Reverse Logistics a key element in Corporate Social Responsibility! How can that be?
Many companies are looking at reverse logistics as the new revenue stream. How can returning and then disposition of product lead to a revenue stream?
The answer lies in part in the understanding of reverse logistics as a part of sustainability. Reverse logistics or returns management, once an afterthought, now covers the green movement of reduce, reuse, recycle and recover. Companies are being held accountable for the entire lifecycle of their products after being returned.
The accountability is due to the growth of aftermarket interactions. While these new markets have created new markets for many companies, they must also ensure their brand is protected. Firms are finding themselves under increasing observation to ensure these operations have a positive effect on the environment as opposed to filling up a landfill.
There are several best practices companies should be using or developing to augment reverse logistics. They are the following:
- Simplifying the returns and repair process can increase the speed of inventory movement through the supply chain. Reworking product into saleable condition and recycling usable parts and selling any excess to jobbers or surpluses.
- Capture, analyze and use the return data to understand and improve the design of future products.
- Outsource such components as warranty claims processing.
- Increase the quality of complaint behavior.
- Implement programs alerted on eliminating defects, thus preventing returns.
- Align sales, design and production teams with incentives to ensure products meet customer needs.
Traditional disposition of product has bred much inefficiency that have impacted the supply chain – returned products moving from customers back to suppliers, then to a return center, then to a recovery provider.
For those reasons above reverse logistics remains a large source of untapped revenue to companies. Knowledgeable improvements to reverse logistics can lead to present reductions in cash pay outs. In addition, organizations with effective reverse supply chain competencies have a better outlook on customer service and offer more services.