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Four Steps to Have an Efficient Reverse Logistics Process

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According to studies, an average of 4% to 6% of all retail purchases is returned, costing the industry about $40 billion per year. Every industry is facing a challenge today in managing goods return and use this as a key differentiator for their business.

Without having a proper reverse logistics process in place, it is difficult for an enterprise to stay competitive in the Ecommerce industry as today is all about providing quality service along with quality products.

A renowned Ecommerce company having an amazing reverse logistics process built on the lines of flexibility and responsiveness; will first provide a new product to the customer and then take the defective / damaged product within 3 to 4 working days – from the date of return request.

Without a reverse logistics process in place, organizations are not able to manage returns and channelize goods. This situation makes it difficult to understand whether the returned goods need to: go to the warehouse for resale or to the manufacturing unit for re-manufacturing or be recycled. The customer satisfaction levels continuously decrease as they find it cumbersome to return the goods. Organizations are losing a lot of money to get these returned goods back to the warehouse.

According to Harris Interactive, “85% of customers WILL NOT shop with you again; if the return process is not convenient, and 95% of customers WILL shop with you again; if the returns process is convenient.”

With a good reverse logistics process in place, companies can not only track returns but also get the value from returned products. They can provide quality service to the customers. While outsourcing the processes to 3PLs, providers will be able to help organizations save a lot of money in the return process.

According to the Aberdeen Group, “very few companies are more than marginally satisfied with their current reverse logistics approach, with nearly 60% reporting that they are somewhat or not satisfied.”

To implement a successful Reverse Logistics process, we can follow the below points:

Have a clear visible system in place for real-time monitoring and tracking.

OEMs should have a proper process for the products that customers would want to return. The first point is when the customer calls customer care to request a return. The official should be able to differentiate the queries based on different scenarios like: damaged, defective, not available and want a different product. The people in charge of the transportation can then screen the products with respect to the different reasons and ship them back to the places determined for each scenario.

Outsource your logistics to the 3PL vendors.

Reverse logistics itself is a very complex process and to do it effectively one needs to have a separate department with skilled human resources. Reverse logistics requires a huge investment, and it is not possible to do it properly from Day1.OEMs tend to outsource this process instead of setting up a department. 3rd Party Logistics vendors like Blue-dart, FedEx, etc. have developed systems through which the OEMs can keep a real time track of their reverse shipments while the actual job is being performed by the outsiders. This not only helps the OEMs to reduce investments but also in attaining an effective return management process.

Figure out your distribution centers and warehouses to manage reverse logistics.

This is the most important part of the reverse logistics process. To have an effective RL process in place, OEMs needs to decide strategically on the return/ collection centers. Locations will have to be based on the cost of the products and the reason for return. For example, a damaged / defective product will go to the inspection plant where it would get inspected, and actions would be taken accordingly. On the other hand, if it is in a state of re-use then it would go to the distribution centers for resale.

Communicate with customers during the return process.

This helps in building a trustworthy relationship between customers and industries. Communication is one of the deciding factors for an OEMs sustainability in the long term. This era is of providing quality service. To get trustworthy, OEMs need to communicate continuously with customers. They need to listen and understand the queries placed by their customers and provide the best possible solution which will delight them. In case of returns, they need to interact with their customers and let them know the status of their returns. They should follow an interactive approach rather than a reactive approach.

After understanding the efficient ways to implement a successful reverse logistic process, the following steps can be incorporated to get the maximum value of a returned product.

  1. Disassemble – Once the returned product reaches to the DC/ Warehouse, try to disassemble it to view the parts that malfunctioned and the parts that can be used.
  2. Sort – Segregate those into two groups like the malfunctioned parts and usable parts.
  3. Reuse – Reuse the usable parts to manufacture new products so that the daily wastage reduces.
  4. Repair – In case if there is a need for small repairs, the OEMs can fix them, and the same product can be re-sold.
  5. Recycle – Recycle the parts that malfunctioned and cannot be re-used by taking proper safety measures towards the society.

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