
The Reward: How to Use Analytics in Reverse Logistics to Reap Greater Savings
In today’s age, many supply chains outsource reverse logistics management and processing. Unfortunately, this is an added expense to the company. Companies that process reverse logistics, such as returns management, for other companies are effectively using your product to make a profit. This may include the reselling of merchandise, restocking of merchandise, and recycling of products that may have been defective. Warehouse Managers, therefore, need to know how to use analytics in reverse logistics to recover costs and reap greater savings.
To use analytics in reverse logistics in the warehouse, the Warehouse Manager should follow these steps:
- Integrate systems, allowing inbound and outbound systems, as well as business-to-business and consumer-facing systems, to communicate.
- Monitor inventory from a single location.
- Simplify all planning and fulfillment tools by automating the process.
- Use the Internet-enabled devices, connected to the Internet of Things (IoT), to obtain real-time visibility and full unit lifecycle tracking.
- Set realistic key performance indicators and metrics for insights gained from analytics in reverse logistics.
Implement Analytics in Reverse Logistics Today
Although analytics are a revolutionary way to improve warehouse operations, such improvements may not be possible or may be severely limited when analytics in reverse logistics are ignored. Warehouse Managers should begin the process of implementing systems to leverage the power of analytics in reverse logistics.