Reverse logistics (RL) refers to monitoring your products after they have been delivered or arrived to the final customer. In this sense, RL is all about considering how your product could be reused, how it can be disposed (considering ethical methods) and any other way in which your product can be used to derive value (spare parts). Because of this, reverse logistics processes have a direct impact on supply chain management strategies and are a worthwhile investment for your business. It’s a big industry with a lot of value. Let’s see why.
The return of goods sold
Most supply chains stop measuring the effectiveness of their products once they have been shipped and delivered to the consumer. Sometimes, this metric can be ineffective, while not painting the whole picture of success.
Think about it this way – what if a customer receives an order that is incomplete or what if the product they ordered is not what they expected (e.g. different to product description)? The returning of the product qualifies as reverse logistics. Herein, managing the backwards travel of your product can help you avoid any mistakes in the future, while enabling you access to the components of the product for reuse.
What are the benefits of reverse logistics?
There are many great benefits of incorporating reverse logistics into your business model. The following are some of the most vital advantages:
Reduced costs
RL systems can help you plan for returns of products. How is this helpful? Well, having a clear plan can help you coordinate and minimise your transportation costs, shipping charges, tech support needs and general administration budget.
Quicker service
Another benefit of RL is that it is far easier to offer reimbursed or replacement goods. Quickly refunding or replacing a good brings a lot of value to the consumer. It restores their faith in your brand and helps cultivate customer loyalty.
Minimise profit losses
RL systems can also help your business minimise any profit losses. You can easily cover the investment losses associated with a failed product by fixing, restocking the unit and re-purposing the good for a secondary market. You can even scrap the product for parts, which could be valuable in other markets. With a good RL system, you don’t have to worry about a product costing your business money; simply turn that “useless” product into a worthwhile company asset.
Improved customer retention
If a customer has a very bad experience with your company, then they are very unlikely to return. Issues with fulfilment shouldn’t be viewed as a negative; in fact, they should be viewed as a valuable educational tool. It’s important that you learn how to keep your customers engaged with your brand. Customer utility is the cornerstone of retaining valuable, lucrative customers.
How are reverse logistics frameworks measured?
When it comes to RL systems, there are plenty of analytics available to help you understand and evaluate the success of your supply chain systems.
Volume
Are the same products being returned in the same quantity? Is it happening in large-scale quantities? If the answer is yes, then you probably have a big problem with your production processes.
Condition of returned products
Is the product becoming defective after a certain task is completed? If there are recurring patterns of poor performance within returned products, you probably need to rework your quality assurance programs. Error reproduction is a strong sign that quality assurance measures have fallen through. With reverse logistics systems, you can easily determine where the problem is occurring, adapt your processes to fix it, and ultimately, ensure it doesn’t happen again.
Thus, RL programs bring great value and utility to a wide variety of business models. If you feel like your products are letting down your customers, consider a new RL system today.