A Guide to Reverse Logistics: How It Works, Approach & Types

Reverse Logistics Management is a daunting task due to the inadvertent challenges. Reverse Logistics helps Mr. Supply Chain Manager to have both his clients happy. He now has the wherewithal to deliver parts to clients for service within agreed SLA’s while incorporating a process to get the faulty part back to the mother warehouse, thus helping Mr. CFO. for something that might seem as simple, the role of reverse logistics is quite huge in a circular economy.

India, because of its large geography and complex regulatory environment, has always posed a tremendous challenge for the movement of spare parts across states for Mr. SCM. So how can he set processes to work in such an unorganized sector?

The ANSWER lies in working with the right partner — one who offers specific solutions through set systems and processes.

Below are some benefits of reverse logistics:

  • Reverse logistics done properly can decrease returns processing costs by 25%,
  • Increase productivity by at least 10%,
  • Increase asset realization by 2x to 4x
  • Increase customer satisfaction by 100%
  • Increase profitability by 2% to 5% apart from complying with waste management

Reverse Logistics Process

Reverse logistics in a warehouse setting refers to any of the below:

  • Returns
  • Re-manufacturing
  • Refurbishing
  • Unsold goods
  • End-of-life
  • Delivery failure
  • Equipment rentals/leasing
  • Equipment repairs/maintenance

Approach to Good Reverse Logistics

When a customer indicates or decides that they want to return the received goods, that’s the beginning of the return process. In this, the end customer should specify the product’s condition, the reason for returning, and include a return authorization. This procedure entails planning return shipments, approving reimbursements, and exchanging defective items. The team receives and handles the item if a business requests a return. They keep track of the product’s location and ensure that it flows through all return processes to the final disposition. The capacity to trace and manage returns from the moment the consumer sends it back through the last step of a refund, warranty repair, or exchange is improved using reverse logistics software.

Types of Reverse Logistics

Returns management: Managing activities related to returns, reverse logistics, gate-keeping, and avoidance inside the company and among important supply chain participants is known as returns management. When this procedure is correctly implemented, management can properly monitor the flow of reverse products and spot chances to cut back on undesired returns and keep track of reusable assets.

Return policy and procedure (RPP): Company’s Return Policy and Procedure (RPP) establishes and informs the clients during purchase. It covers the window of time a product can be returned, the acceptable state for a return, the refund policy, and the process for sending a return delivery to the business. Products that are returned are examined, disassembled, fixed, recycled, or discarded. And all the damaged goods are disassembled.

 Re-manufacturing or refurbishment: Refurbished products might be practically “new” things that customers return unused, or they can be defective products that customers return under warranty and the manufacturer resells after fixing the flaws and ensuring correct operation. Re-manufacturing is a more extensive and expensive procedure than refurbishing, since it adheres to a higher standard.

 

Rising return rates make it imperative for businesses to figure out a more cost-effective way to handle products sent back to them. Evaluating your reverse logistics processes to identify inefficiencies and address those shortcomings can boost your bottom line by not only lowering costs, but increasing customer loyalty and elevating brand reputation.