Return logistics used to be a rather abstract and complicated term. However, return flows nowadays are just as common as outgoing flows. An example is the recycling and reusing of defective products and parts or collecting and delivering refills for purchased products. Thus it is quite essential that this process runs smoothly, but this is not always the case. In this blog we discuss various aspects of reverse logistics and we offer tools for improving return flows.
Reverse logistics
On encyclo.nl, reverse logistics is described as the ‘logistical management of returning goods, possibly for repair or reuse’. However, this meaning is too succinct to cover the full concept of reverse logistics. Reverse logistics also includes taking back reusable transport items and packaging items, recycling depreciated products or delivering and collecting refills (such as gas bottles or waste containers).
More and more shippers and customers request this kind of extra service after delivery of goods. Moreover, it often concerns goods that are valuable or from which raw materials can still be extracted. For the shipper, this is an extra step for which extra costs are incurred if the return flows are not in order. These types of ‘value added’ activities, known as reverse logistics, are becoming increasingly important.
Problems with reverse logistics
Return flows are not a priority for many companies, even though they involve a lot of money. In these cases, the insights are limited, there is no clear process and the responsibilities and tasks are not properly communicated internally. This is a shame, because this way the profit is lost faster due to the extra costs that are made on returns. It is therefore strange that more value is not attached to the aspect of reverse logistics, after all, companies almost always have profit maximization as their goal.
Because the way and the speed in which customers and users return items remains underexposed, opportunities remain untapped within the entire supply chain. In the meantime, this problem will only get more complicated with the emergence of multichannel models. These allow consumers to buy products anytime, anywhere, making it more difficult to control the return flow. Moreover, this topic will also receive more and more attention as the logistics industry becomes more sustainable.
Improvements and benefits
If the reverse logistics are not in order, this causes problems in several places. Warehouse and operations managers cannot estimate the amount of work to be distributed, because they do not know when items will be returned. It is also difficult to estimate the impact of the returns. For example, it is not clear which part of the returned items can still be counted as stock or how many new items have to be ordered. Sales managers also have to deal with unhappy customers and the CFO has to deal with a combination of these problems.
The benefits of good return flows include:
- Improved customer loyalty
- Lower support costs
- Increased transaction speed
- Growing market share
- Sustainability
- Lower storage costs
- Better customer service
- Increased ROI
Several steps can be taken to improve reverse logistics:
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Map internal processes and agreements
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Reserve a part of the warehouse specifically for reverse logistics
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Work together with partners in the chain and industry
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Set up an accessible IT landscape and collect and use data to organize the reverse logistics
It also makes sense to link reverse logistics to activities that improve the supply to the customer and generate value.
In practice
When working with return flows in practice, the residual value must also be taken into account. This is the value of a product at the end of its use. For products with a high (residual) value, it can be useful to exchange them one-to-one. However, this is too expensive for products with a less high (residual) value. Here it comes down to bundling return flows as much as possible.
The (residual) value of the products to be returned, in combination with the total transport costs, also determines the radius within which reverse logistics is profitable. Collecting companies regularly offer the possibility to collect old, discarded products from consumers when they come to deliver new ones. Transporters also regularly collect the previously left reusable packaging when they return to a supplier.
Return logistics with TellApe
Insight into the logistics chain is the first step towards efficient reverse logistics. If companies know where transport items are, they can easily be taken back once drivers are present. This insight can be provided with the help of relevant data from applications and online programs. These digital solutions can also exchange data with each other, so that all processes are better aligned.
An example of such a digital solution is TellApe. The packaging app gives the driver the tools necessary to create that insight. TellApe records the packaging movement at the time of transfer. The driver places packaging items at the customer and then enters them into the app. This transaction can then be immediately signed off by the recipient.
In addition, the items are visible in the TellApe online portal within a few seconds after they have been delivered. When planning trips for the next day, the planner can then see which customer still has packaging in the online portal. On the basis of this data, the reverse logistics can be efficiently organized.
