What is Reverse Logistics?

Sometimes things go wrong. Products are incorrect or faulty, or a customer may not be completely satisfied with an item. In some cases, they may decide they don't want an item. Regardless of the reason, reverse logistics allows you to accept a return and process a refund or replacement for the consumer.

Reverse logistics is the process of following a product from the consumer back to the retailer or manufacturer. Because there's always the potential for things to go wrong, having an organized, streamlined reverse logistics department is a critical part of managing your supply chain effectively.

Types of Reverse Logistics

Reverse logistics focuses on managing returns and any return policies and procedures. It encompasses several key components, including:

• Customer returns: A customer's return must be processed quickly and easily. Customers judge companies based on their return policies and processes. Part of logistics management is overseeing this process and following set return policies and procedures.
• Product refurbishment/disposal: Some products can be refurbished upon return. When a product can't be fully repaired, reusable parts or materials may be recovered and used to repair other products. 
• Unsold products: In some cases, unsold products are returned by retailers or distributors, either due to poor sales or inventory obsolescence. 
• Delivery failures: If a delivery fails, drivers must return the products to sorting centers. The sorting centers then return the products to the distributor. 
• End of service life: Some products become obsolete with time. Think of how many phone manufacturers release new models each year. The old model becomes outdated. Products that reach the end of their service life are often returned and recycled or discarded.
• Repair and maintenance: Some products come with warranties or other agreements stating the manufacturer will repair them if something goes wrong. This requires the customer to send in their faulty equipment back for repair. If they've sent it in for a refund, the defective product may be repaired and resold to another customer. 

The Reverse Logistics Process

Reverse logistics can be broken down into several key steps that must flow seamlessly to deliver the results customers expect. Often, reverse logistics involves processing returns for customers who are unsatisfied with the product because it was faulty or didn't meet their expectations. Having a smooth reverse logistics process helps make things right for the customer and can boost satisfaction if it's executed correctly. 

The reverse logistics process involves the following five steps:

1. Process the return: This stage begins with the consumer initiating the return process and involves a return authorization and confirming the product's condition. It may also necessitate scheduling the return shipment, replacing the faulty product or approving a refund for the customer.
2. Determine the return category: Once the returned product is received, it must be inspected to determine the correct return category. Some items may be returned in their unopened packaging if the customer changed their mind about a purchase. These can be resold as new. Others require refurbishing or repairing before they can be resold. Some must be scrapped and either disposed of or recycled. Companies with optimized reverse logistics often know which return category a product belongs to before it's received.
3. Move products to reduce waste: Products must continually move through the chain to reduce buildup. Daily waste can often be reduced by sending any items that can be repaired to the appropriate department.
4. Execute the repair process: Once the returned item is reviewed, it can be repaired. If repairs aren't possible, any sellable or recyclable parts can be sorted out. 
5. Recycle items that can't be repaired or resold: Any items that can't be fixed, reused or resold should be recycled as much as possible before disposing of the remaining waste.

By optimizing and streamlining your reverse logistics process, you can minimize waste and maximize efficiency while fostering a positive relationship with your customers.

The Goals of Reverse Logistics

The ultimate goal of reverse logistics is to keep products moving to maximize efficiency, cost savings and waste reduction. Because it's inevitable that some products will be returned to the retailer or manufacturer, having a game plan to streamline the process keeps operations running smoothly.

Developing a reverse logistics process allows businesses to offer returns seamlessly, helping salvage the relationship between the company and the unsatisfied customer. Because it encompasses the potential for resales, repairs, refurbishment and recycling, it also helps reduce waste and save costs by recouping the cost of manufacturing, even after processing the return.

Challenges of Reverse Logistics

Of course, the process isn't without its challenges. Managing returns can be a headache for companies, especially if they operate on a slim profit margin. International returns may necessitate navigating customs and managing cross-border transportation.

Issues can also arise with environmental sustainability. The return process uses up additional resources for shipment and transportation. Depending on the product, it can also result in significant waste if most or all components can't be easily recycled.

While these are significant considerations for any company, they can be significantly heavy for smaller companies without the necessary cash flow to invest heavily in software and technology to streamline the process. Fortunately, there's a solution that's fully scalable to your business's unique needs and size — third-party logistics (3PL). You can outsource your business' logistics, including reverse logistics, to a company that specializes in the process. 

Why Partner With Atlas International

With decades of experience handling cross-country moves, Atlas International has entered the global logistics field, bringing all our knowledge of customs, organizing transportation and storage to businesses like yours. By partnering with us, you gain access to a global network of warehouses, transportation and supply chain management, along with our top-of-the-line equipment and technology to reduce waste and optimize your logistics every step of the way.

We'll help you overcome your reverse logistics challenges, reducing your overhead cost and helping you deliver faster outcomes to further enhance your customer experiences. We can scale to meet your business's growth, whether incremental or seasonal. You benefit from some of the largest networks for comprehensive transportation management and our 3PL providers to boost your business. 

Meet Your Logistics Needs With a Global Logistics Expert

Managing your global logistics gets a lot easier when you partner with Atlas International. Whether you want to optimize your transportation, outsource your returns management or grow your business on a global level, we're ready to help make it happen. Reach out today to discuss your business and how we can encourage its growth in a consultation with one of our representatives or request a quote online.