Most people know that a company's supply chain involves every step needed to source materials, create products, store inventory, and ship items either to third-party retailers or directly to the customers themselves. However, a whole other section of the supply chain often goes unnoticed: reverse logistics.
Reverse logistics is the portion of the supply chain that moves items from the sellers back to the manufacturers. There are many reasons why a product might need to be moved backward along the supply chain. Whatever the reason, this aspect of the supply chain requires just as much management and careful planning as the process that delivered the product to the customer in the first place.The goal of traditional logistics (or the typical supply chain process of moving products from manufacturers to customers) is to create a high-quality product while keeping profit margins high. The goal of reverse logistics is usually to recoup any profit losses and maintain customer satisfaction.
The best example of reverse logistics, and the most common reason for this process, is item returns. When customers receive an item they are unsatisfied with for any one of various reasons, they can return it to the company they purchased it from for a full or partial refund or exchange. Of course, the process depends on the company’s return policy terms. Another example is collecting used items back from customers for recycling purposes. Some companies who sell items made up of recyclable materials will allow customers to return the items once they’re done using them, creating the opportunity for sellers to make some of their overhead costs back in the recycling process.
Companies will use several different facets of reverse logistics for diverse reasons. Returns management is one of the most common types, as it oversees the returning of defective, incorrectly ordered, or unwanted items from the customer back to the seller.The seller will then have to determine whether the item is fit to be resold or not, and the customer will usually receive some kind of refund based on the company’s RPP (return policy and procedure).Some companies will include remanufacturing (or refurbishment) reverse logistics in their supply chain. This provides the option for customers to send in their products for repair or refurbishment to then be sent back so that the customer can continue to use them. Reverse logistics don’t always include the customer. In some cases, third-party retailers will have to return unsold goods to the manufacturer due to obsolescence or poor sales. Additionally, if a product is returned to a manufacturer that can no longer be resold in any capacity, it is labeled EOL (end-of-life) and transferred to a recycling or waste facility.
Good supply chain management is key to successfully carrying out the reverse logistics processes of any business. No matter the size and scope of your company, the quality of your reverse logistics can make a huge difference in customer satisfaction and loyalty as well as your overall profits. Let’s explore some of the best ways to monitor your reverse logistics accurately.
It’s important that you and your business team know if your company is receiving a high number of returns. By keeping a close watch over the volume of items returned, you can identify any common problems among these products to potentially fix issues or make improvements in your products in the future. Companies without reverse logistics lose thousands without this critical, insightful quality control measure.
Monitor how much your company is spending on refurbishing, recycling, or reselling items compared to your overall supply chain expenditure. This will help you track how much your reverse logistics processes are costing over time.
In some cases, an item will be returned in perfect reselling condition; however, many customers only return their purchase because it is damaged or defective in some way. These goods may need to be repaired before they can be resold. Otherwise, they may be past the point of resale entirely.Determine how much your business is spending on repair or refurbishment with the intent of resale and how it compares to your overall supply chain costs.
Every step within the supply chain, including reverse logistics, has great economic value to your company as well as your industry. You should have a good understanding of the financial effect of your business within each step to determine where processes could be made more efficient.
What if your business is extremely small scale or even made up of a single person? In these cases, you likely don’t have the capital or even the need for a management team overseeing your reverse logistics. However, staying on top of returns and repairs is important for any company, no matter the size. This is where Sharetown can help.As a Sharetown rep, you can scale your furniture selling or hauling business to perfectly suit your needs and preferences, all from the convenience of our app. We’ll help to connect you with customers in your area, allowing you to make extra money on the side. All you’ll need is a pickup truck or similar vehicle, the ability to haul mattresses or bulky furniture, and the drive to be successful with your side hustle.Plus, Sharetown helps to minimize reverse logistics issues for our reps by handling return pickups, recycling or disposal, on-site product inspection, warranty and refund management, and cleaning services as needed. This level of support allows our reps to carry out sales with confidence and see massive success in their personal businesses.
By working with Sharetown, you can turn your small side hustle into a full-time career on your own terms. Ready to get started? Learn more about Sharetown and our detailed reverse logistics solutions today.
