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How does reverse logistics impact supply chain management?

Reverse logistics involves the reverse process of moving goods, here the goods are moved back from end-users' hand to the warehouse and to the supplier or manufacturer. Once the product has reached its intended user but due to some reason it has to be returned or replaced then the reverse logistics comes into the picture. Reverse logistics has become a common practice for manufacturers and logistics service providers in India.

In most cases of reverse logistics, it would be the manufacturer's responsibility to organize the task for reverse shipping along with additional processes like testing, repairing, recycling, or disposing of products. Reverse logistics has become common these days because e-Commerce companies offer return/replacement of products within certain days, certain products whose expiry date is over need to be recycled by the manufacturer.

The spike in the popularity of e-Commerce companies in recent years has led to a sharp increase in return orders. According to invespcro.com, at least 30% of all products ordered online are returned as compared to 8.89% in brick-and-mortar stores. The survey report suggests that 92% of consumers will buy products again from the same platform if the return process is easy and 79% of consumers want return shipping free of cost. Around 49% of retailers offer return shipping now, the main reason why consumers apply to return for products is 20% for receiving damaged products, 22% for received different looking products, 23% for receiving wrong items, and 35% for other undisclosed reasons. It is also interesting to know that 67% of online shoppers check the return page before making a purchase that means the seller or retailer who offers return shipping has a high sales rate.

The major impact of reverse logistics on supply chain management is as follows:

Challenges of Reverse Logistics:

The challenges of reverse logistics can be complex and unpredictable. Goods come back to the retailer or manufacturer in various stages and conditions. This will be a decision-making situation for the retailers whether the goods to be returned to the manufacturer or to be overstocked. Another challenge of managing reverse logistics is to recover as much as the value from the returned product, along with satisfying the customer's need.

Cost:

When a manufacturer or retailer initiates a reverse shipping facility for its customer, the extra cost is involved in the pick-up and reverse transport of the items. The items have to undergo various processes like pickup, validation, packing, and transporting. The time consumed in reverse shipping is almost the same as the time consumed in shipping to the consumer. A properly optimized reverse logistics solutions can definitely increase asset recovery and utilization. In order to sustain business manufacturers can expand a product's life or retain its value through repair or recycling. The retailer should also describe the exact details about the product to avoid return after the delivery.

Higher Customer Satisfaction and Retention:

As already stated above that 92% of consumers will buy products again from the same platform if the return process is easy and this will tend to retain the customer and convert them into a return customer. Adding a return shipping to the e-Commerce platform will gain more trust from the users and creates transparency and loyalty of the business. Almost most of the logistics and supply chain companies in India have equipped with the reverse logistics facility.