Following the 2019 holiday shopping season, the state of e-commerce returns, as well as returns in general, rose more sharply than anyone anticipated. The average rate of holiday returns rose 26% compared to the returns timeframe following 2018’s holiday shopping season, says CBRE.US. As shippers look for ways to stay competitive and avoid the potential disruptions of coronavirus, uncertainty regarding the US-China, and a US election in 2020, taking time to focus on returns is an opportunity for improvement has arrived. This year, returns will become as critical as outbound freight, and shippers need to understand the top trends in reverse logistics to expect.
Reverse logistics must evolve to meet customer expectations. Customer expectations have continuously changed from a fast, hassle-free returns processes to a free, hassle-free, AND limitless returns capabilities. In other words, customers expect to return a product at any time for any reason, and shippers that do not get control over their supply chain will realize increased cost and potential problems deriving from the continuance of the Amazon effect in reverse logistics.
Automation within reverse logistics also allows for better parcel auditing and fewer costs. The introduction of automation represents one of the greatest advantages and the top trends in reverse logistics for the coming year. Automation can be leveraged to route customer returns’ requests, generate packaging and labeling materials, avoid delays for returning products in brick-and-mortar stores, and give your customers the option to return orders by mail, and much more. As the process continues, companies can leverage robotics process automation to effectively audit all processes and connect with customers after the initiation of the return or to fulfill a return.
Traceability within reverse logistics will also form another dominating trend for 2020. As the organizations around the globe look for ways to deploy more track and trace capabilities, including the introduction of blockchain in the supply chain, traceability will become the cornerstone of all visibility measures within the coming year. Moreover, traceability reduces the risk of fraud, and with uncertainty in the market regarding the state of raw materials and products from China, now is the time were grey market vendors will set up shop and try to trick established supply chain leaders. Fortunately, blockchain and additional visibility measures will continue to empower shippers with more traceability.
Smart planning trends in reverse logistics also involve the inclusion of the Internet of things (IOT), smart analytics, robotics process automation, artificial intelligence, machine learning, and metrics to enable better planning and reverse logistics. Since reverse logistics heavily relies on information provided by consumers, smart planning must involve customers and generate data at every step of the way. In other words, organizations that tap into the information provided by customers, as well as customers recent purchases and buying habits, can help reduce the rate of returns and avoid fraudulent returns.
The topic of circular supply chains made news in recent months, but in the coming year, circular supply chain to begin to promote reverse logistics efficiency in a profound way. Since reverse logistics involve the flow of products back toward shippers, manufacturers, and third parties, it would make sense to use damage-free, unopened products for the fulfillment of additional orders and reduce the costs associated with restocking or re-shipping the order in the first place. Yes, this is an opportunity for local order fulfillment centers to recapture returns and avoid the hassle of sending things back through the supply chain by effectively turning reverse logistics into the last mile.
Since the coronavirus is rapidly on its way to disrupting the global supply chain, more interest in reverse logistics will naturally involve the introduction of complete visibility and diversification of parts’ sourcing strategies to overcome potential barriers and disruptions resulting from quarantined zones. This effect might be more true in the automotive or electronics sectors than any others, and supply chain leaders that recognize the need to diversify and gain visibility into their parts’ supply chains can make the changes necessary to avoid potential disruptions throughout the year as well as in the future. As reiterated by Inspirage:
“The returns management process requires an end-to-end solution that can leverage machine learning, manage multiple demand signals, rebalance inventory and improve service levels. [In addition, solutions must provide] complete visibility on the parts [or] repair to the customer through various channels.”
A critical question in a recent interview during the RLA Conference & Expo in Las Vegas to Tony Sciarrotta, Executive Director of the RLA, regarding the state of recycling and reuse problems in the supply chain was as follows:
“We understand that China and other so-called emerging markets are beginning to reject U.S. scrap and recyclables. What kind of alternatives remain to be explored?”
Sciarrotta responded, “of course, it would be great if recycling was as advanced in the USA as in Asia and Europe. That may start to improve as the political situation is not being resolved and China’s doors to USA scrap may stay closed.”
So, it is up to U.S. shippers to begin reinventing the wheel of reverse logistics.
Reverse logistics can be improved by aligning supply chain strategies with the top seven trends in the industry. As the world moves toward efficiency, sustainability, disruption prevention, and improved operations, supply chain leaders need to start thinking about how to improve reverse logistics and transform this traditional cost center into an opportunity for recapturing freight spend and boosting profit margins.
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