Competition in the business world is fierce these days, and everyone is searching for that edge that will bring them to the front of the pack and keep them there
When a business owner hears ‘reverse logistics’, he or she might underestimate the fundamental effect it can have on a business, brushing it aside as some passing fancy.
In fact, the exact opposite is true, and the theory of reverse logistics dates back to the mid-1800s, just after the American Civil War.
On a conceptual level, it is likened to the process of “recovered product management”, which attempts to recover the monetary and environmental value of used or discarded materials and products, with the end goal being an overall reduction in waste level.
To put it another way, the goods are moved from their typical final resting-place, for disposal in the most profitable way—reconditioning, refurbising, remanufacturing, reselling, or recycling.
Advantages of reverse logistics
The process of reverse logistics should be part of every business’ core competencies, and if it isn’t, it will be soon. Nearly every company that has set up the program, if done correctly, has seen increased revenues and decreased cost simultaneously. Mastering the reverse logistics process will directly affect the overall cost of running your business, the amount of customer service required, and the return on investment (ROI), confirming the importance of reverse logistics.
What is reverse logistics in transportation?
The key element in any logistics supply chain is the transportation system. It occupies a huge amount of the logistics cost and plays a crucial role in the logistic start to finish.
A good transportation system:
- provides better logistics efficiency
- reduces operation cost overall, and
- promotes better customer service quality
which is key when working with product return.
Product return rates continue to skyrocket, and enormous costs are incurred from having to move, handle, and ship the returns and/or replacement items. This is when reverse logistics comes into play, to implement functions that will ultimately reduce cost and mitigate loss.
Accordingly, customer satisfaction rises as their experience with the returns process is now quick and seamless… hassle-free. The theory and process of reverse logistics are executed through a variety of vendors’ software products that perform functions aimed at reducing cost, adding efficiencies, and streamlining the return and product reallocation process.
Reverse Logistics Services
Reverse logistic services generally focus on creating cost-effective, feasible solutions, using their own assets and team, at a mere fraction of what you are currently paying to do yourself. “Returns software” provides inspection of each return and takes care of the disposition process, while collecting information in regards to the reason products are being returned. After that, the corrective action to solve the issue is initiated and disposition is determined.
Transportation is affected because the cost of unusable products is reduced and product consolidation takes place. In other words, one single trip takes a large volume shipment as opposed to multiple trips with fewer items. Again, a cost saving effect for transportation.
Some vendors offer extensive, computerised, master source control systems with automation and streamlined functions that will result in the following improvements:
- creation of accurate Bills of Lading (BUL)
- information transparency (tracking information, return information, authorizations, etc.)
- proper destination routing
- reduced handling and shipping costs
- a master invoice and payments solution
- reduced administration involvement
The BUL is created using least cost rules to ensure multiple returns are consolidated into each shipment, thereby lowering costs. The master source control will centralise functions, so the shipper can enter initial returns, approve returns, track returns, authorise payment of any approved returns and see Proof of Delivery receipts for returns. Before you know it, the transportation department will be functioning like a well-oiled machine.
Some vendors offer software for “returns processing” that identifies the item being returned and tracks the shipment beginning to end—even generating the necessary paperwork along the way. Most have a flexible rules engine to define consumer behaviour, type, item, etc. It seems a common theme is a centralised coordination system to provide users with top-notch tracking capabilities along with metrics to improve efficacy and save cost.
Reverse logistic services provides large savings with improved overall efficiencies to retailers in any given market. These companies are, in fact, leaders in supply chain companies with years of knowledge and experience.
First, understand that reverse logistics is critical to organisational output and can lead to quantifiable savings if the process is set up correctly. By deploying reverse logistic strategies, everyday activities can have a profound impact on what the business’ bottom line is.
Get familiar with reverse logistics and really understand the potential savings.
Do your research and contact us to help you best fit your business’ need.
Reverse logistics is considered a value-added service and a product that helps achieve the desired return. As your business continues to grow, so does the need to apply reverse logistics if you want to reduce cost, increase efficiency, improve customer satisfaction, and above all, keep your business relevant and competitive.