The application of analytics offers opportunities to increase supply chain value, and in today’s world, few applications of analytics carry the weight placed on reverse logistics analytics. The rate of returns and demands for reverse logistics continue to skyrocket, and with companies facing grave uncertainty already, disruptions within reverse logistics will only lead to added costs. As a result, supply chain executives need to understand the traditional visibility problems in the reverse supply chain, how big data powered reverse logistics analytics offer a way to overcome such challenges, and a few tips for connecting the supply chain beyond the initial delivery to the customer.
Reverse logistics suffers from a severe lack of visibility. Much of the problem derives from the limited information available within reverse logistics. Companies simply do not know when a customer is likely to make a product return or send a product back for recycling and reclamation. Furthermore, some customers do not wish to share such information. Obviously, those seeking a refund for merchandise are more inclined to provide context and details. However, those sending products back for recycling will likely never think about whether an item was received properly or not. As a result, shippers and supply chain partners are often left with a near impossible ability to understand and predict demand on reverse logistics. However, the changing role of technology, particularly reverse logistics analytics, and how customers interact with shippers will reshape the narrative.
Among the latest technologies to affect reverse logistics, advanced analytics and connected systems provide a way for companies to look beyond the final mile delivery of merchandise. Shippers and manufacturers can collect data on electronics performance, and as more devices come online and are connected to the Internet of Things (IOT), that opportunity will grow in volume and value.
For example, Joe’s appliance shop begins selling smart refrigerators. Those refrigerators can connect to the Internet and send performance and maintenance states back to both the reseller and the manufacturer. When a problem arises, the system can be accessed by a technician, and that technician can seamlessly initiate a return, repair, or other reverse logistics process from the device itself. As a result, the company will receive an automated notification, know what to expect, and could apply that data to understand what went wrong and whether it is a problem that needs to be addressed.
The basic premise of reverse logistics analytics also allows for organizational restructuring to meet changing demands. As reported by Chain Analytics, “organizational leaders understand that changes in demand, service expectations, market costs, reverse logistics, to name a few, can affect the effectiveness of supply chain networks, and therefore network design must be periodically reevaluated to either confirm design optimization or determine if a restructure is needed. However, this tends to be quite costly.”
Managing reverse logistics is not just the process regaled to the far reaches of the largest supply chain enterprises. It is a process that affects sizes and types of supply chains—ranging from medical through food industries. The smallest companies will also face additional challenges and handling reverse logistics, such as accepting final mile delivery for returns without the presence of the dock for loading and unloading or trying to understand why deliveries seem to cost so much more than outbound shipping. These problems reflect the seriousness of a quality reverse logistics solutions provider and consultancy service that can help the company connect to the proverbial dots. For those that do not have that opportunity and failed to take advantage of it, applying a few best practices for the use of reverse logistics analytics can help. These include the following:
The rate of returns and demands on reverse logistics will only grow as e-commerce swells. Managing reverse logistics is simply too complex to handle with outdated processes and fly-by-night companies. Instead of trying to go it alone, shippers need to seriously consider outsourcing the whole process and connecting reverse logistics through an integrated man and machine approach.
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