Outsourcing Reverse Logistics – From Problem to Opportunity
Reverse Logistics is a term that is most often used to refer to the role of logistics in product returns, source reduction, recycling, and materials substitution, reuse of materials, waste disposal, refurbishing, repair and re manufacturing. Dealing with product returns is extremely complex, but reverse logistics management has become increasingly important due to its ability to generate superior customer satisfaction, cost reduction, and more profit to enterprises.
Reverse logistics also includes processing returned goods due to damage, periodic inventory, restock, salvage, recalls, and excess inventory. It also includes recycling programs, obsolete equipment disposition and asset recovery. While many companies have yet to recognize the strategic potential of efficient reverse logistics, it is clear that the tide is beginning to turn.
When a returned product is returned it re-enter the distribution system, it moves along the supply chain distribution network back to the factory for after sales supports such as repairs, or reconfiguration. Enterprises need to handle the returned products as quickly and cost-efficiently as possible to reduce costs and increase responsiveness to customer demand simultaneously.
Many companies set up centralized service center to support returned products but the most common challenge faced by them in doing so is poor level of customer service. In order to improve the returns and provide good customer service, companies have tried to increase their ability to respond to customers by setting up of service centers near retail centers in contrast to near the main factory or main distribution centre. This helps minimize inconvenience to customers in terms of time and cost.
To save cost and meet these challenges, outsourcing the complete supply chain management to third party service providers can help organizations save on the cost of disposition methodologies thus saving cost of warehousing the stock that has gone bad based on the out of date revisions and components immediately upon receipt.
With proper returns management in place these service providers can refurbish a vast array of products in minimal time and gets them back into the field tested and up to clients’ often within 24 hours or less.
Given the amount of goods that are returned, it is not surprising that companies are strategic importance of having an efficient reverse logistics in place. This will be one way to reduce cost, increase revenues and customer service levels and gain market advantage.
Relatively irrespective of whether items are in forward logistics and distribution or in reverse channels they equally impact the bottom-line.
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