BY ASHUTOSH AGRAWAL
Turn your
REVERSE
supply chain
into a
PROFIT
CENTER
Selecting the right disposition strategies and understanding
their financial impact can help you turn the reverse supply chain
into a revenue generator instead of a cost center.
Reverse logistics—the management of returned and recyclable goods—is a pervasive and important business activity. In the United States, for instance,
roughly 20 percent of everything that is sold is returned to
the manufacturer.
1 It is more expensive than is commonly
recognized, costing companies approximately US $100 billion per year in the United States alone.
2 Costs associated
with returned goods represent anywhere from 8 percent to
15 percent of a company’s top line.
3 In fact, the cost of processing a return can be two to three times that of handling
the original outbound shipment.
4
Product returns exact a toll not only on a company’s
financial performance but also on its image and sales. In
2007, for instance, about 60 percent of Americans avoided
certain food brands because of a recall.
5 This suggests that
a large percentage of consumers may have a negative view
of brands associated with returns.
