Reverse logistics has become a mainstay for a number of companies across various industries, from consumer electronics to aerospace and manufacturing. In an Aberdeen survey, 89 percent of respondents said that effective reverse logistics management is either “extremely important” or “very important” to the overall customer experience. These companies have three primary goals in mind: to reduce costs, add efficiencies, and improve the customer experience while building sustainable supply chain practices. At a time where the cost of returns is staggering, the reverse logistics function enables businesses to drive real impact to their bottom line.
As a 3PL, in order to meet customer expectations, you must be able to satisfy both your internal customer and end customer, knowing that expectations vary from one customer to the next. End customers (a.k.a. your customer’s customers)—whether retailers or individuals–need to have product taken off their docks and credits returned to them. Once the returned product has been delivered to the 3PL’s distribution center, it is the 3PL’s responsibility to make sure that said product is turned around promptly and efficiently. After ensuring that the return is authorized and the warranty information is correct, the product data must then be gathered in order to determine the product’s proper disposition, which could include: scrap, liquidation, refurbish, online auction, or repackaging and return to stock.
Processing the product and getting it back on the shelf in a timely manner is the crux of the customer’s expectations, especially in the case of a Class A product. A Class A product, one that has never been opened and which requires a full reset, needs to be put back in stock quickly. This scenario is very common, for example, in the medical industry. In any case, transparency and visibility are essential to the entire reverse logistics process.
Ryder System, Inc. utilizes a co-location strategy to turn product around, which entails combining reverse logistics and forward logistics in the same distribution center. By doing this, there is no extra set of touches, and therefore, no delays. As a supply chain partner, it’s critical to provide fully integrated solutions, to develop a strategy around customer expectations, and to build an optimized supply chain to help them meet those expectations.
Technological enhancements have enabled reverse logistics to go beyond the status quo in adding value for customers. Things like value stream mapping provide a full look at the flow of product, which helps identify key areas for process improvement. As a result, customers are able to gain efficiencies in reducing the number of steps and handling time it takes to process product and reduce the cash to cash cycle time.
According to a Ryder reverse logistics customer, there are different elements to be aware of from a manufacturer’s perspective. How reverse logistics and returns are handled can vary across the board, largely dependent on each retailer and the terms of sale between the manufacturer and retailer. For example, some prefer to consolidate, while others do not. Freight is also a factor that varies from one retailer to another, with each having its own protocol in place. It’s important that the manufacturer, in close partnership with its 3PL, is able to accommodate these kinds of differences.
Reverse logistics also goes hand in hand with environmental sustainability. In today’s markets, the total cost of logistics is defined in terms of carbon impact, and “going green” has become a standard business practice. Consumers are asking for measurements around climate change impacts, energy consumption, and emissions. More and more, companies and their suppliers are expected to provide environmental scorecards, quantitative environmental performance data, and descriptions of sustainable initiatives. End-to-end reverse logistics solutions translate into energy savings and waste reduction, provide economic value and savings, and strengthen customer relationships.
Being a leader in supply chain management can be difficult for a company to achieve on its own, which is why reverse logistics is well-suited for outsourcing. It is characterized by uncertainty of supply, as no one can easily predict which products are coming back, when, or in what condition. There’s also the customized nature of reverse logistics supply chains, which operate under company-specific rules that can vary for thousands of different SKUs.
Reverse logistics management that is effective in meeting customer expectations offers a variety of capabilities, including:
• scale and flexibility to meet changing business needs;
• industry and geographic expertise;
• visibility into the full product life cycle;
• refurbishment and distribution center management;
• web-based technologies and data integration.
Ultimately, companies that outsource their logistics services are looking for greater control of their supply chains. In doing so, they are able to drive quality, reduce costs, increase visibility, and improve inventory management. And for reverse logistics, this means increasing the speed and efficiency of receiving, inspecting, testing, and dispositioning returned products.
Norm Brouillette is the Vice President & General Manager of Technology and Healthcare for Ryder System, Inc., a FORTUNE 500® commercial fleet management, dedicated transportation, and supply chain solutions company. In this role, he is responsible for providing the strategic vision, operational execution, and commercial leadership for the supply chain industry vertical.
Mr. Brouillette began his career at Ryder as a Logistics Manager in 1998 after retiring from the U.S. Air Force. Since then, he has progressed through various logistics management positions of increased responsibility and has lead teams responsible for some of Ryder’s largest and most integrated customers.
Mr. Brouillette earned his degree in Transportation Management from the College of the Air Force.