Two thousand eighteen has been a year of increasing popularity for e-commerce in which retailers look to use the power of the internet to move their products through the supply chain as fast and efficiently as possible. Traditional or forward logistics come to mind, which refers to the process of the flow of things from the point of origin to final consumption. Not only is the booming presence of e-commerce as a shopping channel making an impact on this year’s holiday season, but also on supply chains. A recent press release published by the National Retail Federation (NRF) expects holiday retail sales to increase between 4.3 and 4.8 percent over 2017, from a total of $717.45 billion to $720.89 billion. However, there is a significant challenge that comes with the increasing number of sales: the returns made by the customers. So, what happens when a product goes through a return process?
There are various reasons why merchandise is returned including damaged items upon arrival or needing refurbishment for resale. When it comes to the reverse process of the supply chain, then we can talk about the other side of the spectrum, which is reverse logistics. According to the Cambridge Dictionary, reverse logistics is the process of dealing with goods that have been returned to the company by their customers. All of these processes related to the backward movement of products and materials to reclaim their value represent a challenge for the supply chain and call for effective methods that help optimize the reverse flow of products.
Some of the advantages of implementing optimal reverse logistics methods include:
- Better customer service.
- Reduced transportation and administrative costs.
- Increased transparency and velocity of the supply chain.
One example of reverse logistics is the recycling, refurbishment, and reuse of merchandise. A company that sells home appliances, for example, should be able to develop end-of-cycle programs that help customers know what to do with their item to avoid dumping it. Besides contributing to the protection of the environment, implementing green reverse programs can help reduce processing costs. Another critical aspect that is key to reverse logistics is the optimization of warehouses. Since customer returns can cause issues with warehouse capacity and flow of inventory, it is essential to employ the right technology and operations so that the stock can get back into circulation without getting stuck.
It is in our nature to be forward-oriented. But, as professionals in logistics, we know that it is important to think creatively and consider both forward and reverse processes. This way, we can dramatically reduce the cost of supply chain operations and maximize the life-cycle of each product with effective and cost-reducing processes, as well as a better experience for customers in this holiday season.
National Retail Federation (2018, October 3) NRF Forecasts Holiday Sales Will Increase Between 4.3 and 4.8 Percent. Retrieved from: https://nrf.com/media-center/press-releases/nrf-forecasts-holiday-sales-will-increase-between-43-and-48-percent
Roach Partridge, A. (2011, June 15) Full Circle: Reverse Logistics Keeps Products green to the End. Retrieved from: https://www.inboundlogistics.com/cms/article/full-circle-reverse-logistics-keeps-products-green-to-the-end/
Murray, M. (2018, January 12) What Are Reverse Logistics? Retrieved from: https://www.thebalancesmb.com/reverse-logistics-2221089
Miller, J. A. (2018, October 9) Rampant Return and What to Do About Them. Retrieved from: https://www.supplychaindive.com/news/returns-liquidation-resell-logistics-technology/539243/
Aouad, A. (2018, October 2) How Logistics Firms Can Solve a Multibillion-Dollar Issue for Retailers. Retrieved from: https://www.businessinsider.com/the-reverse-logistics-report-a-2018-10