Putting Your Supply Chain in Reverse to Move Forward26 Oct
Questions that are often asked: What is reverse logistics and how can I benefit from a reverse logistics strategy? Reverse Logistics has often been an overlooked area in the world of supply chain management and often misunderstood.
Times are changing. With return rates in excess of 20% for some channels, and the total value of retail returns estimated to be more than £5bn in the UK, it’s understandable that reverse logistics is becoming increasingly important for building brand loyalty and safeguarding the bottom line.
The rapid development of the omni-channel shopping experience is having a huge impact on customers’ returns behaviour. However, reverse logistic operations can be complex with pressures to reduce costs, speed up product lifecycles, develop service offerings and behave more responsibly to the environment to name a few. Having said this the benefits of implementing a reverse logistics strategy are truly worthwhile to businesses who engage in them in a methodical way.
In addition to financial impacts, a sleek returns process can have a positive impact on the customer experience. This is vital when you consider that the average cost of getting a new customer is five times that of keeping one. The impact of putting the supply chain in reverse will help to drive repeat orders and improve customer loyalty and satisfaction.
Effective Returns Management in an Integrated Supply Chain
It’s important to understand the total impact of return products. Retailers need to find a way to cost effectively handle returns and get undamaged goods back into the supply chain as quickly as possible.
A lot of businesses do not understand the operational cost of returns because these costs often get buried within the facility operations. Every return product incurs transportation to the customer, then back to the company. If a replacement product is being sent, a third transportation charge is incurred. When the returned product is re-entered into the inventory ledger, it starts incurring inventory carrying costs, and takes up warehouse space. Each of these logistical activities is expensive and must be considered part of the total cost of returns.
Reverse as a strategy
Fullers Logistics can offer a reverse logistics management program which can make it much easier to find a solution tailored to a business’s specific needs. This is not a ‘one size fits all’ type of business and a management program can contribute to reducing costs and protecting revenue. Fuller’s specialise in the redeployment, repair, reuse, recycling, and resale of their customers’ supply chain.
In addition to this Fuller’s can protect businesses from “volume unpredictability” and an idle and unproductive labour force. This is because logistic providers receive their workload from several customers and the total volume received is what can dictate the amount of man hours and warehouse space required. When it is possible to scale physical space and resource to meet changing demands then busier periods like Christmas and the January sales when returns are at their highest can be managed and supported much easier.
Reverse logistics should no longer be viewed simply as a cost centre for retailers. Instead, a well-planned reverse logistics strategy can be an essential factor for improving a company’s competitive advantage and creating both tangible and intangible market opportunities. With a clear defined processes and metrics, retailers can drive efficiencies and have access to valuable analytics that will turn reverse logistics into a profitable investment.