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Importance of Reverse Logistics Management

By martinwell : A how to tutorial about supply chain management solutions, Reverse logistics, Time to repair, Technology with step by step guide from martinwell.

In today's highly competitive business environment, success of any company depends on their supply chain. Companies can no longer focus only on forward supply chain management and ignore reverse supply chains as it has been seen that an efficient reverse supply chains bring many benefits to the companies. Customer today has become highly demanding and wants full value for their money. Apart from that highly hyper-competitive market, increased customization, and other retail challenges also has an implication on logistics.

Companies like Walmart are trying to get more out of their supply chain to offer products at cheaper price to their customers. More and more companies are today outsourcing their supply chain management solutionsneeds to a third party (3PL) while concentrating on their core competencies. But without an efficient and effective supply chain, companies cannot benefit from outsourcing also. Moreover reverse logistic is also becoming one of the most important parts of supply chain that can no longer be ignored.
Study shows

• 6% of all items sold are returned (Returns Logistics, 2009).
• 68% of returns have no technical fault (Accenture report, 2007).
• The average loss related to a return is €19 (Newgistics, 2007).
• Processing returns costs four times as much as processing the original order.
• An average of one consumer phone call is made per return.


Gartner Group estimates that the average online return rate is as high as 36 per cent. In addition to providing a discounts and incentive to increase sales, the reverse logistics strategy must also make returned items as cost effective as possible. If the handling of growing volumes of returns is allowed to impinge into the revenues, business survival will be a problem.

In supply chain process today, product returns is a significant part. The types of items that come under reverse logistics processing include product returns, product recalls, end-of-lease equipment, old or obsolete items being replaced and innumerable other items. A fully integrated reverse logistics management tool needs to be incorporated, so that the entire time to repair process, Repair & Return (R&R), Repair & Calibration (R&C) and Returns solution can provide end-to-end visibility throughout the complete cycle and include all parties involved in the reverse supply chain flow.
Unfortunately, there is no one reverse logistics strategy that is ideally suited to all industries. This is largely because the frequency and number of items that are returned will differ drastically. Reverse logistics has the potential to become a major source of revenue. A good system can improve cash flow management through the reverse logistics pipeline.


Also read on - Time to repair , value networks





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