Top Three Benefits of Effective Reverse Logistics

In part one we looked at what reverse logistics involves and the challenges faced by manufacturing and distribution houses in managing this important process. The high cost of dealing with returns is invariably seen as never-ending headache but with the correct management systems in place, reverse logistics can actually be beneficial to your business. Let’s look at the top three benefits of effective reverse logistics:

Improved Customer Satisfaction

Customer satisfaction involves meeting or even exceeding expectations of a product or service. Research confirms that what customers really want is to be heard and real action to be taken about their complaints. Strong, loyal relationships are built bringing repeat business.
Studies show that customer satisfaction is improved through reverse logistics management programs that:

  • Give real customer support and speedy dispute resolution
  • Give frequent and consistent communication and feedback
  • Have more reliable and faster delivery times
  • Eliminate slow or lost shipments
  • Use optimisation tools that improve profit margins
  • Reduce product carrying costs for the customer
  • Have efficient shipping and receiving operations
  • Reduce the number of defective products getting to the customer
  • Monitor and track performance throughout the supply chain

Reducing Overall Total Costs

Reverse logistics is major part of some industries including dealers in the automotive industry and manufacturers of electronic equipment. Getting products from a dealer or retail outlet back to the manufacturer for repair so that the item can be rebuilt and resold can be an expensive process. A sound reverse logistics management program coordinates, schedules and controls the process, ultimately improving efficiency and cutting costs.

The reverse logistics cost equation

The Reverse Logistics Cost Equation is invaluable as it defines the real costs of each component needed for the handling, processing and repairing or disposing of returns.

The Reverse Logistics Cost Equation:

Processing Costs + Logistics Costs + Credits/Replacements Cost + Asset Depreciation
= Total Reverse Logistics Costs

Reverse logistics programs assist with evaluating and finding ways of reducing expenditure of these components which results in improving bottom line profit.

Maximising Return on Assets

The number of possible ways to dispose or recycle returned goods has grown significantly bringing with it many more opportunities for return on investment. It is also essential to monitor the impact of asset depreciation as time can reduce the value of idle returned goods. A reverse logistics management solution can speed up the process of reselling goods while they have a high market value.

Need a logistics management solution? Contact Dovetail Today!