Why Is Reverse Logistics Important In Supply Chain Management?
Before we go into a detailed explanation of reverse logistics and why it is important to the management of supply chains, picture this:
In your mind, or on a piece of paper in front of you, draw a circle. There will be six stations around this circle with the top (or 12 o'clock) station being Industry. At approximately 2 o'clock, the station will be Distributor. The next station, at 4 o'clock, Retail. At 6 o'clock and at the bottom of the circle is the station we will call End User. At 8 o'clock, Collection and Selection and at 10 o'clock, Recycling. Now look at what you've got and picture a product running from 12 o'clock all the way around the circle through 10 o'clock and back to 12 o'clock again and beyond. This – in a nutshell – is reverse logistics.
First Things First – What Is Meant by Reverse Logistics?
What happens to your product after it is received by the end consumer? Who knows? Who cares? You should! The life-cycle monitoring of products from the consumer forward is what reverse logistics is all about. What does this include? It includes:
How, after use, a product should properly be disposed of
If not disposed of, how it could be reused
Or any other value that can be created from an "expired" product
When the situation arises where a product from a consumer finds its way back to the manufacturer, this is the reverse logistics circumstance that supply chains are most affected by. Fortunately, there is a way to use the process of reverse logistics for the good of your company.
A Reverse Logistics System That Runs Well
They are a necessary evil – returned goods. That's how many companies look at the entire process of returns. That's a big mistake! You can reap numerous benefits from an effective reverse logistics workflow. Here are just a handful:
Reduce unplanned profits and losses – When a product fails, then what? Is there a way to recover the loss of investment? By re-purposing it in the secondary market, scrapping it for parts, or fixing and then restocking the product, you may be able to recover your losses.
Customer retention – Making sales is important, but so is dealing with errors properly. You have to make it right when your customer has a bad experience with your product. That means taking back a product that they are unhappy with.
Faster service – Shipping goods in an expedited manner is essential but so is the return process and reimbursement of that product. Fast replacement or refunding will greatly assist in restoring the faith of your customer in your brand.
Reduced costs – QA, tech support, shipping transportation, administration, and more, are costs that are related to returns, replacements, refunds, etc. All of these costs can be reduced if you plan ahead and operate an effective reverse logistics process.
How to Create Effective Reverse Logistics
The professionals at Infinity Remarketing Services, LLC are experts in reverse logistics and so much more. To find out how potential profits for your company can be realized through the return of goods, contact us today. We can help you assess and measure your company’s reverse logistics system. With a good reverse logistics flow, there are numerous benefits to be enjoyed!