Reverse Logistics Importance in Your Supply Chain Network

Getting products into the hands of paying customers is one thing but providing smooth logistical flow if a product comes back is another. Planning for this critical aftermarket process is called Reverse Logistics. More specifically, reverse logistics is the process that occurs once a product has reached the marketplace and is then returned back to the manufacturing company.

For example, a manufacturer’s product moves through the traditional supply chain network, ultimately reaching the customer. If the product needs to be returned for any reason, the customer would return it. The product would travel in reverse through the supply chain network, and the manufacturer would have to organize the shipping in addition to any necessary testing, dismantling, repairing, recycling, or disposing of the product. The logistics for all of these activities is referred to as reverse logistics.

In addition to satisfying the customer’s needs that were not initially met, it is very important for the manufacturer to recapture the value of the returned product. In order for reverse logistics to operate smoothly, strict procedures must be in place to handle things like returns management, warranty claims management, return merchandise authorization, and any remanufacturing, reconditioning, or refurbishing activities.

The role of reverse logistics has become even more important with the arrival and continued growth of e-commerce. In recent years, physical retailers have been replaced with online ones, resulting in rapid growth in the magnitude of returns and pressuring supply chains to manage product returns successfully. Companies can no longer afford to treat reverse logistics as “the cost of doing business” – there is too much at stake in terms of brand reputation and profitability, not to mention the unnecessary headaches that occur throughout the supply chain when reverse logistics is not optimized.

The good news is that streamlining the way products move back through your supply chain results in huge benefits such as cost reductions, happier customers, and less environmental waste, and can make your company stand out among the competition. Also, the advantages of implementing a reverse logistics strategy, as detailed below, far outweigh the implementation cost.

 

Decreased Costs and Increased Asset Utilization

The reason reverse logistics is so important to companies is the cost benefits associated with it. We all know inventory costs money, and manufacturers should always have the goal “to do more with less”. Minimizing product return, repair and replacement times reduces the inventory requirements, thus, decreasing the capital tied up in inventory. An optimized reverse logistics solution also has the benefit of increasing asset utilization by extending the product’s life via repair or recycling, allowing manufacturers to extract even more value from the product. Additionally, there are often other cost reductions as a result of a robust reverse logistics system such as transportation, shipping, administration, and technical support expenses.

 

Greater Customer Satisfaction and Higher Retention

Simply put, happy customers are return customers. If a customer has a bad experience with a product, you must make it right.  Efficiently repairing or replacing products can directly affect how customers feel about your brand. Also, as on-line purchases continue to grow, customers are expecting returns that are convenient and hassle-free. Having a strong, customer-oriented reverse logistics process says “we go the extra mile”! Effectively managing return orders could be the difference between a one-time customer and a returning one; thus, having a successful reverse logistics system impacts revenue! It is crucial to invest in reverse logistics processes that help maintain high customer satisfaction levels.

Less Environmental Impact

How many of your products are disposed of improperly? Companies continue to take steps to reduce their environmental footprint, and it has never been more important to implement supply chain programs that are environmentally sustainable. One part of the business with ample opportunity for environmental benefit is reverse logistics. Reverse logistics can help you identify ways to reuse, resell or recycle materials that would otherwise end up in a landfill – a win-win solution for the environment and your company’s reputation!

Supply Chain Transparency

Many supply chains stop measuring success once the product is delivered. While this is sometimes an accurate measure of customer satisfaction and profit, it doesn’t account for all situations. Once you have traditional forward logistics as well as reverse logistics processes in place, supply chain operations will be transparent across your entire network. This benefit allows you to track logistics performance across the entire life cycle of a product and better identify opportunities for improvement. Without this transparency, it is impossible to fully oversee and holistically manage your supply chain operations.

RiverStar: Your Trusted Reverse Logistics Provider

One of the biggest issues companies face is having a team and department setup to handle reverse logistics issues and support. It can be very costly to have these resources in place, so companies turn to RiverStar for their reverse logistics management.

RiverStar’s reverse logistics program provides electronic and electro mechanical repair, refurbishment and warranty services for products no matter the stage in the product life cycle. Whether its end-of-life product support or new warranty claims, our repair program keeps your products running. Our reverse logistics program is designed around the knowledge that once your products hit the market place is when the most support is needed. Here’s a few of the benefits of RiverStar’s reverse logistics program.

  • 100% Customized: RiverStar’s reverse logistics program is set up per customer specifications and is capable of handling all of your repair, refurbishment, and warranty work.
  • Returns: An effective repair program isn’t complete without an effective returns program. RiverStar can help establish a returns program customized to your needs.
  • Quality: Repairs are completed in accordance with RiverStar-generated work instructions that meet our customers’ defined quality standards.
  • Refurbished vs New: Allow us to supply your service replacement program with refurbished parts when available or supplement with new parts when needed. Refurbished parts typically can save 50% or more over the cost of new parts.
  • Peace of Mind: Focus your energy else where knowing that your products are backed by experts to keep them running. We handle all testing, part replacement, warranty tracking, and returns management.

 

Is your supply chain ready to move in reverse? Contact RiverStar today at (507) 452-5109 to discuss your logistics needs or complete the form here.