Improve Reverse Logistics for making SCM Green & to Increase Revenue

Reverse logistics is the largest part of the broader supply chain management process called as returns management. Returns Management, in addition to catering to handling returns that come back from customers due to various reasons, also puts in place, processes to reduce the number of returns by doing some reverse engineering with the help of departments like warranty, product quality, marketing and testing – but still the major portion of a returns management process is management of returning goods from the customer, that starts with customer’s request to return the item and ends with putting away that item in the pertinent warehouse. This part of returns management is called as reverse logistics and lately, the scope of reverse logistics has been increased at least in the best in class organizations, and now it includes facilitating smooth refund to the customer as well as ensuring a good percentage of items getting either recycled or re packaged to be sold to new customers in different product categories. This is the need of the hour for all of us to put more focus in, and this will help us not only to increase our revenue (discussed later) and to make our supply chain greener (recycling). Let me first break down few broader sub processes of Reverse Logistics so that we can focus on the pertinent parts:
  • Customer request register and finalize modalities/approvals (if required)
  • Organize the returns, their journey back and putting them away in warehouse
  • Credit customer for the returns
  • Re-cycle/Repackage returned goods and keep them ready for selling
Now, to make sure that you increase revenue from your returned goods, it is imperative that you need to increase the percentage of the returned goods that can be sold back by recycling or re-packaging while keeping in mind the compliance related stuff where those can not be sold as new again. All this can be achieved to the closest by following strategies:
  • Ensure that the process of customer approaching you and returning goods is smooth not just because you need to compliant against some practices but to make sure that the customer satisfaction increases rather than decreasing by returning the goods sold by you. A smooth and customer friendly process will increase their confidence in your product quality, minimize their purchasing risks (so they will come again to you) and increase your brand value
  • Revisit & Leanergize your process of picking the returned goods from your point of sale or retailer, organizing their safe and cost effective journey to your warehouse and to your supplier’s warehouse (in case of buy items) and putting away the goods in your warehouse in earmarked sections. This will make sure that your:
    • Cost of returning goods is lowest – For example: using the same trucks/vehicles that bring goods from your suppliers, to send the returned goods to them can save cost of shipment
    • Quality of goods is not diminished during transit
    • Picking the same goods for reselling is easiest and transparent
  • Early identify the goods that need repair before being sold again and have a process in place to make sure that repair required parts reach directly to your or suppliers depots where they can be rectified – This will save multiple journeys for same parts
  • Recycle the packaging material of returned goods for good corporate citizenship and a cleaner and greener supply chain
  • Separate out the physical receiving sub-process from the account credit sub-process and allow for gaps between physical and accounting such as, out of a returned pallet only part may be moved back to inventory and another part of it may be credited to your customer
  • Integrate your IT systems such as handheld scanners, warehouse management system and accounting system share the information and are in synchronized at all times – for faster and cost effective process of returns
Since this area is huge, the strategies can go on and on but there is a need to identify which ones suit our own organization and execute them to the plan to achieve increased revenues as well as greener supply chain contributed by efficient reverse logistics management.

1 comment:

  1. Hello,

    I have been in the logistics industry for 15 years, and I can tell for sure that reverse logistics can be used to increase the over all revenue ten folds. I have implemented this in my own company as well.


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