Rejections are not just hard but expensive too, especially when it comes from your beloved customers. All that effort you took to provide a delightful customer experience goes in vain when she returns her order. Little does the customer know about the storm she triggered just by returning what she purchased. Brands have to be the bigger person here and ensure that the product is efficiently sent back to its origin and no losses are incurred by the customer.
Reverse Logistics Definition
Reverse logistics is an industrial term. In simple words, reverse logistics means moving goods from their traditional final destination for increasing their value or proper disposal. Reverse Logistics incorporate reverse logistics management and sale of surplus inventory and raw materials.
The process of reverse logistics encompasses remanufacturing, redesigning and refurbishing. The process is complex and needs efficient planning implementing and controlling of final goods, the flow of material and reduction of energy for transportation.
The conversation around reverse logistics is ever increasing due to the rise in eCommerce sales. Experts of supply chain management are concentrating on making the reverse logistics process more efficient and eco-friendly.
What is reverse logistics tracking?
In short, reverse logistics tracking refers to the process of tracking the journey of a returned parcel back to a hub, warehouse or it's point of origin. It's getting increasingly critical as most businesses are offering returns at zero charges to enhance customer experience and loyalty. Reverse logistics tracking drastically brings down costs associated with returns.
The Complexity of Reverse Logistics And Supply Chain Management
The process of logistics has been forward-focused for a very long time. But the new age shopping, i.e. through eCommerce websites, the process of reverse logistics has come into the spotlight. Customer satisfaction, without a doubt, is the priority of the eCommerce business, but following best practices for cost-effective and technological efficiency is a concern for the logistics industry.
Reverse logistics plays a vital role in industrial equipment too. In the USA alone approximately 4% -8% industrial equipment is returned every year. These returns impact the American economy to between $52 billion to $104 billion.
The complexity of the process is ever increasing due to the sheer volume. Many supply chain managers are working to make the process simpler, cost-effective and free-flowing.
Challenges of Reverse Logistics
Ecommerce is now a booming industry. People are more inclined to buy online because they have greater freedom to return the products, and it is a hassle-free process. Did you know, 30% of all orders placed online get returned? The returns of brick and mortar stores are only a mere 8.89%. Surveys have found that around 92 per cent of people are willing to buy products online if the returns are easy and efficient.
However, the process of reverse logistics takes the supply-chain at least one step back. Another major challenge faced by companies is tracking the profitability of the business and forecasting for the future. Reverse logistics also presents another problem- it makes it difficult for sellers to ascertain the correct value or proper disposal of goods.
Hidden Costs in Reverse Logistics Process
The reverse logistics process is complex and needs intense planning implementing and controlling. The reverse supply chain process is not naturally designed and hence includes multiple hidden costs.
The supply chain managers are trying their level best to make the process of reverse logistics automated. However, its challenging and labour and workforce is involved, which incurs hidden expenses.
There are labour charges involved at many steps in the reverse logistics process:
1. Deciphering the issue with the product and business requires manual labour. This is done by customer relation advocates on a one-off basis, and they also look into returns management.
2. Managing carriers and services, for a door to door delivery, is designed for profits. Returning the goods leads to losses in pickups, increases shipping costs and damages during transit.
3. Warehousing the returns is a small cost, but that can accumulate over time and may lead to significant losses.
At times the products cannot be recycled or refurbished. Companies need to look into the proper disposal of goods so that the same do not to find a way to the black market post-return. The logistics company has to look into fail-proof disposal methods.
Tracking of Reverse Logistics
Customers and companies need access to the return status of the goods and related information. Logistic companies bear the burden of expenses and time in customer service.
The process of return logistics is often time-consuming and involves the restructuring of human resources. The time spent on planning implementing and controlling leads from negative reviews by customers can hamper the company's reputation.
Hurdle in Forecasting
It's easy to keep track of products and finances when the flow is one way. Reverse logistics make the process difficult. The accounts department finds it challenging to predict the future of the company and trends.
Addressing The Issues of Reverse Logistics
Though the process of reverse logistics is involved, there is nothing beyond the principle of customer satisfaction. Sellers have to streamline new trends and strategies needed for enhancing customer experience and have to implement best practices. The process needs to be cost-effective so that businesses flourish and logistics services may flow freely.
Returns Management Cell
The need of the hour is to employ a complete cell or wing for the management of returns. The design of the supply-chain institution needs to change. The traditional method of the only point of origin to final destination should change. The entire system needs to incorporate the reverse movement of goods and products.
Analytics of Machine Learning
When you can see your path ahead, it bodes well for your business. The future of supply-chain management and logistics business is bright but more insights can provide an added advantage. New technology, like machine learning, can come in handy. The process of planning implementing can be sharpened if the analytics can indicate the chances of a product being returned. The analytics can dive in the history of both product and customer.
The record can predict the probability of the product return and the customer's tendency to keep or return the product. Such insights can play a crucial role in advancing the processes of reverse logistics.
Digital Control Tower
Line hauling and forward logistics are optimized to the point that each step they take is optimized to the grassroots level, including paths they take and hubs they stop at. As reverse logistics has become an integral part of the supply chain of products, optimization with machine learning can cut down pickup timings and help combat shipping and inventory challenges.
The tower can also accumulate data from many software in play like CRM, ERP, TMS and convert the data into one figure so that supply chain managers can make sense of them, and understand the granular details of reverse logistics, shipping and inventory.
Tracking of Shipment
It has been observed that hidden human resources and labour expenses are involved in reverse logistics tracking if conducted manually. The automation of reverse logistics tracking can help in many areas. Following are four ways in which reverse logistics tracking may ensure better customer retention.
Better 3PL/carrier Management
Dealing with third-party logistics presents its challenges. The return of goods may include freight distribution and outsourcing. Shipment tracking helps both the industry in management and warehousing.
Reduced Returns Management Costs
Returns management needs manual interaction at every step- from a discussion with the consumer to updating the customer about the progress. Automated tracking will reduce human interaction leading to saving of cost in the workforce and working hours.
Increased Reverse Logistics Productivity
Now that we have established that reverse logistics is here to stay, we now need to concentrate on increasing productivity and gain better brand image. Productivity can be increased by implementing tracking and understanding customer and product analytics.
Traditionally the process of tracking ends once the product is delivered to the consumer or the company. Setting tracking as the industry standard for the reverse movement of goods will fasten the process and consume less time and energy.
Enhanced Returns Experience
In the competitive world, nothing matters more than brand image. Services rendered by an enhanced tracking system for reverse logistics will gain customers trust and brand the company as trustworthy. The new and advanced tracking system will enhance the customer experience.
How To Ensure Seamless Returns Management
Moving goods is the day and age that we live in. Easy returns are one of the biggest reasons why customers shop with a particular brand, and the easier the returns, the more they shop. This keeps the economy running. To keep the returns seamless, supply chain managers have found three ways.
Controlling and Increasing the visibility of shipments
Reverse logistics is an integral part of the new age shopping system of eCommerce platforms. The best way to ensure seamless returns is to keep the process transparent and detailed.
The consumers find relief when they can see real-time updates on the reverse product flow, from the location of pickup to the pickup personnel's name and time of pickup. Including the hubs and flow of return, logistics will help companies make the process of reverse logistics transparent and seamless.
Increasing customer transparency, improving flexibility and boosting the personal touch
Reverse logistics is a part of the delivery service. Treating the reverse logistics process as a stand-alone process and system will help the businesses establish better authority. Undeniably tracking is an integral part of the return process, but it's not enough. Giving a personal touch to the process will help boost customer loyalty and advance your business.
Setting a product pickup location or point of origin and time convenient for the consumer and ensuring bank details for refunds will help build trust with the consumer, ensuring loyalty loop in the future endeavours.
Keeping the expenses and resources in check
Treating reverse logistics as a process in itself will help business plan their costs better. Customers prefer free delivery and reverse logistics and make buying decisions based on the delivery charges too. However, all businesses are striving to ensure free shipping; it's denting the companies' profit margins.
The logistic industry needs to concentrate on saving some bucks on automating processes that require workforce and hours. Using advanced machine learning algorithms for predictive analysis, companies can save on precious money and increase consumer satisfaction in reverse logistics.
Drive Towards Circular Supply Chain, A Key Reverse Logistics Trend
The online shopping scene was already booming around the globe in 2020. The advent of covid-19 has moved the few customers who stuck to brick and mortar stores online.
Increased customers point proportionately to increased inventory, and returns. To make products and services more viable to customers, concentrating and adopting new trends can be the path to follow.
We have already established that reverse logistics is undeniably a part of the future of logistics. Establishing a circular supply chain for making the reverse movement of logistics can come in handy. Having local warehouses and maintaining inventory in the there will save on unwanted shipping charges.
Reverse logistics is the future of products return and raw materials movement. Reverse logistics is complex and time taking with many hidden costs. Reverse logistics of product and service may point expensive operation but there are ways to cut down the expenses. To ensure a profitable future in reverse logistics, you must adopt new trends and implement tracking techniques. Implementing advance machine learning algorithms for data analytics can boost the reverse logistics process.
Giving buyers reverse logistics goods and related information tracking details will come in handy in winning customer trust.