1. SUPPLYCHAIN14 CARGOTALK SEPTEMBER 2015
Reverse Logistics: Key to success?
The idea of alluring shoppers to
shop from the comfort of
their homes at no additional
costs has changed the way
supply chain used to function.
Before the onset of e-tailers,
supply chain was confined
only to forward logistics, the
promise of returns after
goods having been purchased
and sold led to the need for
effectively managing return
management - a relatively unex-
plored area of supply chain.
The process of logistics
involved in the reverse process
of supply chain is what is termed
as Reverse Logistics.
Reverse logistics provides
utmost convenience by enabling
picking up of the products, right
from the customers’ homes or
offices and delivering them
back to the seller.
Reverse logistics
Though eCommerce compa-
nies are vying with each other to cap-
ture a larger share of the market, the
idea of persuading customers to buy
online without the 'touch and feel'
experience also has another side to
it. e-tailers, supply chain companies
and consumers sense that the cost
and efficiency of reverse logistics is
bad, as eCommerce companies
tend to ignore it in the initial stages.
Sumit Khandelwal, Co-Founder &
Director, Giftxoxo.com says, “Our
focus is to get the shipment delivered
in the fastest possible manner in
proper condition.To ensure customer
satisfaction and handle concerns, we
work on tie-ups with partners to
handle reverse logistics.This is done
at a later stage.”
Adding to sustainability
As eCommerce cannot function
efficiently without reverse logistics
support, the need for a robust and
efficient reverse supply chain is being
felt strongly. Amit Kumar, Supply
Chain Specialist, Amway India
Enterprises says, “Since the product
life cycle has shrunk, reverse logis-
tics is a ‘must-have instrument’ to
make business profitable by
practicing reverse-refurbish-reuse
cycle. It also adds environmental
and sustainability dimension
to the overall societal commitment
of companies.”
Besides this, reverse logistics
partners can also ensure return of the
right products in proper condition to
enable faster refund of the money
to the customer's account.
Praveen Sinha, Managing Director
and Founder, Jabong.com opines,
“An efficient and reliable logistic part-
ner enables us to turnaround the
returned inventory faster, thus freeing
up significant amounts of blocked
inventory and other associated costs.”
Low in list of priorities
There are few LSPs, who have
been able to meet expectations.
According to Sandeep Padoshi, Co-
Founder & Director, WOW Express,
“The focus of most logistics compa-
nies in India has been on forward and
not reverse logistics because forward
logistics is a big challenge and
demand for forward logistics exceeds
supply.Obviously, companies thought
it was logical to set up a forward deliv-
ery network first.Hence, reverse logis-
tics took a back seat. Moreover,
companies did not want to spend
as much on reverse logistics.
Few LSPs have a dedicated
logistics set up.”
Most of the LSPs do not have
direct presence at all locations, but
rather sub-contract their shipments
through a network of small-time
agents.Ajay Khosla, Deputy General
Manager – Sales, Jaipur Golden
Transport adds,“Reverse logistics has
historically been overlooked and
many LSPs viewed this as only
expense and recurring exasperation
because of uncertainties and com-
plexity in implementation. Due to
these complexities, the number of
LSPs, who have reverse supply chain
in their product list, gets reduced.”
Seeking attention
eCommerce companies are
focused on bringing customers and
supply to their side, rather than
spend too much money on ware-
houses necessary for e-fulfilment
and last minute delivery.This results
ABEER RAY
eCommerce has changed the way supply chain companies function. Reverse logistics is now crucial to the
survival of any online marketing platform that banks on the loyalty of its customers and makes returns a
comfortable experience for them.
Sumit Khandelwal
Co-Founder & Director
Giftxoxo.com
Amit Kumar
Supply Chain Specialist
Amway
Praveen Sinha
Managing Director & Co-Founder
Jabong.com
Sandeep Padoshi
Co-Founder & Director
WOW Express
Ajay Khosla
Deputy General Manager – Sales (NCR)
Jaipur Golden Transport
Bad roads are painful
Transport centre, Punjabi
Bagh, New Delhi is spine of
northern India’s logistics indus-
try.From here all major logistics
companies operate and trans-
port goods to PAN India. Bad
roads and garbage dumps
obstruct traffic and affect
business in a big way. Due
to this Transport Centre is not
able to give its best to the
country; these rags and
garbage thrown by encroach-
ers causes great nuisance
in this area.
(Pictures are given by a logistics
company working in this vicinity)
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3. SUPPLYCHAIN16 CARGOTALK SEPTEMBER 2015
Reverse Logistics equals to returned goods
in LSPs playing a key role.Citing the
possible reasons for inadequacies
and ineffectiveness by reverse supply
chain companies, Sanjeev Saxena,
Co-Founder & Director, Ecom
Express points out, “The instances
of inefficiencies in reverse logistics
are due to inadequate packaging.
This causes damages to products on
return journey, less quantity or mis-
match of products leading to refusal
of shipment by the portal.”
Stressing on the same,
Subbramanian, Assistant General
Manager Reverse Logistics,
ProConnect Supply Chain describes,
“The courier, transportation and doc-
umentation charges are high. Each
state has different rules and regula-
tions and there are no specific guide-
lines from the government for carry-
ing out reverse logistics functions.
Many customers are returning their
products taking the advantages of
the policies, which results in losses.”
Reverse supply chain
There are some supply chain
companies with a separate
vertical for reverse logistics.
Subhash Mendiratta, General
Manager – North India, Flyjac
Logistics reveals, “Flyjac has a
nationwide network, good vendor
base of packaging companies, trans-
portation vendors, transparent
process of disposing the material as
per customer's guidelines, IT support
system to manage the reverse
logistics and adequate infrastructure
to manage the inventory
and for complete repair and
refabrication process.”
Managing costs
Reverse shipments cost
more than that of forward
shipments. Hitendra Chaturvedi,
Founder and Managing Director,
GreenDust explains, “In 70 per cent
of the cases, cost to process
(transportation, warehousing, people
cost, depreciation, call centre, over-
heads) a returned item can be higher
than the value of the product and
absolutely higher than cost of
forward shipment.”
But Kumar has a different take
on the subject. Elucidating on three
different methods of reverse logistics
Kumar says, “If the company has
delivery in the same area of pick up,
then the cost of reverse logistics
will be less. Also, if one dedicates
a special agency for this, it is
less since they consolidate pickup
of various companies and plays
on scale. If the customer delivers
at the shop or warehouse, cost
will be lesser.”
Saxena indicates, “Availability
of consignee at location and ensuring
shipment packaging is intact, takes
more time and attempts.”
Recovering costs
Reverse logistics is the key to
providing superior after experience.
eCommerce companies need to take
into account the costs incurred
during both forward and reverse
shipments, especially, in case
returns logistics cost more
than traditional logistics.
Girish Singhal, Vice President–
Electronics, Infibeam.com stresses,
“The first attempt should go in
reducing instances where product
needs to be brought back to our
warehouse. This can be achieved
by employing stringent quality
checks. In cases where reverse
pickup can’t be avoided, cost of
reverse logistics can either be
recovered from the vendor, who
supplied the faulty product or has
to be absorbed in case the product
has no quality issue.”
Khandelwal confirms,
“It is taken care of in the costing of
business.As an e-tailer you incen-
tivise customers at low price or
find ways to avoid reverse logis-
tics. The cost of servicing this is
really high.In cases where it’s reg-
ularly happening we tend to move
out of supplying in those geogra-
phy for specific set of customers.”
Returned goods
The option of returns has led
to more consumers returning prod-
ucts due to damages incurred in
shipments, difference in receipt and
purchase orders. Saxena conveys,
“Mostly electronic items being used
for internal purpose, garments and
household items are donated to
charity.” Mendiratta communicates,
“SCM companies are adapted to dis-
pose the general goods but in case
of any special requirement like
disposing chemical, medicine,
electronics and hazardous material,
SCM companies take the services of
specialised organisations. SCM
companies work with manufacturers
or customers to dispose off
as per government and
environmental guidelines.”
A long way to go
Subbramanian comments,
“The products that are imported in
India have different warranty
processes and due to various
difficulties in cumbersome processes
exchanging the product and
coupled with various hectic
documentation processes, reverse
logistics in the country is not
at par with international standards.”
Reverse logistics has a long
way to go in terms of costs
and efficiency.
Sanjeev Saxena
Co-Founder and Director
Ecom Express
Subbramanian
Assistant General Manager Reverse Logistics
ProConnect Supply Chain
Subhash Mendiratta
General Manager - North India
Flyjac Logistics
Hitendra Chaturvedi
Founder and Managing Director
GreenDust
Girish Singhal
Vice President - Electronics
Infibeam.com
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