Develop a Reverse Logistics Strategy to Handle Increased Demand in Returns

Create a reverse logistics strategy to handle returns in peak demand times

When planning your peak season transportation strategy for the holidays, it’s essential to include technology-empowered reverse logistics strategy. That’s because returns spike after the holidays.

Americans make more than $300 billion in returns every holiday season, and that number is growing. That’s because of the boom in e-commerce, a marketplace where the return rate is more than 20%. The holiday season accounts for increased purchasing and spending, which also results in more product returns.

In response, shippers should anticipate high returns and have a solid reverse logistics strategy. Not only does a good plan for parcel return service help meet demand, but it also improves your customers’ experience.

What Is Reverse Logistics?

Supply chain logistics transport goods from point A to point B. Yet, that’s not the end of the story. Businesses also need to consider returns or recycling, with a plan to get those same goods from the end customers back to the sellers or the manufacturers. This supply chain management process is known as reverse logistics.
This process is important because it maintains an efficient flow of goods, reduces costs, creates value, decreases risk, and completes the product life cycle. This is part of the circular economy idea of following traditional logistics, turning the end into a closed-loop supply chain. Gartner Research reports that 70% of businesses anticipate investing in a circular economy.

Your returns management process is especially important during the holiday peak shipping season. Most holiday returns now happen in December before the new year starts. Since shippers are holding these sales earlier, peak season is full of returns.

Customers may return Black Friday/Cyber Monday items during peak shopping and shipping season. That means shippers need a clear strategy to manage these early returns concurrent with deliveries.

Tips for Reverse Logistics Strategy Success

An e-commerce reverse logistics strategy should not be an afterthought. Returns are expensive and can throw off a streamlined supply chain. Shippers need to plan in advance to maintain profitability, growth, and customer satisfaction. These tips can help guide your reverse logistics strategy:

  • Think about your returns policy and state it clearly.
  • Consider packaging before returns happen.
  • Keep space ready for returns in-store or in the warehouse.
  • Anticipate high returns as online shopping and expectations increase during the holiday peak season.
  • Take stock of lessons learned during previous holiday seasons.
  • Develop a solid reverse logistics strategy with technology interoperability in mind.
  • Integrate the TMS with the WMS, ERP, and other supply chain systems to gain better visibility into data, stay proactive and automate certain returns processes.
  • Support excellent customer experience with improved visibility into returns status.
  • Rely on solid technology to run automated business processes and rules.
  • Consider outsourcing inbound deliveries of returns to a third-party location to free up valuable resources.

How a TMS Enables a Better Returns Strategy

Technology helps businesses streamline reverse logistics. In particular, a transportation management system (TMS) provides these benefits:
  • Seamless Integration: Integrate the TMS with other logistics systems for a better workflow and improved reverse logistics process.
  • Data Insights: TMS technology can collect and analyze reverse logistics data to clarify carrier performance.
  • Payment and Return Predictability: Improved visibility through the TMS allows shippers to track return rates, fees, and profit/loss measures.
  • Improvements to Returns: A good TMS creates a customer-centric process leading to better preparation for managing returns and carrying out reverse logistics tasks.

Calculate your potential Saving While Using an enterprise TMS

Plan Ahead for Spikes in Peak Season Returns

Shippers must prepare for returns spikes during the Q4 and the Q1 every year as customers return holiday purchases. Much of the returns process is carried out simultaneously with the delivery of holiday purchases. Some of it extends past holiday buying as well.

A good peak season logistics strategy incorporates holiday buying and associated return spikes. This means shippers need a good reverse logistics strategy as part of an overall logistics strategy. Technology can simplify your processes to make reverse logistics management work in your favor. 

MercuryGate TMS can help make your returns process a delivery differentiator. Learn more about delivery management and reverse logistics capabilities in this brochure.

Frequently Asked Questions about Reverse Logistics Strategy

How does a TMS (Transportation Management System) contribute to optimizing a reverse logistics strategy, beyond just integration with other logistics systems?

A Transportation Management System (TMS) enhances a reverse logistics strategy by providing end-to-end visibility into the return process, allowing businesses to track returns from initiation to final disposition. It enables efficient coordination of transportation resources, optimizing routes and carriers for return shipments. Additionally, advanced TMS platforms offer analytics capabilities that analyze return data to identify trends, patterns, and areas for improvement in the reverse logistics process, helping businesses make informed decisions to streamline operations and reduce costs.

Are there any specific challenges or obstacles that businesses commonly face when implementing a reverse logistics strategy during peak seasons, and how can technology address them?

During peak seasons, businesses often face challenges such as increased return volumes, shorter processing times, and heightened customer expectations for quick and hassle-free returns. Technology, including TMS, can address these challenges by automating return authorization and processing, optimizing reverse logistics workflows, and providing real-time visibility into return shipments. For example, TMS can automate the generation of return labels, route returned items to designated facilities for processing, and track return shipments in transit, ensuring timely and accurate handling of returns.

Can you provide examples or case studies of companies that have successfully implemented technology-enabled reverse logistics strategies, particularly during holiday peak seasons?

Several companies have successfully implemented technology-enabled reverse logistics strategies to manage returns during peak seasons. For instance, Amazon utilizes sophisticated logistics technology to streamline its return process, offering customers convenient return options and fast refunds. Similarly, Walmart employs a comprehensive reverse logistics system that integrates with its supply chain network to efficiently handle returns and minimize costs. These companies leverage technology to enhance visibility, automate processes, and deliver a seamless returns experience to customers.

What metrics or key performance indicators (KPIs) should businesses monitor to evaluate the effectiveness of their reverse logistics strategy, especially in the context of managing returns during peak seasons?

Key performance indicators (KPIs) for evaluating the effectiveness of a reverse logistics strategy during peak seasons include return rate, return processing time, return accuracy, return disposition cost, and customer satisfaction with the return process. By tracking these metrics, businesses can assess their performance, identify areas for improvement, and implement targeted strategies to optimize their reverse logistics operations. For example, monitoring return processing time helps businesses identify bottlenecks in the return process and implement measures to expedite processing, reducing customer wait times and improving satisfaction.

Are there any emerging trends or innovations in reverse logistics technology that businesses should be aware of to stay competitive in managing returns, particularly in the e-commerce sector where return rates are high?

Emerging trends and innovations in reverse logistics technology include the use of artificial intelligence (AI) and machine learning algorithms to predict return behavior, optimize return routing, and automate decision-making in the return process. Additionally, blockchain technology is being explored to enhance transparency and traceability in reverse logistics, enabling secure and immutable tracking of returned items throughout the supply chain. Furthermore, the adoption of advanced analytics tools enables businesses to gain deeper insights into return data, identify opportunities for cost savings and process improvement, and enhance the overall efficiency of their reverse logistics operations.

Request a demo to see the MercuryGate Reverse Logistics Solutions.


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