Reverse logistics is nothing new to manufacturers and retailers. For decades, businesses have managed the flow of returned goods and materials, but this process has often been overlooked in favor of order fulfillment and forward logistics.
A market projected to reach $603.9bn by 2025, reverse logistics – when optimized – can increase customer satisfaction and even ROI. But while 75 percent of retailers identify it as an important part of the supply chain, only 3 percent name it a key area of investment.
Why are manufacturers leaving so much money on the table by putting reverse logistics on the back burner?
A common misconception is that reverse logistics is an expensive and unprofitable process, with many viewing returned goods as waste products. But when the reverse logistics process is streamlined and optimized, businesses can reclaim value from their returned goods, damaged or otherwise.
By gathering customer feedback on the reason for the return, evaluating the value of returns throughout transit with mobile data collection, sharing information throughout the warehouse, and streamlining spatial planning, manufacturers can optimize the reverse logistics process and turn what was once considered a burden into a profitable opportunity.
As soon as a customer decides to return a purchase, the reverse logistics process is set into motion. As the product begins its journey to a centralized return center, workers can prepare their initial assessments with local screening while the product is en route. Is the item broken? Is it repairable? Does it need to be scrapped for parts or thrown out entirely? Asking these questions while tracking an item’s pickup, drop-off and barcode information provides transparency into its journey throughout the reverse supply chain, and helps guide the item into the proper return channel more efficiently.
By immediately conducting an appraisal of each returned product upon pickup or receipt, confirming its condition, and sharing this data in real-time, manufacturers make decisions more quickly. To optimize the appraisal process, workers can utilize mobile devices, including barcode scanners, visual sorting and mobile computers, to facilitate real-time data collection and sharing. As the item is sent to the centralized return center where it will be sorted, information collected en route can be shared with workers on the warehouse floor who are next in line to receive the merchandise, boosting efficiency and reducing the time that the item will remain in the reverse supply chain.
With this information recorded and digitized in real time, customers can rest easy knowing that the status of their return is readily available. They are able to track the item from transit to receipt, and have full visibility should an issue arise. Barcode scanners in particular can protect customers, retailers and manufacturers by tracking each individual item throughout its return process. This prevents returned products from being lost in the process, and ensures they’ll end up at the correct destination.
Ultimately, all data collected about a returned product can be used to determine how best to reclaim its value and, in turn, where it will be sent next for proper reuse, recycling or disposal. Manufacturers and retailers can enhance customer satisfaction by preventing the mishandling of returns. At the same time, they can ensure that each return is mined for its value in the most effective manner possible as it’s reintegrated into inventory.
Once products are received at the centralized return center, they’re ready to be sorted and moved to the next facility to be recycled, repaired or properly disposed of. Accurate inventory data and real-time communication are key to ensuring that the sorting process runs smoothly, and that items are guided quickly through the return process. At this stage, it’s necessary to take inventory of returned items and keep tabs on the location, status and destination of each individual component, in order to move the logistics process forward.
Setting up workflow alerts is another way to help workers stay up to date as products move through each stage of the reverse supply chain. Workflow alerts can be sent directly to workers’ mobile devices, providing real-time notifications about products that have arrived at the warehouse. Predictive analytics can help plan for those that are slated to arrive next. As a result, workers can better track and manage each individual return, and ensure that each product is properly handled. By maintaining accurate volume and individual data about returned items, companies can ensure inventory transparency, a smooth returns process, and the proper allocation of resources and space.
The transmission of data throughout the reverse supply chain keeps workers informed, and allows them to prepare for incoming inventory. This ensures the proper use and allocation of returned items as they reenter the supply chain. It’s essential that warehouse managers know and trust how many items need to be resold, recycled, repaired or disposed of. The process enables the accurate ordering of new parts and products to re-stock the warehouse, and eliminates wasted time and unnecessary expense. This can only be achieved with accurate data collection and strong communication throughout the sorting and re-stocking process.
Real estate is expensive, and warehouses are typically crowded with inventory waiting for processing, sale or resale. Warehouse managers looking to optimize the reverse logistics process must remember to proactively allocate space and staff for the handling of returned merchandise. And while many managers believe their warehouses are stocked to capacity, at any given time roughly 80 percent of any warehouse sits unused. By relying on data and the right technologies to allocate and optimize space in the warehouse, manufacturers can increase efficiency and simplify this final stage of the reverse supply chain, while making the most of their real estate investment.
The process of determining where to store products in the warehouse matters more than many logistics managers realize. Having a warehouse that is purposeful and strategically organized offers workers the ability to maximize space, while retaining information about the location of each item for easy retrieval. To do this, workers use a process known as slotting. When a new SKU or product is added, “cubing” technologies capture its dimensions and weight, and enter this data into the warehouse management system. This data is then used to determine the best location for the product in the warehouse, to optimize space and worker travel time when storing and picking products.
These technologies can also determine packaging requirements, how many items can fit in a box or on a pallet, and much more. Along with the mobile devices on which they run, they are key to having an efficient and well-organized warehouse.
With the rise of e-commerce leading to an influx of returns, products in the supply chain tend to spend more time in reverse channels than in forward channels. The result is increased inventory, transportation and warehousing costs, and ultimately reduced profitability. As this market continues to grow, businesses must respond accordingly or put themselves at risk of being overwhelmed by the volume of returns. By implementing tools and processes such as mobile data collection, predictive analytics, data sharing and spatial planning, manufacturers and retailers can make the most of their returns, and improve both customer satisfaction and ROI.
Jim Dempsey is National Sales Manager with Panasonic.