Reverse Logistics - What it is and Why it's Important

Reverse Logistics: What is it and Why is it Important?

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Many businesses see logistics as the “last” stage in the sales cycle. The product has been manufactured, stored, posted for sale, sold, payment collected, and then finally, shipped out. We obviously have our opinions about this “last concern” mentality when it comes to logistics, but we understand the conclusion. However, for those in the non-disposable-goods sale industry the need for logistics solutions extends beyond the shipment of a product. Why is this?

What is Reverse Logistics?

Product returns. Unfortunately, for one reason or another, products break. Whether it’s faulty manufacturing, breakage during transit, or malfunction during a warranty period, products get returned all the time. In these cases, the importance of reverse logistics comes into play – the entire logistics process of returning goods to the seller/shipper.

What All Encompasses Reverse Logistics?

The “entire logistics process” as mentioned above refers to more than the vehicle picking up the goods for return. In fact, there are a whole myriad of steps involved in reverse logistics and product returns.

Firstly, the claims process is important. If it is not clearly described as to how customers can begin the claims filing process, you have already failed at optimizing your reverse logistics. Secondly, documentation is important. Make sure customers are given easy access to return documents which highlight the return process (who it is addressed to, who pays for the shipping, etc.) Lastly, warehousing is important. Dock doors are not only for outgoing freight. If there isn’t a process established regarding how products are to be taken out and where they are to be placed, you will be in for an inventory mess.

Just remember, reverse logistics always refers to every step associated with getting a product back from buyer. Documentation, records, inventory, warehousing, shipping, and packaging all play a role in that.

Why is it Important?

Reverse logistics are important for quite a few reasons. Most importantly, established reverse logistics processes lead to good customer service.

Customer Service

Although it’s not always the case, many customers are frustrated if they are requesting a return. Adding any complexity into the mix of how to get it back is a surefire way to get bad reviews, a bad reputation, and negative word-of-mouth. Reverse logistics matter a great deal to the consumer. If you want to improve your company’s reviews and customer service levels, establishing reverse logistics processes is crucial.

Lowered Costs

Reverse logistics are also important for lowering your costs. Think of it this way – products are not always damaged beyond repair when in need of reverse logistics solutions. Businesses often see the most fit solution to be issuing a refund and disposing of the goods. However, goods may be returned, refurbished, repackaged, and resold to help eliminate the costs associated with a failed purchase, whereas disposal would finalize all company costs due to the faulty product. Many company’s see this as being too complicated or expensive, but it doesn’t have to be. If you have clearly established practices for returns, you can reduce the time and cost involved in returning and refurbishing your products.

Conclusion

If you haven’t spent time developing a process for reverse logistics, you are putting the reputation and operational efficiency of your business at risk. Always remember that the cash flow and sales process is not finished when a consumer/business buys your products – any returns, exchanges, and repairs are still your responsibility.

All things considered, building a reverse logistics process can help to save your company money, combat negative feedback, and improve operational efficiency. If you need any help developing a reverse logistics plan, or have any related questions, reach out to one of our team members at Interlog USA and we’d be happy to talk with you.

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