By James Smith
“Mgoing back in the supply chain is more difficult and complex because there is no priority and the products move against the normal flow, â€says Dr. Dale Rogers, professor of supply chain management. procurement at the University of Nevada (Inboundlogistics.com, 2018).
Dr Rogers continues, “Companies can’t see where returns are budgeting because their systems and processes are designed to support the flow of goods downstream. Additionally, technology in general does not support returns. No ERP system or diagnostic and analysis tool supports backward inventory. “
Reverse supply chain refers to the movement of goods from customer to supplier. This is the reverse of the traditional movement of the supply chain of goods from supplier to customer. Reverse logistics is the process of planning, implementing and controlling the effective and efficient inbound flow and storage of secondary goods and associated information with the goal of recovering value or properly disposing of them (Cognizant.com, 2018).
Reverse logistics refers to tracking the life cycle of your products after they reach the end consumer. This could include how the product could potentially be reused, how it should be properly disposed of after use, and any other means that allow the expired product to create value (Systems, 2018).
Why are customers returning the product?
There can be many reasons why customers return products, some of which are listed below.
Incorrect items
The customer orders the item and the incorrect item is shipped or sent to the wrong customer. The result is that the customer is frustrated. Sports Direct does not pay reverse shipping charges, but offers a full return or exchange program for any item returned within 14 days. This process, however, does not take into account repackaging, restocking, labor, and customer contact costs.
Damaged item
The item arrives damaged, as above, frustrating for the customer and the retailer as they will have to return to their own supplier as part of this process.
Not as described – from the customer’s point of view
The customer is not satisfied with the description, it will be monitored online and offline as the retailer attempts to spot trends in product lines to reduce description / sizing / type errors.
More wanted
This is to be expected in any business and the long return lead times from distance selling make it much more difficult to manage.
In all of the above cases
As the Kinaxis blog (Niroomand, 2018) points out, the retailer must arrange for the shipment of the returned product and send it through various processes, such as testing, disassembly, repair, recycling, or disposal. All of these processes require the product to travel in the opposite direction through their supply chain network.
Factors to Note in the Reverse Supply Chain
Distance Selling Regulation according to the government website
By law and according to the website (GOV.UK), the customer does not need to provide a reason for returning the product. In addition, the seller must inform the customer of his rights of withdrawal. If not, the customer can cancel at any time during the next 12 months. If the seller informs his customer of his right of withdrawal during these 12 months, the customer has 14 days to cancel from the moment he is informed.
After an order is placed
The organization should provide a copy of the contract on paper, email or other format that the customer can keep for future reference and provide the copy of the contract no later than the time of delivery of the goods.
The invoice / return slip should clearly state the reason the customer is returning the items and whether the customer wants a refund or an exchange. Items must be returned in resalable condition, however, items do not need to be in their original packaging and it is the customer’s responsibility to provide proof of postage.
According to the table on the right (Ofcom Annual Monitoring Update on the Postal Market, 2016), the biggest commercial security threat within the shipping chain and reversal chain is lost packages. Therefore, making sure the customer takes responsibility for receiving and postage (returns) will reduce costs.
Royal Mail reported complaints for 2015-2016
Client’s faith
Having a faster return service with as many barriers removed as possible can help restore customer loyalty and confidence in the product and the organization.
Loyalty of the clientele – dealing with mistakes is just as important as making sales. If a customer has a bad experience with your product, the company needs to fix it. Errors in accomplishment can create educational opportunities. Learn how to keep customers happy and engaged with your business.
Cost reduction By scheduling returns and making the return ordering process easy and successful, the business can reduce associated costs (administration, shipping, transportation, and technical support).
Faster service. This refers to the initial shipment of the goods and the return / refund of the goods. Prompt refunds or replacement of products can help restore a customer’s confidence in a brand.
Recovering losses in the reverse supply chain
Planning and ensuring an effective return system will go some way in mitigating losses in the reverse supply chain, but having plans for recycling, reuse, and prompt replenishment will also reduce the costs involved.
Storage – the storage of returned items must be taken into consideration, not only physical space but also personnel, repackaging, replenishment and return to the shelf.
Reuse at end of life – some items will be at the end of their life. A method of reuse or recycling to reduce costs will be an effective way to reduce costs. This can be part of a sales or return contract with the organization’s own suppliers if the contract allows, or a donation to a third party.