The WHY behind ReturnDock.
Direct-to-Consumer commerce changes the way companies do business.
In today's world, customers ask for an on-demand availability and experience of products and services. The classical 4P’s of the marketing mix (product, price, place, and promotion) have been extended with a 5th (personal), 6th (process), and 7th P (physical evidence). Products development and marketing have evolved to deliver products and services that meet and exceed the increasing demands of the modern customer.
New products are introduced with the speed of light and customers have access to a global supply of any product, with any specification, at any price. Increasingly, businesses are selling to end-users directly. Direct-to-Consumer commerce is a new business model in many verticals. Supply chain management and fulfilment logistics have evolved to deliver products any time, any place, anywhere. The useful life of a product is getting shorter and varies from months to years. Enabled by the evolution of technology, companies introduce and customers adapt new products fast. In some cases, products are not even used at all when the product doesn’t meet the expectation of the customer.
Product returns require an effective and sustainable reverse supply chain.
Product returns are a logical, yet undesired result of business. There are 3 main reasons why customers want or have to return a product to the seller. First, the product is undesired. Second, the product has a defect. Third, the product is no longer used.
From one point of view, returns can be seen as customers who return products. Customers expect a hassle-free returns process to do so. The returns process needs to be customer-centric.
From the other point of view, returns can be seen as products that are being returned. This involves a physical process to bring the products from one party to the other. The returns process needs to be product-centric.
Traditionally, reverse logistics is the operations process of returning physical products. Reverse logistics, by nature, is very product-centric. With the rise of on-line commerce, reverse logistics is becoming more customer-centric. The reverse supply chain is a long supply chain that stretches from customers who return products, to products that are being returned, to products that are being recovered. This long supply chain involves many product touch-points and much process lead-time. That makes the reverse supply chain a time-consuming and costly activity.
In classic reverse logistics, product recovery is often limited to recycling. In on-line commerce, product recovery involves other tactics, such as repacking or refurbishment, simply because returned products are often not used at all. In many cases, recycling unnecessarily destroys the nominal and added value of a product.
We have an obligation to care for sustainable consumption.
However, many returned products are still recycled or destroyed. The economic trade-off often results in recycling instead of a better recovery such as refurbishment. This trade-off is influenced by 2 major factors; manufacturing a new product is often cheaper and the costs of reverse logistics are often too high. The trade-off is more impacted by decreasing value when products reach their end-of-life. Reverse logistics costs further increase when the reverse supply chain is slow and inefficient. In the economic trade-off recycling or destroying products simply is the easiest and cheapest solution. It is questionable if the trade-off is always correct? Recycling destroys the added value of the initial manufacturing effort and making a new product requires new raw materials, consumes water, and creates emission. Often, these factors have not been included in the trade-off.
All of the above makes the reverse supply chain a discipline that is often considered a problem. As a result, many companies ignore the need for a solid reverse supply chain, and therefore miss the opportunities to generate value from it. Value in different ways, product value, sourcing value, environmental value, social value, and information value. In a customer-centric economy the reverse supply chain is part of the customer journey and offers many opportunities for customer interaction and engagement.
It is commonly accepted that todays linear production and consumption system is far from sustainable. Raw materials are getting scarce, manufacturing and logistics heavily contribute to emission, and consumption leads to landfill. The linear economy should become circular. The supply chain, the forward and reverse supply chain combined, should become circular too.
Supply chain management as a discipline can support the transition to a circular economy in which manufacturing (products) and consumption (customers) need to go hand in hand for a fundamental change. Within the supply chain management discipline we need to rethink reverse logistics. The reverse supply chain should be customer- and product-centric at the same time and should function fast and efficient to drive an economic trade-off for better product recovery than just recycling.
The reverse supply chain is faster and cheaper when it is local. When supply (returns) and demand (product recovery) are matched locally, the reverse supply chain can act faster and cheaper. A fast and efficient local reverse supply chain contributes to an economic trade-off for better product value recovery than recycling or destruction. The revalue of returned products contributes to the circular economy.
ReturnDock has been launched to support Direct-to-Consumer Brands to deal with returns locally.