Needs for efficient reverse logistics systems continue to increase as e-commerce claims greater market share, and as so many traditionally functioning businesses grow and inevitably incur increasing volume of returns. This presents opportunities for developing new revenue streams, an exciting challenge to logistics professionals. However, forward logistics management skills (involving original production and distribution of new products) may scarcely apply to reverse processes of moving products from buyers’ locations in order to recover remaining value or appropriately dispose of items. Product travel in reverse of their original paths from the seller to buyers’ locations, after which they may undergo disassembly and disposal or recycling, or repair or refurbishment, testing, packaging, warehousing, resale, shipping, customer support, and other reverse logistical processes executed by the seller outsourced services.
Efficiently managing reverse logistics is a daunting challenge for many businesses. Quality, service, costs, environmental and legislative issues are strategic issues that must be managed in addition to the operational challenges mentioned above. Successful reverse logistics systems and programs significantly increase customer satisfaction, decreases necessary allocations storage, energy, and other resources. Program managers recognize the revenue potential of returned assets and strive to streamline processing systems in order to capitalize accordingly. Opportunities in this area of U.S. business are huge. The annual volume of returns in the U.S. is estimated to be as much as $200 billion, per the Reverse Logistics Association.
Customers want results. So, many suppliers utilize outside logistics management to ensure customers remain fully satisfied and continue to repeat purchasing. Companies that integrate reverse logistics systems into their logistics systems distinguish themselves from competitors in:
A growing network of channels for disposition of product returns, regardless of condition, has opened up major opportunities. (Asset depreciation also offers significant profit potential to some companies.) Managing returns is a customer service fundamental requiring your company to balance your customers’ needs for competitive product and service value and your company’s need to yield profit. In the interest of both, businesses are increasingly tying reverse logistical operations to transportation management as a natural fit.
Managing all costs associated with moving, handling, and shipping returns and/or replacements, in conjunction with warehousing functions, amount to a logistical enterprise that often is not among a company’s core competencies. In such cases, it’s advisable to look to experts in freight management, logistics, and reverse logistics systems implementation to optimize customer service and maximize potential profit.
Many companies now outsource transportation, logistics technology, accounting, and other systems management. Use the 3PL checklist to identify your company’s resource needs.
The value of a product is more likely to decline and damage to it is likely to increase when movement through the reverse logistical process is unnecessarily prolonged. The speediest possible disposition is critical to recapturing the full remaining value from the product. Further, ability to accurately track movements of components and measure costs of returns to your company and supply chain members is essential to profitable reverse logistics management. TMS software in conjunction with a reverse logistics system provides necessary metrics, including:
Your company may have the resources and the will to invest in developing and maintaining optimal reverse logistics systems. However, it’s becoming more common for businesses to outsource these logistics services. Especially if your company does significant amounts of e-business, your reverse logistics services should offer your company these essential features.
As your business grows, reverse logistics necessarily becomes more demanding. Turning this obstacle into an opportunity for the establishment of an additional revenue stream requires managing this need to the satisfaction of the parties on both ends of the reverse transaction—your customer and your company. That presents overwhelming challenges for many companies that do not have resources or sufficiently developed competencies to sustain a viable program long-term. Obtain professional consultation as necessary to thoroughly evaluate needs. And, keep sight of the profit potential in making full commitment to optimal management of this critical business function.
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