Reverse Logistics & Cost Reduction

We see how reverse logistics can revolutionise the supply chain


The ruthlessness of today’s marketplace means that companies must continually take note of new processes and be open to changing the way they do things.

Global supply chains are a risky business, with political disruptions now categorised as one of the biggest concerns for international retailers. To add to this, logistics has become more expensive, with a report by Rosalyn Wilson stating that the cost of international rail and water transport has increased in price by around 4.5%.

Seen as a way of negating this trend, reverse logistics has been touted as a way for companies to wring every last cent out of their supply chains.

Referring to all the procedures to do with repairs, product returns, recycling and maintenance, it’s about running products in reverse through the supply chain so that they gain maximum value. With the online retail space increasing in popularity everyday, the amount of product returns is only likely to soar, making reverse logistics an even bigger pull for companies.

The examples stem for the obvious to the incredibly complex, but all have cost-reduction in mind. For example, a supermarket that gets empty plastic pots from customer returns would clean and sterilise them and then reuse for future orders. This would save the company money, whilst also promoting their ethical endeavours.

Managing returns used to be sidelined and not viewed as a core competency, but increasingly companies are discovering the cost savings and the improved customer service that can be attained from incorporating reverse logistics.

Recently identified by 4 out of 10 respondents to a survey by the Reverse Logistics Executive Council as a barrier to effective management, it’s becoming increasingly clear that companies want to embrace reverse logistics.

As mentioned at the top of this article, organisations must be willing to open up to new ways of doing things, and reverse logistics should be looked at as a new way of approaching logistics, especially if you’re a retailer with an online presence - it saves time and most importantly, keep your customers on side.

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