Logistics plays an essential role in offering great customer satisfaction and delivery times. Investing in logistics should be a priority for businesses and they should always be looking for strategies to improve their supply chain processes. One of the ways to do this is through reverse logistics; which has become an operation that most businesses have had to focus on. Investing in the functions of reverse logistics can be beneficial for business operations.
What is Reverse Logistics?
Reverse Logistics refers to the process of handling the return of products and materials. It involves the return of goods from their final destination in order to capture their value or dispose of them. The reason why goods might need to be returned is that customers or stores need to return them to the warehouse or the goods are no longer in season and need to be removed from the shelves.
Even when goods are returned, they still cost money and hold value. Reverse logistics allows retailers to capture the value through resales, remanufacturing of products as well as the management and sale of surplus goods.
Reverse Logistics Benefits
Reverse logistics offers several benefits to businesses and these include:
1. Reduction in Costs
Reverse logistics is able to reduce costs through various ways such as decreasing transportation costs to reselling returned goods that would have been wasted. When products are returned they can either be resold, repaired or you can break down the product and use parts to create a new item. This allows you to recover money from products. If you are unable to recover any value from the product, then you can dispose of it in a manner that will prevent you from being fined for incorrect disposal.
2. Increased Customer Satisfaction
The customer’s ability to return products can be beneficial for both the customer and the business. A survey that was conducted indicated that businesses with strict return policies were likely to be avoided by customers. Businesses should steer clear from return policies that require receipts or original packaging and aim to provide a full refund.
The business can gain insight from customers and also respond to any concerns that they have made through the returned goods. They should aim to either replace or repair damaged or faulty goods quickly in order to maintain customer satisfaction as well as improve their brand image. The customers tend to give feedback relating to why they chose to return goods and this information can be beneficial as it could be used to make improvements in the future.
3. Waste Reduction
Reverse logistics helps find ways to reuse, resell or recycle materials that would usually have been disposed of. This is done by looking at the condition of products; if they are in good condition and not faulty, they can be sold to someone else. If they are damaged, they go for repairs and then refurbished at a cheaper price. If the product cannot be resold or repurposed, it is broken down in order to be recycled. Not only does this reduce the waste created by the business, it allows the business the capture value throughout multiple points within the supply chain.
4. Data Protection
There are security breaches that might occur during the disposal of the product. Any data breaches that might occur can negatively impact the business’ customers such as someone obtaining information about a customer from a previously owned product.
Proper reverse logistics processes take these issues into account and prioritizes the protection of data throughout the process. This requires formulating steps that will be needed to respond to account breaches that might occur. During the recycling process businesses must ensure that they erase existing data on previously used equipment to avoid any business risks. This will improve the business’ success as well as their sustainability.
5. Better Brand Image
Reverse logistics is not only able to improve customer satisfaction, but it improves your image to the general public. This is because the business is able to reduce the negative impact they have on the environment by promoting the recycling of products. People respond more positively to brands that are environmentally conscious and that also follow the green movement. Plenty of companies have started to capitalise on the positive impacts that going green has by marketing their products as being safe for children.
6. Encourages Competition in Manufacturing
When products are returned it creates competition within the supply chain between the industry’s material supplies. This competition leads to cheaper prices as some repurposed or recycled products are sold again. Reselling products also eliminates the risk of having resource shortages and saves business expenses. The business is also able to attract more customers due to their lower prices.
Reverse logistics processes create methods to decrease costs that you might incur when you have to handle returned products as well as improve your brand’s image. It is important for organizations to invest in their reverse logistics operations in order to see an improvement in their business operations.