Reverse logistics is the process of movinga product from the consumer—the typicalfinal destination —to the manufacturer,the point of origin, for re use or disposal.The process includes the managementand the sale of surplus as well as returnedequipment and machines from the hardwareleasing business.
Four Questions.• What % of products sold by companies are returned by customers?...4to5%• What is the cost to process a return?..multiple times that of forward movements.• What is the % cost companies manage to recover? ..lower than 50%• Are manufacturers complying with govt e-waste regulations?...Total negligence.• Every one is so focused on forward logistics no one understands the potential in managing RL well.
• Under normal circumstances when, say, in case a new laptop turns out to be defective, the consumer would return it to the retailer, who returns it to the distributor, who in turn gives it back to the manufacturer.• Causing consumer dissatisfaction, cash lockdown for the retailer, and a rise in the distributor’s inventory.• Reverse logistics company steps in to reduce the time and cost involved in the backward chain.• India- Aftermarket (market that supplies accessories, spare parts, second-hand equipment, and other goods and services used in the repair and maintenance of returned products.)returns that form part of the reverse logistics industry are estimated at $10-15 billion.• Reverse logistics has the potential to become a key route to cost optimization as the Indian economy grows.• Average spending on reverse logistics is about 10-15% for garment firms and about 20% for furniture companies.
• Power of reverse logistics is in data and so its solution’s backbone is its proprietary technology platform that provides end-to-end data visibility of the returned products from point of origin to its final disposition.
• Majority of the companies do not have a control on the total cost of reverse logistics.Reducing returns management costs leading to increased margins• These costs include repeated customer calls relating to returns, people cost, warehouse space, transportation cost, cost of capital locked in inventory that is depreciating daily, low asset recovery, fraud, etc.• Reducing cost and making them predictable while improving process efficiencies makes a significant financial impact for any company.
Improving customer return experience leading to increased sales.• More than 50% of consumers surveyed by RLC indicated that bad return experience will negatively impact their decision to re-purchase from same retailer/manufacturer.• Given a viable option they would not purchase if they have a bad return experience.• Consumers in India are getting more demanding and in these competitive times when retention and growth are keys to success in India, companies cannot afford bad customer experience when it comes to returns.
Generating higher asset recovery rates.• Research has indicated that electronic goods will lose close to 30% of their value within 4 months.• To maximize asset recovery key is to put the products in the market at the earliest.• Core competency in reverse logistics can – through channels of disposition , proactively strive to dispose off returned, refurbished, overstocked, and surplus products in the fastest possible time without cannibalizing new product sales channels.Avoiding channel conflict resulting in new customers.• One of the biggest value proposition RL brings to its customers is in form of an organized trusted partner who will ensure that sale of returned, refurbished, overstocked, surplus products are marketed as such and do not cannibalize your new product sales channels.
• Network of partners is under survellience to ensure that all products are never sold as new.Providing business intelligence services for better decision making.• RL’s proprietary technology captures data that can be translated into valuable trends, and insights for customers allowing them to identify product defects, customer return patterns, tweak expensive marketing campaigns, and improve supply chain bottlenecks.• This data can be harnessed to improve customers bottom-line as well as top line and make company more competitive and efficient.
Providing a trusted, organized partner to manage electronic waste.• The day is not far away when India will also implement strict regulations around electronic waste management.• Today most of electronic waste is being "disposed off" through unorganized channels that pay little attention to the damage that they are doing to our environment.• This can be a PR and liability issue for large companies, something they cannot afford.• In RL customers can have a trusted partner who will ensure all electronic waste is being disposed off in environmentally friendly way within the strict guidelines of government regulations.
• Reverse logistics is complex. Standard logistics and courier companies focus more on forward due to volume and decreased complexity.• In laymans terms, reverse logistics is anything happening to a product after the point of sale.• Traditional logistics providers who only ship return products back to the source are just scratching the surface of what is real reverse logistics.• Reverse logistics done properly can decrease returns processing costs by 25%, increase productivity by at least 10%, increase asset realization by 2x, increase customer satisfaction by 100%, and increase profitability by 2%-5% apart from being compliant with e-waste regulations.• Proper reverse logistics (call it reverse supply chain - RSC) solution encompasses integrated SCM, logistics, warehousing, repair, customer contact, IT, field service, e- waste, retail, e-commerce, branding, marketing, etc.
EPRIndian logistics industry is not ready for the Extended Producer Responsibility (EPR) regime.• It will evolve. If enforcement is there.• Size Of RL market --• RSC has two elements - processing cost (moving product back, warehousing, repair, refurbish, etc.), and then asset realization. In Indian context total cost to process ALL returns (assuming 4% return rate) is about $4-$6 billion. The value of ALL products returned in India is worth of $12 billion.
Other regular business needs- Refilling-Collection of1.Soft drink bottles.2.LPG cylinders.3.Beer bottles.4.Pallets.5.Containers ( imported cargos).Product recall as an opportunity to increase customer satisfaction:- Dairy products, bakery products( Monginis), Pharmaceuticals.
• Design a case for reverse logistics of:-1.Big bazar schemes in which they buy everything from Old broken commodes , to old tyres, newspaper raddi , old plastic articles, even old footwear.