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Reverse Logistics: 3 Ways To Effectively Manage Returns

(This article was published first on inc42.com.)

Reverse logistics - a term used to define the action of a delivery truck moving in reverse. Obviously not! How we all wish life was that simple. Having said that, not everything is worth the complexity, but some things like reverse logistics are, simply because it has tremendous amounts of financial impact in the world of supply chain. According to estimates, the market size for reverse logistics is approximately $ 30 billion and is expected to reach $ 50 billion by 2020, growing at a CAGR of 10 percent. Lucrative right?

But managing reverse logistics is no cake-walk. We are talking about situations that include handling disappointed customers, retrieving a product, shipping an item back to the hub, understanding the extent of defect or damage so on and so forth. This is just one part of reverse logistics, then surfaces the cost factor accompanied by resource management challenges and poor customer satisfaction. Within a short time, items under reverse logistics can transform into a parasite that feeds on an organization’s profitability. In the US alone, Statista highlights that return deliveries will cost $550 billion by 2020, 75.2 percent more than four years prior.

Reverse LogisticsThanks to advancements in supply chain and logistics technologies businesses can transform this parasitic relationship into a more symbiotic one. Here are three easy ways to effectively manage reverse logistics.

Control and Visibility of Shipments

With the growing demand for returns, customer experience cannot only be measured once a delivery is done. Businesses need to walk that extra mile and ensure a seamless returns process. This can be achieved by having complete visibility over the shipments that are being returned.

To achieve a hundred percent visibility of shipments businesses need to invest in modern delivery platforms that generate real-time updates on when a parcel was returned, who retrieved the parcel, when will it be delivered back to the hub and so on. By constantly staying up to date with how a return is being executed, the delivery stakeholder can significantly optimize reverse logistics. This also ensures that timely and data-driven decisions are taken as and when required, thus helping businesses gain greater control over reverse logistics processes.

Customer Transparency, Personalization, and Flexibility

It’s no secret that your customer demands transparency of both deliveries and returns processes. Hence, it’s imperative for businesses to embrace technologies that empower customers to know and change when a return pickup will be done, suggest where she is comfortable with returning a parcel and how will she get her payment back. While executing all these personalization practices, businesses should also equally focus on providing absolute transparency of the entire returns process. By getting these right, businesses can influence a customer to remain loyal to the brand.

Keeping a Check on Costs

Today as much as 79 percent of customers want free shipping of returns and almost 49 percent of retailers deliver on that expectation. Hence, guaranteeing free returns is rapidly becoming a competitive differentiator. But one has to realize that by doing so businesses are actually making a dent on their profit margins. While businesses cannot over-look free deliveries, they can focus on other aspects of reverse logistics to save costs.

Eliminating manual processes can significantly reduce operational expenses as well as time. For instance, by leveraging modern logistics platforms businesses can automate task allocation, that otherwise is done manually. Such platforms intelligently allocate tasks to pick-up executives for retrieval of products and bringing them back to the hub. This also helps scale reverse logistics processes.

An advance logistics platform with Machine Learning capabilities can help businesses get insights on why a particular product or product type is being returned frequently. These insights can help retailers plan inventory efficiently and reverse logistics processes accordingly.

Returns are like double-edged swords, it depends on a business whether to execute it in a way that results in customer churn or increases loyalty. There are more ways to effectively manage reverse logistics, these are the ones that can be quickly executed. In a nutshell, a key to managing reverse logistics will greatly depend on when businesses will start digitalizing their key supply chain and logistics processes.

So, how far are you on your digitalization journey? To know how FarEye can help you achieve the same, sign up for a quick demo here.

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