Managing parcels for outbound shipping represents only a portion of a shipper’s overall logistics strategy. Freight spend must include parcel in reverse logistics spend, and major carriers are turning their attention to the value stream of proactive parcel management in reverse logistics. In fact, the top carriers actively invested in parcel in reverse logistics to offer more options to shippers, such as the $1.4 billion with FedEx’s purchase of GENCO Distribution System Inc., reports the United States Postal Service Office of Inspector General. In conjunction with greater customer demands for low-cost, easy returns, shippers must understand the role of parcel in reverse logistics with greater resolve.
What Does Parcel Have to Do With Reverse Logistics?
As explained by UPS, parcel shipping makes up the dominant part of reverse logistics in e-commerce. This is due to a higher rate of returns for purchases made online, which may be as high as 30 percent. Since customers tend to return items as a single transaction, they are often shipped via parcel. However, some single returns, like furniture and items that exceed the shipping restrictions of parcel shipping, may require a different mode, such as LTL. Meanwhile, outbound freight may be shipped via multiple channels, but inbound reverse logistics are usually exclusively parcels.
Parcel in Reverse Logistics Requires Re-Integration (Restocking) and Accountability
Re-integrating products that can be resold or liquidated is a major challenge in managing parcel in reverse logistics. Returns may be coming in from virtually any venue, including customers shipping returns by parcel and brick-and-mortar stores, even though a brick-and-mortar store may be able to resell the product to consumers at the point of return. As a result, shippers must consider how to best re-integrate products into warehouses and avoid unnecessary costs in the restocking phase, as noted by Tony Sciarrotta of the Reverse Logistics Association, published by Eyetortransport. If a parcel is damaged, it represents an added cost to the company, including the cost to destroy the product upon arrival to the facility. This poses the question, “When is better to simply refund a customer’s money for an item that is damaged, allowing the customer to keep the product?”
Analytics Can Identify Reasons for Higher Return Rates
Since it is more cost-effective to refund money to customers with defective products that cannot be repaired, as opposed to paying for return shipping and managing the product as it moves through the supply chain, shippers must find a way to separate the defects from the instances of fraud. This is where customer-facing analytics can come into play. If multiple accounts of a defect are found from applied analytics, the company can identify other potential clients experiencing the same issue and process refunds appropriately.
Similarly, applied analytics can be used to identify the step in the manufacturing process or its arrival to a shipper that resulted in the defect, regardless of whether the company pays for return shipping or allows a customer to keep the merchandise.
[WHITE PAPER] The Guide to Proactive Inbound, Outbound, and Reverse Enterprise Parcel Management
Use Customer-Facing Technology to Enhance Traceability of Parcel in Reverse Logistics
When a shipment is tendered for return, shippers should use systems that allow for traceability of parcel in reverse logistics. In other words, customers should have the ability to print return shipping labels on-demand, which include tracking numbers that can be used to monitor the movement of the package back to the shipper. Similarly, customer-facing technologies, like smartphone cameras and artificial intelligence-driven assistants, like Alexa, Google Home, Cortana, and Echo, can help shippers understand why a product is being returned.
Customer Service Needs Information to Route Shipments Correctly
Returns originating in brick-and-mortar stores require customer service agents and store associates understand how to respond when an item is returned. Part of this process must include assessing whether the item can be resold or is permanently defective or damaged. Obviously, some store associates will be unable to make this determination, so they must be informed of how to process the return and get it back to the respective supplier, shipper, or manufacturer. In the case of medical device and medications, processing these returns may require additional training to ensure medical-grade products do not end up misused by novice employees or sold illegally. Therefore, managing reverse logistics through a dedicated transportation management system (TMS) may simplify the process by ensuring the right type of return mode, insurance, and overall monitored chain of custody.
Go Above and Beyond for Customer Returns
As explained by a Parcel MEDIA infographic, the right customer returns process is tantamount to the entire customer experience. A complicated returns process will aggravate customers, and if a return shipment contains hazardous materials, like electronics, batteries, aerosols, cosmetics, perfumes, or medical devices, shippers must take extra care to reduce risk to customers and maintain hazmat precautions (instructions) to customers.
In such cases, customers that fail to ship returned products with hazmat compliant packaging and direction will blame the original seller (the shipper) for having a shipment rejected. This could lead to a lost customer and untold damage via negative reviews on social media. In a sense, this is another reason some companies opt for simply sending replacement items, skipping the returns process altogether.
Parcel in Reverse Logistics Is Inevitable and Key to Business Continuity
Apart from shippers that skip returns for hazmat products, managing parcel in reverse logistics is inevitable. Customers are going to want return options, and they want the process to be as easy as possible. By understanding how parcel in reverse logistics affects overall brand value, shippers can reduce risk and create positive experiences for more customers.