What is Reverse logistics?
The full definition of reverse logistics, according to the CSCMP, is the process of implementing, controlling, and planning the cost-effective flow of finished goods, raw materials, and in-process inventory. In the case of reverse logistics, the flow is upstream from the customer back to the manufacturer. Conventionally, things start at the manufacturer and flow downstream to the customer.
When thinking of examples, try to define customer in the broadest sense. It could be the mom returning baby clothes back to Amazon due to size issues or a clothes manufacturer that misprints 10,000 shirts and needs to get rid of all of them. Either way, the items have now detoured from their normal downstream flow and headed into the reverse logistics supply chain. This detour requires time, effort, and a lot of planning on behalf of the manufacturer.
Here are some key examples of reverse logistics:
- Return of customer goods
- Remanufacturing and Refurbishing
- Returning of packaging/shipping supplies
- Dealing with unsold inventory
- Storing and handling returned freight
- Selling rental and leasing equipment
- Recycling of resources involved with normal supply chain activities.
Key Metrics involving Reverse Logistics
- Costs of Return Deliveries Worldwide is 642 billion USD.
- The market is set to grow 5.6% annually between 2021-2028.
- Reverse logistics costs about 59% of the original sales price of the item.
- Up to $70.5 billion worth of holiday purchases are expected to be returned.
- The annual growth of eCommerce from now until 2024 is projected to be at 12% and reverse logistics is directly tied to eCommerce growth.
Why should my company develop a plan for reverse logistics?
95% of customers will not buy from a company if they have a bad return experience. Enacting a reverse logistics solution, especially around return policies, is one of the biggest ways to show that you value your customers and their time. Giving a customer the ability to return something and do it hassle free is a surefire way to build a long-standing relationship with them.
Will this plan help our customer loyalty?
We have all been the benefactor of a well-thought-out return policy. Dealing with a prepared customer service representative brings a sense of satisfaction to us. It is incredibly frustrating to receive an item that was not as advertised or that came damaged, let alone have that frustration followed-up with a subpar solution to handle it. A company’s ability to take care of that frustration quickly aligns us with their business model and goes a long way in building credibility and trust. These processes are built on the foundation of a company’s reverse logistics policy. The customer does not worry about where that item goes or what happens to it once it leaves their doorstep but as a provider of goods, a seller must have a solution in place in order to capture these loyalty-building reactions.
How does Pulse Logistics contribute?
Our role in the final mile game looks different due to the B2B nature of our business. An example would be us getting raw materials to their end destination or delivering a truckload of inventory to a business (Check out this prior blog post for more on our services!). I bring this up for a reason – the final mile is the last leg of the supply chain but in the world of reverse logistics, it is often apart of the first leg. That means we can excel at both of these with our current setup.
When it comes to reverse logistics, we are a daily participant. An example of that would be us picking up and delivering damaged or returned freight from around Kansas City. One of our largest customers is an auction company that sources a large chunk of its merchandise from huge retailers. Many of them have millions of dollars in return and damaged goods annually to take care. Some of these retailers include massive household names such as Amazon, Lowes, Home Depot, and more. Due to these giants having a large footprint in urban areas such as Kansas City, our final mile operations work perfectly for local pickups and deliveries. As the reverse logistics industry grows, we plan on growing with it.
Reach out to us for more info!
If you need a reputable carrier or freight broker, be sure to give us a call at 816-231-1612 or click the contact button to send a direct e-mail to us. Thanks for reading and we hoped you learned something new about Pulse Logistics!