How often do you think about your retail reverse logistics strategy? It’s easy to assume retail reverse logistics is solely based on returns. While this is partially true, all retail reverse logistics involve a backward flow of products that return to their origin. Returns may derive from buyer’s remorse, damage to items, defects, end-of-life disposal, and even recycling.
Unfortunately, many supply chain leaders continue to regard reverse logistics as an archaic process that’s best ignored and left to individual brick-and-mortar facilities for management. Instead of being relegated to the margins, executives must rethink their strategy and consider how a data-driven reverse supply chain can add more value and improve profit margins.
The Benefits of a Data-Driven Retail Reverse Logistics Strategy
When a return is initiated, the shippers must capture the full scope of data regarding that item or its specific SKU designation that may have contributed to the need to return, repair, replace, or otherwise recycle an item. This is where the value of data-driven retail reverse logistics analytics and management comes into play.
Data-driven retail reverse logistics allow for informed decision-making to consider each return’s unique issues. Since this may include recalled and defective products, it is imperative for supply chain leaders to thoroughly review each return to determine if the return was justified and what the best resolution is going to be. This sentiment is that even the industry’s biggest names have discussed at length. According to Deloitte:
“Returns are becoming one of the most significant supply chain challenges companies face today. A reverse logistics supply chain management strategy is critical to maintaining healthy inventory turn and operating expenses. Understanding the dynamics behind how, when, and why customers return items is essential to understanding purchasing behavior and improving the overall experience. Every product return is a chance to learn more about the customer, drive the next sale, and make it stick. Online returns are often the result of digital challenges, such as poorly displayed images and incorrect fit. Variances in manufacturer sizing contribute to over 50% of customers returning items due to product size or fit.”
As a result, utilizing data to understand retail reverse logistics better and applying advanced analytics allows supply chain leaders to realize these key benefits:
- Reduced rate of returns
- Faster time to resolution for returned items
- Increased speed in managing repairs
- Increased compliance with appropriate disposal or reclamation regulations
- Greater recapture of revenue by assessing the real value of items returned
- Of course, that’s only half the battle in reaping the rewards of data-driven retail reverse logistics strategy