Establishing clear channels for the routing of reverse logistics represents a significant challenge in the modern supply-chain. Organizations that successfully target reverse logistics challenges can streamline the returns management process and lower total freight spend. As a result, supply chain executives need to understand the top challenges in the reverse supply chain and their role in creating successful reverse logistics.
Limited visibility within the reverse supply chain stands out as the key antagonist. As with any supply chain operation, organizations cannot improve what they do not understand. This applies to the value and volume of returned products, as well as their shipping costs and possible resale value. As reported by Larry Laux of Industry Week:
“Software that handles reverse logistics has to consider the usable status of the item and track the unit on a basis that is valued at less than full cost but more than zero cost. And so that is just one small example of some of the interesting characteristics of a reverse logistics operation that really isn’t the same as forward logistics.”
As companies understand more about the value of returns, they can better target reverse logistics opportunities for improvement and recoup added costs along the way.
After customers ship a returned product, the issue of limited visibility takes on a greater role. If an organization lacks a transportation management system (TMS), managing that product while in transit becomes cumbersome. Therefore, shippers are at the whims of carriers for routing optimization and trying to keep that package from soaring in total shipping cost. Fortunately, more visibility into returned products through the use of a comprehensive TMS can help.
Another area of concern is the space required for managing returns. After a return arrives at your facility, it represents more traffic on the dock and an additional labor cost. Meanwhile, warehouse space is rapidly becoming a commodity, and supply chain executives need to start rethinking their strategies for where they will put returned products before they are either re-shelved, resold, or otherwise reused.
Customers expect fast, free shipping for products coming to their homes or other locations. The same applies for organizations seeking to target reverse logistics through better returns. Customers expect a free returns process. Of course, nothing is really free. Supply chain executives need to consider these higher costs and actively pursue opportunities to reduce them.
Like the need for more space, an organization may lack the labor resources needed to manage returns. If workers are already functioning at full capacity to manage outbound freight, handling the reverse logistics’ inbound freight can quickly grow out of control and create bottlenecks. As a result, some companies have created off-site returns centers, which again require integration with the TMS. Companies may also opt to leverage brick-and-mortar stores as returns centers to eliminate this risk.
Not all reverse logistics needs fall within the realm of returns. Depending on the product, such as an HVAC unit versus a computer, repairs may be necessary. Repairs are part of the transportation strategy to target reverse logistics. Consequently, organizations may need to manage the process of sourcing off-site technicians to make such repairs, complete payment, and schedule labor resources accordingly. It’s an immensely complex process that requires data.
It can be difficult to target reverse logistics opportunities for improvement. However, organizations that consider the full scale and scope of reverse logistics costs and challenges are better prepared to handle fluctuations in reverse logistics demand. This is even more important in the post-coronavirus world, and as e-commerce continues its march toward dominance, driving more value from existing systems will depend on the ability of supply chain executives to overcome organizational and technological silos, deploy a state-of-the-art TMS to optimize both inbound and outbound processes, and collaborate. The Cerasis Rater has that potential, and it offers the distinct advantage of working across all possible modes, including the use of multi-model shipping, to help target reverse logistics spend and keep it in check.
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