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5 Cost-Saving Benefits of Working with Reverse Logistics Companies

Last modified: February 10, 2017

Your business is built on your ability to satisfy the demands of your customers. Along the way, you incur manufacturing, storage, shipping and delivery costs, and it can feel like you cannot make any further profits once your customers buy your products. However, your products can have another life once they enter the reverse logistics supply chain. From repairs to warranty replacement and beyond, managing reverse logistics in-house can take time away from production, but outsourcing these processes to companies that provide reverse logistics services, such as Flash Global, can save you money in these five ways.

1. Reverse Logistics Companies Can Lower Supply Costsreverse logistics

The reclamation of valuable parts, including OEM parts, can be a source of supplies for future production in your company. In fact, as many as 8.1 percent of sales come back to your company as returns, reports Curtis Greve of Inbound Logistics. As a result, you need to have a dedicated reverse logistics strategy in place to deal with the sheer volume of returns, but each return also means your company is receiving more raw materials. The materials used to create your product could be recycled, lowering supplier costs.

2. Outsourced Reverse Logistics Improve Reputations

Going green is one the top trends in today’s markets. Companies are looking for new ways to reduce their carbon footprints, and consumers are willing to pay to work with companies that are eco-friendly. Since recycling is tantamount to eco-friendly processes, reverse logistics can improve your reputation. Per Tim Houtby, Director of Smart Meter, 25 percent of a company’s value comes from reputation, so having a strong reputation is key to improving revenue.

Outsourcing reverse logistics can go further by giving your consumers a single point-of-contact for dealing with all repairs, warranty replacements or other needs after the sale. Ultimately, your level customer service grows stronger when you have a dedicated team or person working on all reverse logistics needs.

3. You Can Focus on Manufacturing and Selling, Not Repairing

Managing reverse logistic in-house requires space. You will need to store products that are being repaired, or you may have to sacrifice warehouse space for products that are awaiting recycling. As the demand for a wide variety of products has grown, the demand for more warehouse space has become more important. In other words, you need to fully utilize all warehouse space for new sales and recurring orders, not managing repairs or replacements.

This is where reverse logistics companies can save you money. They take on the costs associated with storage, management and fulfillment of all reverse logistics processes, which lets you focus on manufacturing, not repairing.

4. Inventory Management Is Simplified

Going back to inventory management, outsourced reverse logistics can have cost-savings for inventory management as well. If you do not have to worry about SKU numbers, storage and transport of reverse logistics, you can devote your inventory management processes to actual inventory. This results in fewer errors or delays in shipping new products to consumers and meeting ever-decreasing delivery windows.

Meanwhile, the flow of products through the reverse logistics supply chain is inherently erratic. You cannot track what products consumers are more likely to return based on malfunction until they return them, explains Deloitte. This means the concept of predictive inventory management and forecasting for reverse logistics could eat away at your profits, but outsourcing allows another company to take on this burden.

5. It Improves Flexibility

Having the ability to respond to changes in the market is critical to the success of modern businesses. Armed with the power of social media and the internet, consumers can change their decisions almost immediately, and your company needs to be flexible to meet these demands. Since reverse logistics companies are built on the changing business of its partners, you can increase your company’s flexibility without increasing your budget.

Take Advantage of Profits after the Product’s Lifecycle

After a product’s primary use, it can have another life, but computer parts and sensitive equipment must adhere to recycling and reuse standards. In addition, the amount of time and resources needed to manage reverse logistics in-house can be staggering. Consequently, more companies are opting to outsource these processes to lower overall costs. To learn more about implementing a third-party reverse logistics strategy as part of your service supply chain, connect with Flash Global by filling out the online contact form or calling 1 (866) 611-7574 now.

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