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4 steps to help you get a grip on your reverse logistics

20 March 2018, Retail, Wholesale, Manufacturing, 4 min leestijd

An organisation that hasn’t properly organised its returns process will feel the effect in various different layers of the organisation. These will include the warehouse manager, operations manager, sales manager and the CFO who will find themselves struggling with their activities. In this blog, I will explain exactly where this pain is located and how you will be able to solve it through a holistic approach.

‘Let’s order a pair of shoes online. Size 38 or 39? You know what, I’ll order them both.’ This is example where a B2C organisation is certain of getting a return shipment. These days, thanks in part to how easy it is for consumers to place orders online, return logistics is a fully developed, reversed process for many organisations. The returns for B2B organisations are usually more extensive, which makes good planning essential. For example, think about an unexpected return of refrigerated containers. Those will take up a lot of space, possibly posing some real warehouse issues.

The need for optimal reverse logistics

If your returns logistics approach isn’t in order, it can hurt several different layers of your organisation:

  • Warehouse manager: impossible to estimate the work
    A poor reverse logistics process will mean that the warehouse manager will not know which products will return at what time and so cannot possibly estimate the amount of work, with all its consequences: chaos in the warehouse, lack of space, and little overview. This means that customers will have to wait longer for information, a replacement product, or their money back.

  • Operations manager: impossible to estimate the impact
    For the operations manager, it is virtually impossible to estimate the impact of returns. What part of the returned items can he still count on for stock? How can he know how many articles he must order or have produced. And can he trust that the insights, based on the information he has, are correct and current?

  • Sales manager: more dissatisfied customers
    A return shipment means that the sales department has to regularly deal with disappointed customers, for example, if the product does not meet the customer’s expectations. And poor return logistics only add to the discontent, for example, if customers do not receive a return confirmation or have their money refunded too late. In addition, return shipments cause a lack of insight into the sales figures. And if the sales manager doesn’t have any insight into the returns or their current status, then the customer doesn’t either.

  • CFO: all the pain together
    All the (individual) pain from departments and managers comes together at the desk of the CFO (Chief Financial Officer). He and his finance staff lack insight into the current stock value, the actual turnover, and the exact margin on an order. And because of this, things are unpredictable, something all CFOs dislike.

A holistic approach as a solution
Return shipments are normal now, so it is necessary to streamline this process just the same as with the sales and order delivery process. The return process can be best optimized using a holistic approach where you bring together all aspects and players in the logistics chain.

  1. The customer: prevention is better than the cure
    Give customers as much insight as possible into the specifications of a product so that the product is more likely to meet their expectations. For example, you could advise a customer to order a size larger during the ordering process because the shoe brand in question is small. This means that you have to ensure that your product and customer data is extremely accurate and that you also capture the reasons for a return.

  2. Your organisations: map internal processes and agreements
    Check which department handles which tasks and how that is working. And who is responsible for what? And where is it going wrong at the moment? In this way, you will discover where you need to optimize in order to make the process run more smoothly. After that, you should make new agreements so that everyone is on the same page and the return process is clear and transparent.

  3. Your partners: look for cooperation in the chain and sector
    Work together with suppliers and retailers to gain more insight into which products are being returned and especially when. For example: get logistics partners with return shipments to notify you of their arrival. Customers can also become your partner by, for example, having them digitally register their returns and provide the reason for the return. (see also 1).

  4. The chain: establish an accessible IT landscape
    Every link in the chain must have access to the same information. You should therefore be prepared to share current and reliable data with third parties. But that involves quite a lot such as linking IT systems with other parties, internally and externally, setting up mobile apps and, above all, making a lot of relevant information accessible.

Want to know more?

Can the reverse logistics in your organisation use some improvement too? And you need a hold to realise that? in these webinar recording you hear where exactly to start.
Watch the recording