Reverse Logistics: What are your options for retail overstock and returns?

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Whether you are a manufacturer, supplier or retailer, the movement of product will result in over- and under- estimates of inventory positions, as well as damaged goods.  This is in addition to unsold inventory and product that is returned by vendors or consumers. Supply chain efficiencies are critical.

Reverse logistics is the process of controlling the efficient flow of goods from the point of consumption back to the point of origin. The goal of reverse logistics is to reduce expenses and recapture value – or ensure proper disposal.  The challenge with reverse logistics is that the process can represent a significant cost to your supply chain. Estimates range from one to two percent if well managed, to almost 10 percent of supply chain costs if managed poorly. But regardless of how well managed the reverse logistics process is, there is a built-in messiness to the whole thing.

A recent study by Purolator found that 20 percent of returned products are defective in the B-to-B marketplace, and consumer returns had a nearly 25 percent defect rate. Generally, reason for return fell within the following categories. In fact, these reasons account for fully 75 percent of all retail returns:

  • Incorrect item and/or size
  • Customer decided product was not needed
  • Product did not match description
  • Company shipped wrong item

Note that the vast majority of returns are not defective – which presents an excellent opportunity to recapture value.

Companies commonly rely on third-party providers to partner within their reverse logistics supply chain. These partners will have the expertise, flexible capacity and knowledge of regulatory rules that can improve the recovery for a manufacturer or retailer. However, these partners – valuable though they are – can be cost-prohibitive for companies outside the Fortune 1000.  Many of our mid-market clients simply cannot justify the initial costs associated with establishing a sophisticated reverse logistics program with these third-party providers. Fortunately, we’ve been able to successfully provided reverse logistics services for a number of our clients.

The first step is returning the product from the customer. The next step is to catalog the return and determine the reason for return. This is where we can help problem-solve.

  • Can the item be re-packed, refurbished and sold into secondary channels in the US or export markets?
  • Can the item be returned to the supplier or can the item be returned to regular stock?
  • Other options include donations or salvage for environmental sustainability, and finally destruction.

Our team can help companies like yours determine the best course for those returned items, regardless of condition. Contact us today, and we’ll figure out the next best steps to resolve your unique situation.

 

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