Supply chains face an ongoing crisis with the threat of rising demands across consumers and business-to-business purchasers. Unfortunately, the rising demand is a true risk to the state of reverse logistics. As companies look for ways to meet the rising demand, it is easy to abandon sustainability goals and focus solely on getting things accomplished. However, forgoing the use of reverse logistics technology and simply hoping for the best is the worst-case scenario. This is not even a strategy. It’s setting the supply chain up for failure.
But the risk of needing to address added strain on the reverse logistics supply chain is rapidly approaching critical mass. And in fact, Gartner has described customer returns as “the ticking time bomb of multichannel retailing.” But reverse logistics is much more than just returns. It includes a host of recycling, reclamation, reuse, and repackaging of products for re-distribution. As a result, supply chain executives need to know a few things about what to expect from reverse logistics technology.
Consider this. “While an inbound truckload of products from a supplier could take as little as two to eight hours of sorting, it can take up to 48 hours to process a truck full of returns because each item has to be individually checked. All in all, we’ve found it takes about 20% more space and twice the labor to process a return as it does to send out a package,” reports Transport Topics.
Supply chain executives should also kickstart their use of supply chain technology in the returns process by integrating risk management software with reverse logistics systems. Integration is the only way to see the true picture of supply chain health and mitigate losses. Most importantly, the current crisis is on track to impact most businesses in some form, and it is imperative for businesses to start thinking about how to lower costs, handle the threats, and still create sustainable reverse logistics processes. In fact, according to Forbes, “a February 2020 survey on more than 200 businesses with global supply chains found that over half of respondents expected the coronavirus epidemic to increase their operating costs. Any additional and preventable threats that disrupt supply continuity or damage brand reputation could be devastating.”
Artificial intelligence within supply chain systems is not new. However, the introduction of artificial intelligence as a reverse logistics technology represents another opportunity for improvement within the modern reverse supply chain. Artificial intelligence can be used to sort through the millions of returns or repair requests to identify possible issues with products. As e-commerce expands, this could be applied to food supply chains, electronic supply chains, personal hygiene supply chains, and much more. The opportunities for using artificial intelligence are too great to ignore, and artificial intelligence within the recycling and reclamation phase of reverse logistics can create new opportunities to grow revenue within the supply chain.
As reported by Supply Chain Dive, “a recent redesign of three Ford factories’ recycling systems, for example, helped the auto maker tighten its supply chain by saving 5 million pounds of aluminum per year (23% more product recycled), and hundreds of millions of dollars in procurement savings.”
The way in which a company applies reverse logistics technology and people to improve the reverse supply chain makes a difference in terms of a business’s sustainability. Sustainability means taking the business goals and focusing on how an organization can lower environmental risk and still deliver a superior customer experience. Unfortunately, it is not as simple as putting a new system in place.
“Individual efforts don’t solve complex supply chain issues, at a personal level or even a company level. Many competing companies share portions of supply chains, and collaborating on efforts to develop and establish sustainable practices can benefit all. While it may feel counterintuitive to work with rivals, combining efforts on sustainability practices not only advances the objectives, but offers an opportunity for positive public perception and to build credibility with industry and consumers, “ says Supply Chain Digital.
Supply chain executives must work to train staff and educate them on how to apply new technologies more efficiently. This might include learning how to use a transportation management system (TMS) and ensuring all applicable alerts notifications for any inbound shipment are within the correct parameters.
Reverse logistics technology is susceptible to the same inefficiencies as traditional logistics improvements. Technology for the sake of technology lacks value and contributes to higher total cost of ownership within the supply chain. However, analytics embedded within reverse logistics technology can finally shine a light on these inefficiencies and help supply chain executives make informed decisions. Analytics also have wide applications within the reverse supply chain, including driver and carrier selection for returns management, tracing returns to specific distribution centers, identifying and notifying clients or customers of possible recalls, and much more.
As a larger percentage of traditional transactions move further into the e-commerce space, the need for a more effective reverse logistics process is critical to maintaining business growth. Remember that all e-commerce purchases have a significantly higher returns rate, up to three times, that of traditional brick-and-mortar stores. However, that statistic is expected to climb in the wake of the current pandemic.
The future is always uncertain. The supply chain will sway in response to global influences and consumer demand. As demands grow, the idea of the reverse logistics supply chain will come to rely more cohesively on reverse logistics technology improvements. Supply chain executives need to know the ways technology is reshaping the reverse supply chain and finally get a handle on its impacts. Furthermore, a reverse-capable TMS, such as the Cerasis Rater, can help.
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