Reverse Logistics Options
Reverse Logistics is the process of handling returned products. Some of the more typical reasons for returns are: product recalls, customer returns, damages and overstock. The Distribution Center sorts through items to decide the most economical course of action, which includes: refurbishment, recycling, return to stock or disposal. Here are some options on how to manage this process effectively.
Establish Special Processing Area for Returns
Returned items are received into the Distribution Center with broken/no packaging and are often mixed together with items that come in odd shapes/sizes. This makes it more difficult to process than a pallet of new product from a supplier which has uniform carton sizes. A special sorting area with tables, conveyors and computers/bar code scanners are ideal to handle returns. Items often do not have the right SKU information with them upon return so it is necessary to look it up in the Warehouse Management System (WMS). Lighting levels may have to be increased in this area as most Distribution Centers do not have high foot-candle levels near the dock. The goal is to ensure a smooth process flow with all of the tools/information available to enable the efficient flow of returns.
Make a Decision
Once the item has been received and inspected, a decision needs to be made. Many Distribution Centers “put it somewhere in the back” where it accumulates dust. This not only reduces that value of the item and makes it obsolete but also takes up valuable warehouse space.
- Return to Stock
If the packaging is still good and the item intact, the item would be returned to stock. Be aware of ‘hidden’ damages that items may have incurred; for example, a broken glass in a glassware set or a missing component of a DVD player.
- Return to Manufacturer/Refurbish
Buyers may have an agreement with the supplier on how to deal with manufacturer defects. If not, this should be addressed on the purchase order. If the item is defective (not working as intended) then it may be worthwhile to send it to a refurbishing company. Electronics are frequently refurbished and re-sold at outlet type stores. Again, the Buyer would have to make an arrangement with an organization to do this.
- Hold an Employee/Public Sale
Non-salable items may generate revenue if offered for sale to employees and the public. Everything from dented paint cans to out-of-season cosmetics and short-dated chocolate are examples of products that have nothing fundamentally wrong with them, however a regular customer would not pay the full retail price for the item.
- Recycle/Disposal
If it is not possible to obtain an economic value back from the item, recycling is an excellent environmental option. It may also be in line with the organization’s
green policy which is an added benefit. One high-end clothing retailer donated its non-salable clothing to homeless shelters after removing tags. Disposal should be used only as a last resort.
Outsourcing Reverse Logistics
If the above process seems to be too overwhelming, outsourcing the reverse logistics process may be an option. Many retailers and mass merchandisers realize that they are just not set up to process returns in their high-volume automated distribution centers. Companies such as Genco Distribution provide an outsourcing solution.
| 