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Channel returns are highlighting the need for new reverse logistics strategies
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Have
you ever wondered what happens to the inkjet printer you returned to
the store because you decided after a short trial that the
capabilities just weren't adequate?
As happens with most product
returns, it has to be properly re-turned, re-ceived,
re-sorted, re-tested, re-worked, re-paired, re-covered, re-stocked,
re-marketed, re-shipped, re-warranted and possibly re-turned again
and again and again…. There are a lot or (re's) in this reverse
supply chain and yes, remarketed returns do get returned. If all of
this sounds confusing, then welcome to the complex world of Reverse
Logistics. Returns are not a new problem for manufacturers
and retailers. What is new is the volume and need for speed in the
asset recovery. High tech computers, hand held devices and consumer
electronic products can be compared to the short life of bananas.
Move them to the point of sale while green, sell them when they are
yellow and you can't give them away once they turn black. In today's cost competitive environment, there is
a heightened sense of awareness among executives because of the
enormous amount of expense associated with handling product
returns. |
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Companies
are reporting cost for returns, as a percent of revenue, in the
6%-15% range depending on industry, product type and sales channel.
Asset recovery usually does not exceed 60%-80% of the original cost
for most products in the high tech space.
The internet has highlighted new challenges for on-line retailers never before experienced. Generous return policies, free shipping and the lack of human interface with a product purchased on-line are major contributors to the huge volumes of returned product glutting the Reverse Logistics Path. U.S. retailers have conditioned and encouraged the buying public to become the most returnable society of purchased tangible goods on the globe. The flood gates have been opened at the retail point of sale. "Green Laws" are having major impact on the reclamation cost of returned material in Europe and are predicted to follow suit in the U.S. The laws are forcing companies into costly product support scenarios and requiring them to leave no part behind in the field. New post-sales recovery strategies are beginning to impact the way products are designed and serviced. Large amounts of human resources, systems and developing processes are being deployed in an attempt to control the onslaught in high volume consumer product returns. The perfect solutions have not emerged and many companies are still in the "trial and error mode." New companies have sprung up, practically overnight, claiming to have the next leading edge solution(s). But, as many of us know, there are no free lunches here. It takes the right skill, experience, reverse supply chain velocity, proper economic modeling and supporting systems to truly control this runaway train. This is creating a huge opportunity for many of the 3PLs. One such 3PL has experienced 6X growth over the past three years in their central distribution center with reverse logistics outsourcing, primarily from North American manufacturers. [1] [2] [3] [4] [5] |
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