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Importance of Returns Management and Reverse LogisticsIn today’s volatile business environment, manufacturers are having a...
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Importance of Returns Management and Reverse Logistics

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In today’s volatile business environment, manufacturers are having a tough time in managing the forward flow of goods and products due to increased cost factors.

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Importance of Returns Management and Reverse Logistics

  1. 1. Importance of Returns Management and Reverse LogisticsIn today’s volatile business environment, manufacturers are having a tough time in managing the forward flow of goodsand products due to increased cost factors. Hence, most manufacturers do not care to think about reverse logistics andreturns management as it is considered an expense or an additional financial burden. However, contrary to popularbelief, reverse logistics and returns management offer great opportunities for additional revenue. With effective returnsmanagement and reverse logistics, organizations can not only improve their financial standing but also foster strongrelationships with their customers. However, before delving further into the topic, let’s first understand the termsreverse logistics and returns management.Reverse logistics is “the process of planning, implementing, and controlling the efficient, cost effective flow of rawmaterials, in-process inventory, finished goods and related information from the point of consumption to the point oforigin for the purpose of recapturing value or proper disposal.” While returns management is “the management of alllogistics operations related to returns of products from their original user to their supplier with the intention of a costeffective recovery, while meeting all legal obligations.” In short, returns management is that part of supply chainmanagement that includes returns, reverse logistics, gatekeeping and avoidance.Two important factors that need to be kept in mind with respect to reverse logistics and returns management are thesource of the returns and reasons for the returns. Understanding these returns helps to improve supply chain processes.Take for instance, defective returns and non-defective returns. Defective returns are those items that are returned afterpurchase and some level of use. Such items have issues with respect to quality, which need to be rectified in themanufacturing or distribution level. While non-defective returns refer to those products where the problem is not withthe quality but with the customer’s inability to operate the product properly. In such a scenario, the manufacturer eitherneed to re-engineer the product or introduce a user manual that effectively communicates to the customers about theproper way to install or use a product.The best way to deal with the intricacies of returns management and reverse logistics is to entrust the responsibilities toa 3rd party logistics provider. Here is a look at the returns management and reverse logistics services provided by them.  Detrash and destruction of returned materials (CDs packaging materials, etc.)  Date code based warranty assessment  Test diagnostics and repair  Software and/or firmware upgrades  Refurbishment  Repackaging  Warehousing Service and Distribution  Legally compliant disposal (i.e. WEEE and SB2050)  Web-based inquiry and reportingWith their experience of refurbishing a vast array of products in minimal time and getting them back into the field testedand up to the clients’ cosmetic standard (including “like new”) often within 24 hours or less, enterprises can put in placean effective reverse logistics and returns management processes easily with their help.Other Links - data center integration

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