Logistics is all about supplying the right quantity of products to the customer at the right time, at the right costs, and in the right condition. Logistics is undergoing a major change as today's customer has a great influence on how logistics should perform in order to meet the customer requirements. Besides logistics, there is reverse logistics. Let's see why Reverse Logistics is more than the reverse of logistics.
Why does reverse logistics exist?
Reverse Logistics exists because customers might decide to return a product to the seller. Here are some reasons for product returns that we all recognize:
- Overstock returns: Point of Sale outlets (shop), resellers, or distributors return excess products that can not be sold anymore;
- Field returns: Field engineers return (defect) components or units from the installed base that require repair or maintenance;
- Commercial returns: End-customers return products that have been purchased but don't meet expectations (like returns & exchanges in online commerce).
- Service returns: End customers return a defective product that needs repair.
- Take-Back returns: End-customers return products that are no longer used.
Why is reverse logistics so different?
Shipping returned products sound so easy. Why is reverse logistics so different from traditional (forward) logistics. Here are the top 5 reasons:
- Planning: an outbound shipment is the logical result of a sales order and can be planned once the order has been placed by the customer. A return shipment can be the result of many reasons (see above) and makes planning much more difficult;
- Reason: the reason for an outbound shipment is very straightforward. The customer has purchased a product and wants it to be delivered. In case of a return the (service) expectation might be different based on the reason for return (e.g. a refund versus a repaired product);
- Shipment: shipping an outbound order is an activity that is executed by your warehouse staff, who is using your operational system. The execution of this activity is fully controlled. Shipping a return is executed by the customer. Quite often it is not controlled how this is executed;
- Packaging: an outbound shipment is packed by your warehouse staff, in a condition that is required to protect the product in transit. A return is packed by the customer, who typically does not have proper packing material;
- Condition of the product: the condition of a new product can be guaranteed to meet the promise of what will be delivered. The condition of a product return is often over-qualified by the customer.
Does reverse logistics need to be controlled?
Taking away the risks for the above issues is not an easy thing. Reverse logistics will always leave room for many surprises. The solution to mitigate some of the risks is not in reverse logistics operations itself. The solution can be found in communication with the customer, which typically is part of the Customer Service domain.
Communication at the start of a return journey can take away many of the operational burdens in the reverse logistics process. A return portal (or RMA portal) is an answer to the question. It is time to consider the use of reverse logistics software for your returns management process.