Reverse logistics refers to the set of practices and processes designed to manage the return and return of products from the point of sale to the manufacturer for repair, recycling or disposal at the lowest possible cost. In other words, reverse logistics is simply the backward flow in the supply chain of products back from the original manufacturer via the customers who purchased them online.
The role of reverse returns logistics
eCommerce returns is playing an increasingly important role in companies’ operations planning. The direct impact on logistics is forcing companies to update their strategies, which are increasingly omni-channel oriented and therefore flexible and able to remain competitive to meet the modern challenges of e-commerce.
Reverse logistics can be approached from two different points of view:
- Corporate: it tries to deal with the increase in returns that companies experience in inventories.
- Ecological: one of its main objectives is to minimize the environmental impact. For this reason, from the outset, companies develop products and processes that are less harmful to the environment.
How to manage returns
Each company needs a customized solution for the organization of reverse returns logistics. In terms of infrastructure, for example, it is appropriate to set up a specific area where these activities can be carried out or, if possible, to have a warehouse to manage the returns.
When receiving returns in the warehouse, staff should examine the condition of the goods and understand the reason for the return. They should also check whether the item can be put back on the market or whether it needs to be repaired.
How to improve reverse logistics
To reduce the costs associated with returns, companies must first conduct an analysis of their reverse logistics in order to identify areas or processes that can be improved. The most common strategy is for companies with a high returns rate to put a lot of effort into improving their reverse logistics.
For returns logistics to be most effective, it is essential that consumers are involved. It is the responsibility of companies to involve them in this process, e.g. by organizing campaigns that explain to citizens the role they have to play and encourage them to recycle.
6 Benefits of reverse returns logistics
The implementation of reverse logistics offers the following advantages:
- Increased sustainability. The reuse of materials in production processes avoids the exploitation of virgin raw materials and requires less energy. Of course, this translates into higher profits for the company.
- Cost reduction. Due to online shopping, there are more returns than ever before and not having a structured returns system can make the process costly for the company.
- Faster return service. Having a reverse logistics system in place means that goods can be returned more quickly and any subsequent steps, such as reconditioning, repair or recycling, can be carried out as quickly as possible.
- Improved corporate image and increased customer satisfaction. Customers are increasingly interested in companies that are committed to environmental protection.
- Discovery of new solutions for reused materials. By recovering the economic value of discarded items, new markets can be opened up, such as outlet shops, which specialize in selling products from the previous season or with a defect at a lower price than normal.
- Stock control. The logistics of returns favours greater organization of stock, avoiding the storage of obsolete products and minimizing the possibility of errors.
Now that you know what reverse logistics is, do you think it might be time to employ a reverse logistics system in your supply chain? If so, get in touch with our team of logistics service specialists, and we will find the solution that best suits your business.