9 Best Practices In Reverse Logistics

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When businesses are just starting, their main priority is often to deliver products to customers on time. But as the operation grows, a solid reverse logistics structure becomes increasingly important. With the right processes in place, you can find opportunities to create value by reselling, reusing, and recycling returned products and waste. In doing so, you can nurture customer relationships while minimizing distribution and storage costs.   

This article discusses the best reverse logistics practices to help your business turn this often-tedious task into a competitive differentiator and empower it to impact your bottom line.

1. Providing more informative content  

For many e-commerce retailers, the issue stems before customers check out their carts. The lack of informative content on product pages can lead to uncertainties that eventually result in returns. As such, providing more helpful content on relevant pages can help lower return rates and lead to avoiding unnecessary shipping costs. This can include the following:  

  • Definitive size guides  
  • Lifestyle images and videos, as this helps customers visualize the products better  
  • FAQs  
  • Featured reviews  

In addition, a live chat feature can address other customer concerns, giving them all the information they need before checkout.

2. Being proactive in assisting customers with returns  

In line with the above, making it easy for customers to process returns increases the likelihood of repeat business. For example, you can offer customers convenient options for returning products. This includes sending products back by printing shipping labels or dropping them off at a physical location. Customers can often initiate these processes online through your website, boosting convenience. 

Customers are more likely to buy products if they know convenient returns processes are in place should anything be amiss. As such, having multiple communication channels, integration technology, and returns options can help foster customer loyalty, ultimately boosting your bottom line.

3. Expediting returns processes  

Processing returns shouldn’t be an afterthought if you want to keep customers and recover as much value as possible. By including return labels in shipments, you can allow your reverse logistics team to track returned items, prepare for their arrivals, and process them as soon as possible. This practice also keeps your inventory management system up to date and allows you to collect data on returns.   

While different businesses will have varying processes that make the most sense, expediting the returns processing can help manage reverse logistics costs better.

4. Using reverse logistics to improve sustainability  

Globally, there’s been a significant push to re-think how companies and industries address waste. A sound reverse logistics structure can be a vital aspect of this initiative.   

Levi Strauss has one of the more creative ways to improve sustainability while increasing value. The company repurposes jeans by recovering and reprocessing fibers to make new products. Levi’s then sells these reconstructed jeans at a higher price point, promoting the value of sustainability to its loyal fanbase.   

Meanwhile, massive conglomerates like Proctor & Gamble and Unilever have begun shifting to reusable packaging that they urge consumers to return. They then clean and reuse the containers as part of their sustainability endeavors.

5. Leveraging secondary markets  

If it applies to your business, selling overstocked goods to secondary markets like factory outlets, discount stores, and online platforms can help you recoup what would otherwise be losses. Secondary markets can be part of your reverse logistics structure, helping you minimize waste and potential losses.

6. Forging partnerships  

Not all businesses are equipped to handle returns in-house. If this is the case for you, forging partnerships with retailers and suppliers can help streamline the returns process for customers.   

For example, Kohl’s has a partnership with Amazon where the e-commerce giant accepts, screens, and sends back returns in consolidated shipments to them. With this partnership, customers can return products at any of Kohl’s 1,000 physical stores. Apart from offering an easy returns process, accepting returns in their brick-and-mortar stores enables Kohl’s to get foot traffic they may not have otherwise.   

Similar collaborations with distributors, couriers, or suppliers can bolster your reverse logistics structure, minimizing costs and providing customers with a better experience.

7. Tracking the metrics of the 5 Rs  

There are five elements to effective reverse logistics management. These include the following and respective key performance indicators (KPIs) to monitor:  

  • Returns and exchanges: Rate of return  
  • Reselling returned products: Number of products reclaimed/resold    
  • Repairs: Total cost of repairs/refurbishing  
  • Recycling and disposal: Percentage of materials recycled  
  • Replacements: Percentage of products or parts replaced  

Companies with established reverse logistics structures track the metrics of these five Rs to monitor results and make the necessary improvements. This makes having a data collection system for returns critical, as it gives you a better understanding of why products are returned, what they cost the business, and what you can do to optimize your reverse logistics.   

Essentially, having a clear understanding of the five Rs offers the following benefits:  

  • Cost reduction  
  • Waste reduction   
  • Improved sustainability practices  
  • Better customer experiences  

As you audit your reverse logistics process, think of the areas you can use as data collection points, as these will provide invaluable insights into your supply chain.

8. Evaluating policies and procedures  

With the above data, you can evaluate your reverse logistics policies and procedures more intelligently. Armed with data, you can uncover the root causes of returns and repairs while also finding opportunities to turn your return policies and procedures into competitive differentiators.   

Additionally, review distributor, supplier, and retailer agreements regularly. Doing so allows you to find and address contract conditions no longer aligned with optimal reverse logistics processes.

9. Outsourcing  

Reverse logistics can be a daunting task for small to medium enterprises. For such companies, outsourcing the process can make more business sense. Several third-party logistics firms can take away the hassles of reverse logistics off your plate while reducing costs.   

And because it is their primary focus, they can bring expertise tailored to the unique demands of reverse logistics, more efficient processes, and better rates with courier services, among other benefits.

Final words  

Reverse logistics can mean different things for varying industries. For retailers, it can be focused on returns and exchanges. For suppliers, it can entail getting back and reusing containers. For others, like the construction industry, it can mean moving and recycling salvaged materials to new sites.   

On the surface, it can seem like a complex undertaking best left to the experts. But in practice, implementing incremental adjustments can eventually lead to reduced costs, improved customer retention, and a smoother supply chain management system overall.  

As such, take time to evaluate your policies and procedures, and you might be surprised at how small changes can significantly impact your business.

 

Author Bio:  Amanda Nelson is currently a professional content writer.