Reverse Logistics: Top Trends In The Global Supply Chain 2020
Updated: Oct 11, 2020
Did you know that approximately 30% of products purchased online are returned, compared to just 9% of products that are shopped and purchased in-store?
With accelerated adoption of eCommerce and online shopping by consumers spread all across the generational divide, companies can expect a tremendous increase in reverse logistics as consumers continue to purchase more products online and return them at a higher rate than ever before. According to the US dept of Commerce, it is estimated that the global reverse logistics market is forecasted to reach approximately $600 billion in the next 5 years. I believe with non-traditional players jumping into the direct-to-customer business model, the acceleration of spend in reverse logistics is going to be even faster than originally estimated.
For supply chains today, there’s some significant value in investing in reverse logistics capabilities as they continue to plan and remain flexible for the future ahead. Below are some key capabilities that those interested in investing in reverse logistics should look into.
In recent years, there has been a dedicated effort towards creating a stronger capability to capture, analyze, and respond to real-time data for the forward supply chain. With this effort, there is also a clear opportunity to utilize and extend current capabilities to include reverse logistics and return planning as well. An increased focus on returns and improved planning can be useful in helping to reduce unexpected increases in freight costs by paving the way for a more synergistic planning for provisioning and returns.
In addition, it’ll be critical for supply chain to determine the reasons of returns such as defective products, damaged products, mis-selected items, etc. From there, they can take more effective corrective measures to reduce a deluge of returns.
This capability can also provide a significant impact on profitability and branding when there is a timely decision made to resell or recycle returned products. The real-time information on product condition is also very necessary.
In the case of reverse logistics, capturing relevant real-time data can begin with a well-planned RMA process that utilizes consumer data to provide more information that can be used for the decision making process.
With real-time data, businesses can explore the capability of analyzing and creating insights on a real-time basis, which can be further supported by business processes that take advantage of real-time information to make timely decisions.
Advanced analytical capabilities can be used to engage in the predictive forecasting of volumes of returns. I was working for a client, whose 70% of provisioning supplies were contributed by actual returns after being tested and refurbished or renewed. It was critical for that business to have an accurate understanding of their returns volume, which was being driven by market events and promotions, so that they could budget enough to source the new product for the provisioning supply chain. It was also critical for them to be able to estimate the timeline in real-time for testing, refurbishing, or renewing the returns process.
Below are some critical use cases for advanced analytics in reverse supply chain practices:
· Predictive Forecasting of Returns
· Route Optimization And Management
· Dock And Other Resource Scheduling
· Efficient Sorting Using Image Analytics
· ML-Based Root Cause Analysis
Robust Automation and Infrastructure
To be able to take full advantage of investments in real-time data and advanced analytics capabilities, one needs to start considering bringing automation into the fold. Processes like RMA, testing and sorting, restocking, and inventory management can all be automated to drive efficiency throughout the process.
RMA is the first point of contact with a consumer looking to return a product. A well-planned automation of return process can help capture data regarding the condition or issue of the product, which will ultimately aid in decision making for further action. In addition, it can also aid in selling or upselling strategies, ultimately allowing you to retain the customer by making the process smooth and easy.
Augmented reality is another unique tool that leverages technology. AR allows you to optimize the returns process to reduce cost and time in testing, repackaging, or recycling returns.
One of the large communications and media companies, as part of their supply chain digitization strategy, is looking at using AR and voice activated systems to help augment their team members’ ability to put-away and restock items in their returns facility.
As supply chain leaders continue to think and invest in digitizing their forward supply chains, it will become increasingly imperative to consider the capabilities that can be extended to reverse supply chains as well. A well-rounded use case on both forward and reverse supply chains will improve the ROI of such investments. In addition, it will make your brands more sustainable and enable supply chains to become growth enablers.