Reverse logistics is defined as “all activity associated with a product/service after the point of sale.” In traditional logistics, products travel from the supplier to the consumer. In reverse logistics, it’s the other way around. Products are returned by the consumer back to the supplier or distributor.
Many companies have a basic type of reverse logistics system in place, but very few have the best solutions. Reverse logistics remains more of an afterthought. Statistics show that at least 30% of all products ordered online are returned as compared to 8.89% for brick-and-mortar stores. A returned product doesn’t always need to be a lost sale. It could also be an exchange. With a significant fraction of customers returning their orders, it’s vital to have an effective reverse logistics system so that your bottom line doesn’t take a hit.
Let’s take a look at some other ways that reverse logistics benefits your company when done properly.
1. Reduced costs
Defective products that are returned by the customer can be repaired and reassembled. This will increase the life cycle of those products, preventing them from being wasted. It saves money by partially recapturing of the original value of the assets involved. Any analysis conducted during the product recycling process will also provide insight into why it was returned. A lot of operational overhead can be saved this way, leading to reduced costs.
2. Better customer satisfaction and retention
Customers tend to return products for many different reasons. The reasons for returns vary from defective products to products that don’t meet the customer’s expectations. Dissatisfied customers will promptly return the products if they don’t like them. If there is not a proper reverse logistics system in place, it will only cause losses for you. A reverse logistics system will ensure that these returns are handled properly. Prompt and hassle-free returns mean satisfied customers who will continue to purchase products from you.
Customer satisfaction equals customer retention. A seamless returns process will help improve a customer’s opinion about your organization. In turn, that helps you maintain a good market presence, which is vital for success in the extremely competitive logistics industry.
3. Enhanced inventory management
Without an effective reverse logistics system in place, your inventory will be overflowing with returned items. When the returned stock is stored alongside other stock, inventory becomes choked. This leads to a loss of storage space. This will cost you financially as you’ll have no space left to store stock, and you’ll have to purchase more.
Speeding up the returns process and quickly replacing defective goods are just a few benefits of reverse logistics. This will lead to better inventory management, saving you storage space and money.
4. Achieved sustainability goals
Logistics companies today are conscious of the carbon footprint they leave behind. A few of them even have zero landfill waste goals. Any returned product doubles the carbon footprint it leaves on the planet. This is a major obstacle for any organization seeking to achieve better sustainability goals. An effective reverse logistics system will help to minimize the carbon footprint left behind by returned products. Strategies like placing the distribution warehouse and the returns processing area in the same place is a step in the right direction towards achieving sustainability goals from a reverse logistics perspective.
With so much to gain from effective reverse logistics, it’s important that your company runs on software that can help optimize this process. ERP software is expensive and complicated. Generic logistics software will not address all of your reverse logistics demands. The solution is to develop custom software for your logistics company.
Platforms like Zoho Creator enable you to build custom reverse logistics applications on your own. You don’t need any prior programming knowledge. When you are thinking of purchasing a reverse logistics solution, leverage the capabilities of Zoho Creator to make one that is tailor-made for your business.