Most companies, especially in Louisiana, are currently actively working on optimizing their forward supply chain for the return management process that, up until now, remains a black hole. They are offering very little visibility and transparency into whatever products are currently in the pipeline and debates on whether they should be repaired, repackaged, recycled, disposed of or maybe even whether or not they should even be in the reverse channel at all.
Times are changing though because recalls and customer returns are increasing, especially in the automotive, retail, and the technology industry. In Louisiana, you could find the best logistics professional only at Sure Logix LLC. This is why companies are focused on reverse logistics, because it could bring in more efficiencies and it could cost savings from the supply chain. What are the 5 R’s of Reverse Logistics? What are the steps to reverse logistics?
What Is Reverse Logistics?
Reverse logistics is there to encompass the recapturing of the value of a certain company’s return products, parts, and materials that the customer is giving back by getting them back into the marketplace as fast as possible or, if they are not salvageable, properly disposing of them. These typically include repair, warranty recovery, redistribution, value recovery, product and service contract returns, product recalls, used equipment and replacement parts that are there for refurbishments, and resale or sale of products as raw materials.
When Is Reverse Logistics Used?
There are 2 main reasons as to why reverse logistics are used; it could return the impacts of both the customer experience and the bottom line. In general, some manufacturing companies would have to spend between an average of 9 to 15 percent of their revenue on returns, according to an Aberdeen study because companies (especially the high-tech companies) realize that you could get long-term benefits if you optimize your logistics processes.
The reverse logistics are used in maximizing their asset recovery rates, as well as reduce cost so that companies would be able to deliver a return of up to 5 percent of total sales without having to affect the customer’s experience and ensuring that they would have a positive impact on them.
What are the types of reverse logistics?
Typically being the first step, returns are when customers return products for bringing defective, damaged, seasonal, failed to meet expectations, or simply because they represent excess inventory. But whatever reason it may be, the main key solution to handling your returns efficiently and effectively is by having processes in place for receiving, inspecting and testing the returned products. One thing that you should also get is to return material authorization (RMA) verification and an organized tracking system.
Recalls are another way parts and products are returned, but compared to returns, these are much more complex because they usually involve the product being defective or have a potential hazard and it may or may not be subjected to government regulation, liability concerns and reporting requirements.
To solve this problem, like for returns, you have to have a processing place to receive, replace, resell and reclaim failed parts and products. When it comes to high-tech devices, they are typically recalled because of faulty electronics, construction issues, problems with batteries and potential hazards.
- Repair (also Refurbishment, Re-Use, or Re-Manufacturing)
If the products that are being returned are not too severe, they don’t go directly to the landfills, instead the manufacturers identify the failure and repair, refurbish or remanufacture the product in a new condition, and return it back to stock. Something else that they do if the product is not repairable anymore, they get the components from the broken or defective product and reuse them.
This is a great way to get advances in sustainability efforts, recoup the cost, or maybe even both as manufacturers recognize this as the value of reusing materials.
- Repackaging (for Restock or Resale in Secondary Channels)
Most products are returned because the customers are not satisfied with the packaging and not because there is something wrong with them. When you do a test and they come back as “no trouble found”, then the manufacturer would usually just be repackaged and then returned to the store’s inventory.
But there are also times where the part and the product itself has minor flaws, the product may be repaired, reconditioned, and repackaged for resale. The same facility would then repackage for resale using secondary channels like overstock.com when it comes to multi-line packaging capacity that is available for packaging new products.
- Recycling, Disposal, and Disposition
Recycling returned or end-of-life parts, components and products are something that a ton of industries are not practicing, driving to more sustainable practice in every industry. When the products reach the lifespan of their useful and productive lives and they must then be scrapped, usually, electronic manufacturers are seeking some safe, cost-effective, and environmentally friendly ways to dispose of the products. This usually ends up engaging in third-party recycling companies that could collect and reclaim waste, so that they could dispose of the assets for them.
Having a company and setting up a great reverse logistics process could be very complex and it would take time for sure, especially if the reverse logistics is not in its core competency and when you do not have the in-house resources that it could devote it to. But if you want to improve the quality of your reverse logistics, cost savings, visibility, inventory management, and improve the overall experience of your customers, then you always have the option to outsource return management to some experienced third parties.