Reverse logistics is a complicated process crucial to logistics as a whole. Growing market pressures, including customer expectations and online retail, have recently started straining reverse logistics in supply chains.
Companies must adapt to the changing market demands and implement innovative tactics in reverse logistics. Doing so can help you stay profitable and competitive in the market. But where do you start? That’s where Covenant comes in. Using our multiple logistics solutions, we can help you build and customize a reverse logistics plan that makes the most sense for your business.
This article covers reverse logistics, its key issues, hidden costs, and how we can help. Continue reading this piece to familiarize yourself with this valuable segment of supply chains.
What Is Reverse Logistics?
Reverse logistics is a supply chain management process that involves moving goods from end users back to the manufacturer/ sellers/ retailers. The process uses a supply chain to complete.
In simpler terms, reverse logistics becomes necessary after a customer or end-user has received a product they need to send back to the warehouse or DC, regardless of the reason.
Similarly, you may need reverse logistics when a product has reached its life limit or has been damaged. In that case, the supply chain process can be used for recycling, reusing, etc. It typically includes the scenario in which the customer handles a product’s disposal, resale, or refurbishment.
Another logistics strategy in reverse logistics is backhauling. Backhaul, in its simplest form, means the freight return from point B to point A. By working with a company like Covenant, we can help you develop a backhaul strategy to help your shipping costs go down.
Types of Reverse Logistics
Reverse logistics components are another name for the various varieties of reverse logistics. They consider remanufacturing, packaging, unsold items, and delivery concerns and concentrate on returns management and return policies and procedures (RPP). Leasing, maintenance, and product retirement are some examples of reverse logistics.
Returns management, the most popular reverse-logistics process, handles routine client returns and should be a smooth, hassle-free experience to increase customer loyalty and brand image.
Businesses using packaging management procedures can reuse packaging to cut waste and save money on new packaging for returned items. Not only does this help save on your bottom line, but it also helps our environment.
Returning unsold products to manufacturers focuses on sending items from end users or fulfillment centers back to the producers. Delivery rejection, weak sales, or other causes may be involved.
Products that cannot be delivered are usually returned to the manufacturer from fulfillment centers. However, effective businesses can handle delivery failure by fixing the problem and resending. At Covenant, we can help design this reverse logistics process for you to find the most cost-effective and timely option.
Reconditioning returned goods prevents businesses and merchants from forgoing profit (or losing money) on defective goods while reducing unnecessary waste.
How Does Reverse Logistics Work?
Reverse logistics has become crucial to any successful, efficient supply chain in recent years. Reverse logistics involves the movement of freight from the vendor or maker to the final customer. It is most frequently seen when a customer returns a product for a refund or replacement. Depending on its condition, a company may resell the product or throw it away.
A reverse logistics process can involve several logistics solutions and much planning, which is why many companies may outsource it.
Reverse logistics involves dealing with product returns and purchasing surplus materials and products. It also deals with refurbishments and leases.
The sub-processes of this supply chain process may vary across different industries. For instance, reverse logistics may be used for emptying tap containers in a beverage company. In the food & beverage industry, companies aim to recapture their containers’ value through recycling and reuse, and reverse logistics will require transportation, shipping, cleaning, etc. It seems like a lot of work upfront, but with the right logistics partner, you can turn those losses into profits.
Steps of a Reverse Logistics Process
1. Processing the Return
The reverse logistics process begins when a customer initiates a product return. Then, the company will outline a step-by-step process that should typically involve returning authorization and identifying the condition of the returned product. Not to mention, scheduling returning shipments replacing the product with a new one or approving finds is part of this sub-process.
2. Categorizing the Return
After a product has arrived at the company’s location or warehouse, it is time to inspect and determine its category. It is critical to know where a product will go after its return. For instance, a product may need to be recycled, prepped for resale, or refurbished. Covenant can help by providing these value-added services in your warehouse or distribution center. The return category allows you to choose the following process.
3. Moving the Returns
Keeping the returned products moving is critical to reducing waste that can turn into large piles when you allow them to sit for lengthy periods. Moving an item to the repair department as soon as possible is best if an item needs repair. This is part of your warehousing operations. We can help by using proven, effective operation procedures in your warehouse daily.
4. Executing Repair
After relocating any items to the repair department, ensure timely repairs. Dealing with the products promptly can help make any end-of-life arrangements. It is best to repair the items promptly or dispose of them if irreparable.
It must be disposed of properly if it cannot be repaired or disassembled. When recycling and getting rid of things that can’t be fixed, businesses must take all necessary precautions. This entails considering environmental sustainability and dealing with problems brought on by by-product waste. The product may need to be completely or partially disassembled to manage any recyclable component properly.
Challenges of Reverse Logistics
There are difficulties with reverse logistics, which can be complicated. The process is one of the most frequently observed regarding its financial success. Because the value of the items may be less than the cost of transportation, returning products to a distribution center may only sometimes be financially advantageous. This is why a custom, optimized logistics route is so important!
Covenant can help you overcome challenges in reverse logistics by ensuring you have the right technology in place to track your shipments and by coordinating with our expansive list of dedicated customers to create possible backhauls and cost savings for your network. Because of the size of our solutions group, we are well-positioned to help support backhaul networks with our customers.
Reverse logistics refers to the area of supply chains that deals with items coming back into the system or moving “backward” through the system. This can include various things, such as recycling, returned goods, appropriate disposal of materials from previously sold products and packaging materials, etc., and it’s hard to figure out. When you have a true logistics partner with multiple logistics solutions like Covenant, we take care of that for you. With our logistics expertise, we can help you create the most cost-effective logistics solution for your business today.