A guide to how the reverse logistics process works

Supply chain management and logistics are essential and complex processes for every business. The way conducting business has evolved over last few decades, it has immensely impacted supply chain and logistics areas. From the traditional logistics concept of procuring goods from a supplier and delivering it to a customer, modern logistics transportation systems include processes for goods returns or reverse logistics.

The reverse logistics process can be expensive and complicated. Most logistics delivery companies today as such use best-in-class technology to streamline and automate the process for efficiency and reduced errors. Moreover, with the rise of eCommerce and online buying, reverse logistics play a key role in the modern logistics ecosystem.

On that note, let us take a look at steps involved in reverse logistics in India, its role in supply chain management, and how businesses benefit with reverse logistics.

How reverse logistics works?

The meaning of reverse logistics refers to the movement of goods from the end user/customers back to the manufacturer/distributor. It is a type of supply chain, where the starting point is a customer and products move backward in the supply chain towards distributors and manufacturers.

We can list down following steps involved in reverse logistics:

• Return: Consumer initiates the process with the intention of returning goods. Product is picked up by the logistics partner and sent back to the distributor/manufacturer.
• Resell: Products retuned due to reasons such as wrong size ordered, etc. re-enter in the inventory to be sold. However, damaged products need to undergo repairs.
• Repair/refurbish: If the goods are returned due to damage, they can be repaired or refurbished before selling it to the right audience. Additionally, the products are returned/sent for repair and maintenance, can be repaired and sent back to the respective customers.
• Replacement: In case replacement is requested for the goods returned on issues such as size, colour, those specific products can be dispatched to customers.
• Recycle: Nowadays many FMCG companies are requesting back packaging such as plastic bottles, containers, pallets, etc. These can be recycled and brought into production again.

Reverse supply chain vs reverse logistics

The reverse supply chain is a wider concept as compared to the concept of reverse logistics. Reverse supply chain includes the entire process from initiating returns to repair or recycle/disposal of products. On the other hand, reverse logistics only includes logistical part of it. For example, moving products from the customer to distributor.

Considering that eCommerce business has made the returns process effortless for buyers, the scale of reverse logistics has accelerated over the years. This has made it crucial for companies to offer cost-effective logistics solutions for last-mile delivery and reverse logistics to add value and ensure end user satisfaction.

Examples of different types of reverse logistics in business

When it comes to goods returns management, there is no one fixed way to do it. Based on the nature of return and the type of good, various reverse logistics processes can come into play. Listed below are some common examples of reverse logistics that businesses use:

• Return of products by customers/distributors: Percentage of returns is high in the e-commerce industry. According to a report, about 30% goods sold online are returned for one or the other reason.
• Reuse of packaging: In the efforts of going green, businesses request their customers to return packaging so that they can be reused. Some of the examples packaging reuse include containers, pallets, bins, etc.
• Repair/maintenance of products: At times, a product being in use needs to be brought back for repair.
• Recycling: As circular economy gains significance, importance of reverse logistics is increasing. Here, reverse logistics is required to regain value from products.
• Remanufacturing/refurbishing: Damaged products are dismantled, remanufactured and refurbished for the suitable audience.
• Recall of products: A batch of products is recalled by the manufacturer due to defects. Many a times, products are recalled and then replaced.

What are the benefits of reverse logistics?

Reverse logistics has its own advantages for businesses and can be instrumental in growing your business. Some of the ways in which reverse logistics can add value to your business are:

• Customer satisfaction: When a manufacturer retrieves defective products for repair or replacement, it helps the business attain customer satisfaction. This can further lead to customer retention and loyalty.
• Sustainability: It is one of the buzzing words today. A business can reuse or recycle packaging material with the help of a robust reverse supply chain. Today, many consumers prefer brands that are environment conscious. By involving your brand in recycling you can build the image as an environment conscious brand. This will help your business to reach to customers who are aligned to the same thought.
• Brand reputation: Your efforts towards higher customer satisfaction and reducing impact on the environment can help you build strong brand reputation in the market.
• Business insights: Once a business establishes reverse supply chain, it is easier to maintain data on reasons of returns, rate of return, quality issues and so on. With the help of data, you can make required changes to in operations to achieve desired quality and reduce returns.

How to reduce reverse logistics cost?

As can be understood, the concept of reverse logistics incurs additional costs for businesses. Not surprisingly, most businesses are actively working on logistics management strategies to help cut costs. Tying up with a reverse logistics company or third party logistics company (3PL) can help you reap many benefits. Here is a list of tasks your logistics partner can help with in the reverse logistics supply chain process:

• Picking up products: Your reverse logistics partner can pick up and inspect products to be returned on behalf of you.
• Repacking: They can repack and relabel the product as per the requirement.
• Keeping customers informed: The reverse logistics partner can keep the customer updated about pick-up status. Simultaneously, they can initiate refund if needed.
• Offering business insights: While handling the whole process of returns, reverse logistics companies generate huge amount on data about your products and business including – reasons of returns, customer expectations, etc. Having this data can help you in making operational changes to grow your business.

Here are few popular reverse logistics solution provider – Bluedart, Ecom Express, Xpressbees, Delhivery, Aramex, First Flight, etc. Tata nexarc’s Logistics can also help you in managing cargo movement at affordable cost and in a hassle-free manner.

Closing thoughts: Key points in reverse logistics

• Remember that reverse logistics process is an essential part of the business. Order is only complete when right variant of product with expected quality is delivered to the customer. Hence, do not look at it as an extra cost.
• Streamline the process with the help of your logistics partner. Create a workflow for inbound outbound reverse logistics. Automation can help you to be more organised, save time and cost.
• Focus on customer experience. Maintaining high quality of products, timely deliveries and hassle-free returns can help you maintain healthy relationships with your customers.