When companies look to improve the efficiency of their logistics or to hire a logistics service company, they’re typically focusing on their parts and components, and on their shipments. However, there’s a third pillar of logistics that often gets overlooked: your reverse logistics services.
Reverse logistics covers any process where one of your customers or sales partners sends products back, such as for repairs, or because the product was defective and refunded. It can also cover any services you might offer for reclaiming and/or disposing of old products.
These sorts of post-sale operations typically aren’t given the same consideration as sales-driving transactions, which is unfortunate. Since reverse logistics don’t typically generate profit, that makes it even more important to utilize skilled reverse logistics services to minimize costs. In some cases, close monitoring of reverse logistics can even reveal larger problems that need to be addressed.
These are the most important aspects of reverse logistics to focus on.
1. Tracking overall costs as a percent of sales
How much is your reverse logistics processing costing you? Even if the sale is on the books, that’s money lost if the product is returned or refunded. In some cases, profits may be overstated, if a large number of returns are undoing sales after the fact.
Typically, reverse logistics can eat up 10-15% of a company’s profits, so it’s vital to push that number as low as possible.
2. Volume of returns
When discussing technical problems and other returns due to defects, it’s vitally important to track which products are being returned, and how often. If one particular product is being returned more often than others, that’s a big red flag that there are issues with either manufacturing or QC which need to be fixed. After all, along with the costs of returns, you’re generating unhappy customers with every bad product – and that harms loyalty.
3. Failed product testing
What happens to a returned product after reaching you? Are you having items checked looking for common flaws? Are you investigating the possibility of refurbishing returned items? The latter, in particular, can help reduce the costs of reverse logistics.
4. Reverse shipping methods
You’ve undoubtedly optimized your outbound shipments, but are you doing the same for inbound shipments? The same basic processes which improve logistics, in general, can also reduce costs on returns, exchanges, etc. – but only if a company is aware of these issues and actively looking to optimize.
US Logistics is your partner for logistical solutions, including reverse logistics services. If you’re seeing too many returned products, or feel you’re spending too much on inbound shipments, we can investigate the issue and help you reduce your costs with modern logistical analysis techniques.