Reverse logistics is filled with risk, and the rate of reverse logistics in e-commerce is higher than any other channel, reports Business2Community. Among e-commerce sales, up to 30 percent will be returned to the shipper, which reflects a huge demand for effective returns management and reverse-logistics process standardization. Using a WMS in reverse logistics can help meet this rise in demand and increase customer satisfaction.
Warehouse Managers Underestimate the Importance and Demand of Reverse Logistics
Brick-and-mortar sales are associated with an 8.9-percent returns rate, and this rate has been the standard measure for the amount of dedication for reverse logistics. As the world has grown more complex—including the introduction of seamless, omnichannel supply chains and a wider selection of products—demand for reverse logistics has risen, says Steve Wilson of Inbound Logistics.
Reverse logistics is also susceptible to major problems that differ from those in forward logistics. As explained by Supply Chain Digest, these problems include:
- Inefficient space for use in processing returns and recycled products
- Poor space utilization and allocation for processing reverse logistics
- Paper-intensive reverse logistics
- Poor traceability among returns
- Lackluster integration of reverse-logistics systems with the existing WMS
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A Comprehensive System, Such as WMS In Reverse Logistics, Can Transform Costs Into Profits
A comprehensive, integrated WMS in reverse logistics, as well as forward logistics, can increase profitability and decrease the financial impact of a higher rate of returns. On the other side of the coin, products being recycled or returned for reimbursements or rebates adds to the burden. Warehouse managers need a way to separate the physical handling process from the accounting process, and using a WMS in reverse logistics achieves this goal.
How to Use a WMS in Reverse Logistics to Reap Greater Savings
Warehouse managers can increase revenue through reverse logistics by eliminating unnecessary touchpoints and increasing visibility. As a result, managers should follow these steps:
- Separate physical restocking responsibility from accounts payable. This ensures the fastest means of completing a return and its associated payments.
- Use a “returns authorization” process, such as customer-facing portals for creating tracking numbers and documenting the process in real-time. An authorization process mitigates the risk of fraudulent returns.
- Stage incoming merchandise in a similar manner to vendor/ supplier incoming merchandise. Such practices will ensure accurate inventory and avoid instances of overstocking resulting from returns.
- Track un-saleable or “salvage” merchandise using automated technologies. Automated technologies prevent subsequent returns from an unsaleable product being reshipped to consumers.
- Use handheld scanners and voice-controlled technologies. These technologies, as well as emerging technologies such as augmented reality glasses, reduce errors in documentation.
- Interface reverse logistics with existing supply chain systems. Ranging from a WMS with reverse logistics to the transportation management system, an integrated system increases visibility and ensures just-in-time stock.
- Submit damaged merchandise or merchandise with manufacturer-defects back to the supplier or vendor for credits or recycling. Submissions for credits will require documentation to prove legitimate reasons for returns.
Integrate Your Systems, and Upgrade Your WMS in Reverse Logistics Now
Reverse logistics can decimate profit margins and lead to gross misconceptions about a given brand. Moreover, the problems that may not be the responsibility of the shipper (such as manufacturer defects) can tarnish a reseller’s image. Warehouse managers must understand the value of using a WMS in reverse logistics to stay competitive, meet consumers’ demands, and identify potential problems with products after their initial sale. As a result, warehouse managers need to begin upgrading and integrating WMS in reverse logistics processes.