Last modified: April 20, 2015
The goal of conventional or forward logistics is to optimize the flow of goods including equipment and devices as it goes from the producer to the consumer. Conventional logistics is pretty straightforward and most companies have a good handle on the budgeting and planning that goes into getting its product into the hands of the consumer. But what happens when the consumer decides they don’t want the product and would like to send it back or exchange it for something else? This is where reverse logistics plays a crucial part when it comes to managing a global supply chain.
Simply put, reverse logistics is the process that deals with the flow of products and materials including returned or damaged goods from the consumer back to the producer. Besides customer dissatisfaction, other reasons consumers send back products include:
As one can imagine, reversing the flow of logistics can have a dire effect on budgets, asset recovery rates and decreased efficiency in supply chain management. If you want to optimize your global supply chain presence and improve customer experience, you will want to understand why reverse and repair logistics should not be overlooked. When you understand its importance, you will learn that by utilizing optimal reverse logistics techniques, you can recapture the full value of returned products and comply with regulatory requirements at the same time.
Most companies that have discovered the benefits if implementing good reverse logistics practices do so because they know it will help them run their company more efficiently. This in turn helps them save money while keeping existing customers. Another incentive is to help take care of the planet. Companies that focus on “reducing, reusing and recycling” are realizing the many advantages in doing so. By repairing, refurbishing or recycling products, the landfills are kept from being filled with products a consumer no longer wants or needs. Another advantage to focus on repairing and refurbishing products is that it extends their life and decreases demand for new products to be manufactured. When you are able to help decrease the carbon footprint of manufacturers, you are doing the planet a favor that will not go unnoticed by your customers.
Products in the electronics sector generally have shorter life spans and complex global service networks which makes reverse logistics all the more complicated. Thanks to advanced technology, different kinds of software has come to the forefront in helping companies to develop logistics management practices. A few types of software currently being used to help manage the entire process of reverse logistics include:
These types of software can be used to spot adverse trends while correcting potential problems, provide better traceability by producing historical logs, provide cost variables so you know when to either replace or repair certain products, and virtually eliminate the need of store labor to process returns. In fact, our very own proprietary software, FlashTrac, helps integrate into those very platforms.
Third-party logistics providers (3PLs) specialize in helping companies to recapture the full value of returned products while complying with regulatory requirements and environmental regulations such as the European Waste Electrical and Electronic Equipment (WEEE) Directive. Their goal is to help companies minimize logistics costs by using total visibility and by gaining greater control over screening and testing products during the returns process to ensure appropriate activity. They understand the complexity of the reverse system and know that it can be difficult for companies to predict which products will come back in an unrecoverable state or which products will have a higher return rate.
Some companies have found it especially advantageous to partner with 3PLs and have found that by doing so they have experienced a reduction in inventory, reduced parts acquisition costs, and improved customer satisfaction which translates to customer retention. 3PL providers also have skilled workers onsite to make in-house repairs on damaged or defective goods and are experts when it comes to packaging materials and shipping.
It pays to incorporate reverse and repair logistics strategies into your company and make them a part of your global supply chain presence. Whether you go with using computer software or partnering with a third-party logistics provider, you will be well on your way to not only improving your bottom line but improving customer satisfaction as well. If you aim to keep a green supply chain by remembering to reduce, reuse and recycle whenever possible, you will be doing the planet a favor as well.
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