Common Problems With Reverse Logistics

Take a moment to think about everything that can go wrong with an outbound shipment. Now, imagine those same problems applied to a shipping capability when the shipment may not necessarily originate from within your company. Yes, consumers take on the role of shipper in this instance. As a result, it is not always possible to know what freight is moving through reverse logistics to your company. However, reverse logistics digital transformation and more comprehensive returns policies have dramatically changed the way customers view and use reverse logistics.

Of course, it’s easy to assume that fewer returns can reduce the problem. However, customers expect the ability to return items regardless of the purchase place. According to Supply Chain Game Changer, “in the exponentially growing e-commerce marketplace customers expect, and demand, a hassle free returns policy.  They will check out the returns policy before making a purchase.  They will go elsewhere if there is not an easy returns policy and practice.  And they will use the returns process, a lot!

It is estimated that the E-Commerce market in 2018 will be about $1.5 Trillion worldwide.  And as much as 30% of those purchases will be returned.  Add that to the returns rate in the brick and mortar retail industry and there are over $650 Million worth of returns annually!”

So, what are shippers left to do to manage reverse logistics without throwing in the towel and stopping customer returns altogether?

Proactive Reverse Logistics Strategies Build Collaboration and Visibility in the Supply Chain

There was a time when sending a product back to a manufacturer or retailer was simple. Shipments already come with return labels, but even though that label represents a small cost to the shipper, it can be unnecessary. As a result, more companies have created returns management processes that customers can begin online.

For example, Amazon allows customers to initiate a return online and choose multiple options for sending a product back to the company. Obviously, the e-commerce behemoth is a key example of using technology to reduce the impact of returns. However, additional retailers have implemented similar policies in the wake of the COVID-19 pandemic. Walmart now requests customers begin returns online, and depending on the product, returns may not be possible for safety and health reasons. 

The idea of using digital capabilities to manage reverse logistics lies in creating returns authorization processes that preempt customers. Meanwhile, retailers also have the option of using brick-and-mortar stores as returns centers for online purchases, but that may fall short of meeting demand in the post COVID world. 

How to Apply Reverse Logistics Digital Transformation to Save Resources

Reverse logistics are a competitive necessity. However, they are not absolute, unchanging aspects of logistics. Returns policies can change to reflect the real-world concerns of consumers and shippers alike. Meanwhile, costs of manufacturing have declined. Furthermore, it may simply be cost-prohibitive to manage a lengthy returns process, reports Supply Chain Dive. In fact, today’s companies are deploying several innovative capabilities in reverse logistics digital transformation to save resources, including:

1. Creating a way to collaborate more with retailers to avoid unnecessary returns. Instead of sending products back to manufacturers, sharing information allows retailers to essentially handle the returns management process in-house. This is especially true for those that would otherwise send damaged or defective products back for recycling.
2. Using connected technologies to monitor equipment performance within customer homes. In the smart world, nearly everything can connect to the Internet of Things (IoT). This level of connection allows companies to stay proactive on repairs and know when an issue arises. In turn, it lessens the burden on retailers and the supply chain in managing reverse logistics. 
3. Integrating white glove services with returns management to handle debris removal for larger items. Remember that some returns may involve appliances and bulky items. It’s a major issue, but if the ability to handle the return process for such items is in conjunction with delivery of a new item, it eliminates the hassle. 
4. Integrating returns management processes with all third-party platforms. Integration with major e-commerce shopping platforms, such as Shopify, Amazon, and Walmart, is also key.