What Is Reverse Logistics? And Its Benefits

  Reverse logistics is the process of returning goods from the end consumer or customer back to the retailer or manufacturer. The most common example is when a customer returns a product. Sending goods back for recycling or refurbishing is another example.

   Reverse logistics, also known as aftermarket logistics or retrogistics, is an important component of supply chain management.                                                                                                          

 How does reverse logistics work?

  The returns management process provides a look at the key steps involved in reverse logistics.

1.  Initiate and process the return: When a customer wants to return a product, they start the process by initiating a return request. That triggers a process that includes authorizing the return and determining the condition of the product being returned, scheduling shipments, approving refunds, and initiating product replacements.
2.  Handle returned products from customers: Returned items reach the retailer or manufacturer for processing and inspection to assign a return category if not done before arrival. Returned items get sorted according to whether they get resold as new, repaired, or returned, or if the item is to be recycled, destroyed, or refurbished.
3.  Keep returns moving: Product returns management sends fixable products to be repaired, reducing waste of products that would otherwise be scrapped and counted as lost revenue.
4.  Repair returned products: Fix or refurbish, any suitable products and sell any parts of items that cannot be fixed.
5.  Recycle: Products that cannot be fixed and parts that cannot be sold can be directed to recycling.                                                                                                                  

   Benefits of reverse logistics

     As e-commerce continues to grow and evolve and customers expect the convenience of easy returns, reverse logistics plays an increasingly important role in customer satisfaction, cost reduction, and minimizing the environmental impact of waste generated by returns.

     When managed effectively, aftermarket logistics helps companies and manufacturers reduce lost revenue on returned goods. A few other benefits include:

   •  Improved customer experience. Customers today expect nothing less than fast, easy returns. Having an efficient process helps a brand deliver CX that drives customer satisfaction.
   •  Better and faster customer service. Returns are a top reason for customers needing service. Effective reverse logistics streamlines service for happier customers.
   •  Lower inventory risk. An effective reverse logistics process allows companies to better manage inventory risk by cycling returned products back into stock faster. It also reduces fraud risk through quick inspection of returns.
   •  Create value. Returned products can generate additional revenue streams through refurbishment and resale of goods, through an efficient inspection and sorting process. Businesses can identify which returned items are suitable for resale as refurbished items or redirect to secondary markets.
   •  Reduce compliance risk. Reverse logistics processes generate useful data that provides early insights into quality or safety issues with products. This allows companies to identify and mitigate any regulatory or recall risks sooner, thereby reducing legal liabilities and protecting brand reputation.
   •  Boost brand sentiment. Reverse logistics done right can help a brand win customer loyalty and trust, increasing the chances they’ll return to buy more.
   •  Contribute to the circular economy. Customers and investors alike are focused on sustainability. Taking steps to reduce returns, recycle and repair products helps to advance the circular economy.