Achieving balance within the flow of forward and reverse logistics is a complex task for modern supply-chain professionals. Supply chain executives expect results. Supply chain professionals continue to see a steady flow of product returns. Unfortunately, companies cannot simply slam the door on product returns. This would alienate customers and inevitably lead to massive losses. However, next-generation capabilities that actively help companies build sustainable reverse logistics and product returns strategies can make a difference and encourage profitability.
Before attempting to leverage next-generation technologies, supply chain executives must first address the elephant in the room, limited visibility. As reported by Lauren Thomas via CNBC, “The challenges — such as trying to resell returned merchandise and simply finding enough workers to help process returns in distribution centers — could end up hurting department store chains and apparel retailers the most. Typically, about 17% of apparel is returned to retailers, making it one of the most-returned categories of goods, according to an analysis by 1010data.”
Without data, supply chain executives cannot make informed decisions. In the realm of product returns, lack of data amounts to possible new risks for customers. It could lead to compliance violations for improper disposal of electronics. Failure to wipe hard drives properly before reselling could lead to cyber security breaches. The list of risks is endless.
Next-generation logistics capabilities enable sustainable returns management and reverse logistics. Sustainability in reverse logistics means taking the time to consider how the reverse logistics processes adversely influence the environment and customer experiences. Obviously, any products containing rare minerals or metals should be properly recycled. And in fact, major companies have been built on the premise of recapturing gold, copper, nickel, and aluminum from electronics for this very purpose. Of course, sustainability is not solely about recycling.
Sustainable reverse logistics and product returns strategies need to consider the environmental effects deriving from greenhouse gas emissions, unnecessary return trips to brick-and-mortar stores, and lost opportunities. Consider this; trucks carrying LTL freight may have empty space after making deliveries. What if the loading and unloading process considers the need to pick up product returns from brick-and-mortar stores in the beginning? That poses new questions for opportunities to eliminate dead head, overcome problems with routing optimization, and save on fuel. Furthermore, sustainable reverse logistics strategies alleviate the concerns with continuous manufacturing of products that do not sell. In other words, manufacturers can save more raw materials for future products. In turn, total costs for the supplier or manufacturer decline, and those savings translate into gains in the customer experience and lower product price points.
Figuring out the best way to use next-generation technologies is an entirely different animal. Whole books have been dedicated to the topic of sustainability in product returns in reverse logistics. However, the best advice is relatively simple. Companies need access to the most relevant and accurate information surrounding all product returns. Real-time access to the product condition can make or break the decision for recycling or resell. In hopeless cases, unusable components may indeed end up in a landfill. However, the opportunities to reuse raw materials from products even if they cannot be used in their original manner is too significant to ignore.
Furthermore, customers have the Internet at their fingertips, and when given the choice, customers could be the conduit for providing the most detailed information about a returned product status. Is it broken? Can it be repaired? What needs to happen?
The answers to these questions highlight the value of the returned item upon initiation of the reverse logistics process. In a sense, it is a data-driven appraisal process. According to Supply Chain Brain, “by immediately conducting an appraisal of each returned product upon pickup or receipt, confirming its condition, and sharing this data in real-time, manufacturers make decisions more quickly. To optimize the appraisal process, workers can utilize mobile devices, including barcode scanners, visual sorting, and mobile computers, to facilitate real-time data collection and sharing. As the item is sent to the centralized return center where it will be sorted, information collected en route can be shared with workers on the warehouse floor who are next in line to receive the merchandise, boosting efficiency and reducing the time that the item will remain in the reverse supply chain.”
All supply chains need more sustainability to survive. As noted in a past post, sustainability efforts are important to the overwhelming majority (nearly 99%) of supply chain executives. And, finding a way to better manage product returns with a connected system and supply chain—such as using a multi-modal transportation management system (TMS)—is essential to survival.
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