As more people continue to focus on improving supply chain logistics and operations, a focus on reverse logistics management becomes a priority.
As highlighted by Allied Market Research, reverse logistics can be “segmented into return type, it is further divided into recalls, commercial & B2B returns, repairable returns, end of use returns, and end of life return. The end user is fragmented into e-commerce, automotive, pharmaceutical, consumer electronics, retail, luxury goods, and reusable packaging. By service, the reverse logistics market is classified into transportation, warehousing, reselling, replacement management, refund management authorization, and others.”
These specific niches and market divisions add complexity for supply chain managers and transportation directors. They also highlight why reverse logistics management might merit your attention.
What Is Reverse Logistics Management?
The term “reverse logistics management” gets used often when talking about supply chain networks. It is important to grasp what reverse logistics entails.
Global e-commerce growth increased the number of returns and replacement items handled by shippers and carriers and managed by supply chain logistics experts. Reverse logistics is an integral part of the TMS setup in various industries. Some of the most commonly cited include automotive, textile/clothing, healthcare, electronics, pharmaceuticals, and food & beverage.
The bulk of returns usually occur immediately after major holidays, so these peak seasons dominate logistical planning. However, returns can and do happen at any time. At its heart, reverse logistics management is about saving money and maintaining efficiency for both directional flows of the supply chain, domestically and globally.
Current Challenges in Managing Reverse Logistics
Supply chain managers and logistics directors face challenges with tracing, communication, and monitoring.
Tracing can be especially challenging in reverse logistics. It involves monitoring shipments coming back to warehouses or distribution hubs at the same time forward logistics shipments are going out. Transportation management challenges on the forward side are already tough to contend. Poor reverse logistics management compounds problems.
Communications among supply chain team members, third-party service providers, and customers can also become muddied. It can be difficult to track shipment status and follow through without reliable, easy-to-use technologies in place.
And real-time monitoring of traffic, weather conditions, shipment locations, and market rates can be time-consuming. Proper reverse logistics management can help address each one of these issues quickly and efficiently.
How a TMS Benefits Reverse Logistics Management
E-commerce returns can affect profit margins, sink conversion rates and threaten any business that relies on online sales in an industry prone to high return rates.
According to Shopify, consumers returned an estimated $428 billion in merchandise in 2020. This was just over 10% of total retail sales reported for that year. The estimated cost of those returns: at least $101 billion. This shows why reverse logistics management is such a vital part of the modern supply chain. Some of the benefits include:
- Easy integration with other systems of record in your supply chain tech stack. Integrated workflows make it easier for transportation managers to account for reverse logistics needs.
- More data provides insight into carrier performance. Collecting and analyzing data associated with reverse logistics makes it easier to monitor carrier performance.
- More predictability in payments and returns. With effective visibility into reverse logistics, shippers can view the returns rates and fees and monitor profit/loss metrics.
- Improved preparations for returns and reverse logistics. A customer-centric setup makes it easier to manage returns, authorize merchandise, and complete paperwork.
Managing transportation and logistics within the modern supply chain is an ongoing balance, especially as the 2021 peak season approaches. All indicators point to a stronger demand for reverse logistics in Q1 2022.
Leverage Increased Reverse Logistics Efficiency
The demand for streamlined reverse logistics services is paramount to supply chain efficiency. Customers want fast, hassle-free returns, and that is universal across B2C and B2B transactions. Reverse logistics should be thrust into the spotlight of supply chain management.