Most forward logistics 3PL Third Party Warehouses do not realize that they have a distinct competitive advantage in Reverse Logistics and returns processing for their clients. A 3PL can add significant value to existing manufacturing/OEM storage clients by handling inventory product returns, resulting in considerable financial savings and higher re-capture values on the resale of the returned assets. A lot has changed in the Returns and Reverse Logistics landscape in the past several years. The large majority of returns for Consumer Products companies are no longer just shipping damaged or warranty repair. A large portion of Consumer Product returns are now Open Box items from Retailer partners with a very high percentage of NTF No Trouble Found. A 3PL is ideally suited to process these types of returns.
Why Use Your 3PL
Retail Returns have been increasing over the last several years as a result of consumer preferences and the retail industry’s desire to accommodate consumer returns to ensure high customer satisfaction. As a result many of the returns are “open box” with a very high percentage of NTF No Trouble Found (often 60 to 85%). Typically, these open box items are still “like new” and can capture a very high resale value in secondary markets once they are repackaged for resale.
Many manufacturers/OEM/brands now desire to get their returned products back, since: 1. the recovery resale value opportunity is high and 2. To protect their brand by controlling unauthorized parties from dumping their products for very low prices on eBay, auction sites or secondary markets.
This is where the 3PL has the competitive advantage!!
Your forward logistics 3PL partner is your ideal returns processing partner because:
1. The 3PL is already processing your forward logistics and is very familiar with your product, inventory levels, needs and handling requirements.
2. The 3PL can save you significant transportation costs, since there is no need to ship the returns to an external location for processing. No need to ship the refurbished returns to a finished goods warehouse.
3. For exchanges, the 3PL will have refurbished or new Finished Goods inventory to draw from, resulting in better customer service and better refurbishment production planning to meet refurbished inventory needs.
4. Speed – a single 3PL and returns processing partner means much less movement and transportation time. This means faster decisions, faster refurbishment and faster cash value recovery.
5. Software Tools and Rules – there are very good Reverse Logistics management software systems available for 3PLs that streamline the receiving, inspection, triage processing and rules management, as well as integrate with their WMS and provide real time visibility and collaboration tools for the Manufacturer.
All these factors should save you processing costs, transportation costs and result in a much higher cash recapture value and much less cash tied up in returned inventory.
Talk to your 3PL today. It could turn out to be a very profitable conversation.
Paul Rupnow - Director, Reverse Logistics Systems, Andlor Logistics Systems Inc.
Editor - Reverse Logistics Professional Report Business Insights and Strategies for Managing Product Returns