The Reverse Logistics Challenge

A Useful Roadmap to Tackling Reverse Logistics for Every Business

Every business that sells its products in a business to business, (B to B) or business to consumer, (B to C) environment has to contend with the dreaded “Reverse Logistics Challenge.”  So, what is the Reverse Logistics Challenge and how can companies succeed in handling such a challenge.

To start, one has to fully understand the meaning of Reverse Logistics. There are several definitions to help us better understand its meaning. 

• “The process of moving goods from their typical final destination for the purpose of capturing value, or proper disposal” – Wikipedia

• “All activity associated with a product/service after the point of sale, the ultimate goal to optimize aftermarket activity thus saving money and environmental resources” – Reverse Logistics Association

• “A specialized segment of logistics focusing on the movement and management of products and resources after the sale and after delivery to the customer. Includes product returns for repair or credit” – CSCMP

So it’s quite clear based on the above definitions that the reverse logistics challenge is much more than taking back goods from a customer and putting them back on the shelf to sell to another customer.  The challenge is to handle this process by, (1) understanding the customer’s journey; (2) meeting the customer’s promise of accepting customer returns as part of the sales transaction; and (3) controlling costs so that reverse logistics operations does not put a financial drag on the company’s operating profitability.

But, how do company’s handle these functions while at the same time maintaining profitable operations?  That’s a key question many “C” level executives are continuing to ask their supply chain and logistics executives.

Often times however, senior management is unaware of the size of their company’s reverse logistics operations, or the total cost of handling those operations for that matter.  They are also often unaware of the impact reverse logistics has on their bottom line and its relationship to overall customer service and company profitability.  And finally, to add insult to injury, sometimes senior management isn’t aware that reverse logistics operations even exist.  Now, that’s a sad commentary for those businesses where this is actually happening.

So, to solve the Reverse Logistics Challenge in any business, here are the steps that senior management must insist on in order to finally control the process:

• Determine who owns the reverse logistics process. It’s obvious to us that the ownership of the process must include various departments, including logistics, finance, customer service along with representation from senior management.

• Determine who in the corporation has or should have full P & L responsibility. Again, this individual or individuals must also align with “C” level representation.

• Determine exactly how reverse logistics finances should be reported, to whom, how often, and what information should be continually tracked and evaluated?

• Ensure all team members are continually asked the critical questions, including, what is the true customer experience as it relates to the returns process? Is it worth the effort and cost of providing the returns service; what if any options should be considered?

• Determine how training should be developed and handled throughout the various departments with reverse logistics responsibility.

• Assess whether the company really has controls in place for their reverse logistics processes over operational efficiencies, overall costs, and finally, does it have the ability to turn the reverse logistics process into a profit center?

Also critical to successful reverse logistics operations is to understand that the process is never a one and done process.  It must be continually evaluated with a goal towards ultimate success.

Solving the Reverse Logistics Challenge will require a full court press, including the front line employees involved in the day to day operations of receiving, sorting, storing and/or properly disposing of returned merchandise.  The goal is to also include the most senior corporate executives to manage, control, and ensure complete visibility and total accountability.

And finally, and most importantly, it is critical for the entire team involved in reverse logistics to ensure the company can do all of this while at the same time creating a profitable reverse logistics process.  

So, how do your company’s policies stack up against these Reverse Logistics Challenge recommendations? 

We’d love to hear how your company’s doing! 

Want to see what successful logistics strategies look like?  Visit our Case Studies Page to see some of our successes

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