Logistics and supply chain industry has changed dramatically in the last decade due to rapid changes in the shopping experience and customer behavior. This has had a direct effect on how managers and industry managers have had to start executing their strategies deliveries pointing to gain greater market share and retain your current customers.
But the logistics managers are facing challenges not only in the way they produce and distribute the products or services to consumers, known as logistics concept forward, but also in how they can reverse this process.
One of the most important aspects of a good distribution strategy point that little has been valued for a long time, is the logistics process that exists in dealing with the flow of products or materials that are returned by customers.
According BusinessDictionary the reverse logistics is the “flow of surplus materials, products and unwanted goods that are returned to the company through the supply chain, to be reused, recycled or disposed of .”
As you can imagine, the concept of reverse logistics is not new, in fact was established in the year 1 .500 BC when the Phoenicians began exporting wine amphoras to Rome .
Reverse Logistics as Competitive Advantage
During the recent Christmas, an estimated US $ 13.2 trillion in gifts were returned to retailers – reverse logistics involved in this situation is equivalent to more than one third of the market at that time (US $ 36bn) in the US alone.
Administrators supply chain have begun to understand that without a system of adequate returns are businesses may be losing millions of dollars in profits. This is where they appear questions: What kind of problems had these products returned? How he planned to make the management and re-distribution of these items? Customers are dissatisfied with the quality of the deliveries? Recycle or reuse products returned?
Questions that become more frequent as the market delivery and product shipments continues to grow, where the only way to really answer implementing reverse logistics strategy that seeks to optimize efficiency in the delivery process.
Reverse logistics management has become a discipline and skill that focuses primarily on cost reduction, efficiency and return shipments of these same and deliver a better experience for customers. major companies like HP, Walmart, Fedex or UPS have become distribution centers into a competitive advantage by taking an active role in developing strategies reverse distribution, which have increased the perceived value and loyalty for the brand by consumers .
A study by Curtis Greeve and Jerry Davis , carried out after 25 years of experience in reverse logistics processes, concluded that:
“Focus efforts on improving and properly manage the return of products increases company profits even in difficult economic times” Following the investigation , ” Policies returns well established increase sales and corporate profits, while a more restrictive policy It has a negative impact on revenue streams “
Reverse performing distribution logistics Appropriately
– The Case of Zappos
Zappos is an ecommerce shoe, which has built an empire by putting customers at the center of the shopping experience and creating a strong organizational culture.
Zappos customers can order and customize their orders, along with a receipt try and return them, free of charge, if they are not seeking. Zappos has a return policy very free (The return can be made up to one year after purchase for any reason, while the product retains its original condition) that allows consumers to buy more often, knowing they can always return your product if you have any problems.
Although this policy increases the volumes of returns and shipping costs, reduces friction users make purchase order, which translates to more sales. Zappos has put the cost of returning directly to their business model from the beginning of the company, one of the main reasons for the success of the company.
Shipping experience is one of the reasons why 75% of Zappos customers are consumers who buy back the company; after all, Zappos focuses on a pleasant experience and instant gratification. One of the key to how the company achieved sales of US $ 2 trillion in 2008.
“We want to make Zappos synonymous with good service” says Sean Kim, director of business development at Zappos, “Service is not an expense; It is an investment”
Today, logistics companies should focus their efforts on investing in software and efficient infrastructure to handle returns, with this cut in long operational costs and attract more customers by offering a simple solution to this situation. It is clear that without a sustainable system in time to facilitate the process of returns, companies offering delivery services have a difficult situation when competing with those who can offer a simple, fast and even free return service merchandise .
Challenges for Success
As consumers continue purchasing decisions sophisticated and demanding greater choice and shipping facilities, logistics departments are on the lookout for new developments to improve and better manage their systems returns.
You can read more about this in our article: ” What nobody says about the Last Mile Logistics “
When trying to improve a system of reverse logistics, a company may be moving on different fronts, so here we leave what are the most important that you should consider:
- Real-time tracking of the status of each delivery.
- Collect and analyze data to estimate the percentage of returns.
- Integrate your workflows forward and reverse logistics on a single platform.
- Integrate data from customer satisfaction with a management application per driver.
Successful companies are beginning to understand that running a reverse logistics system effectively can have an impact on the bottom line of your company, as returns continue to rise alongside the sustained growth of online sales but which also means a larger amount potential customers happy.
Companies that take an active position on the proper handling of their returns continue to impress and retain more customers. A balance between costs and consumer experience is challenging, but may have great value in increasing sales and competitive advantages as part of a brand promise. Now, more than ever, reverse logistics is seen as a process that can change the scene of the logistics industry.