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that will look like in five to 10 years.”
All of the experts we consulted for
this article agree: You can’t make
an informed decision about central-
ized vs. regional returns processing
without a comprehensive, holistic
network analysis that looks at all
relevant factors. That includes not
just costs but also strategic consider-
ations like customer service and your
company’s value proposition to cus-
tomers. Says Amling, “Do you want
to differentiate on customer service,
lowest price, widest selection? Your
returns strategy should be consistent
with your business strategy.”
The volume and complexity of the
product will also drive some decisions
from a network optimization and “total
landed cost” perspective, Sensing says.
For instance, for some products, it may
be difficult to find the necessary special-
ty repair capabilities in all geographies;
companies may have to work with differ-
ent providers in different areas or find a
way to develop the capabilities they need
in underserved locations, he explains.
It pays to consider a company’s future
plans when deciding whether to central-
ize or use multiple locations, Gordon
says. For one thing, a single change in
corporate policy could have a drastic
impact on returns and leave you with too
much or too little capacity. For another,
you could overspend if you make deci-
sions based solely on current conditions.
“You should understand what the rate of
returns is and do everything possible to
reduce that before making a final deci-
sion,” he says. “If you don’t, then you’ll
be addressing the problem as it is today
instead of solving problems and then
deciding what type of facility you need
and where.”
Changes in product lines and market
strategies as well as consumer behavior
can influence decisions about the num-
ber and location of returns processing
centers. “Some of the change going on
now in reverse logistics revolves around
changing consumer expectations,” Vehec
says. E-commerce, with its high rates of
product returns, raises questions about
where and how to handle returned mer-
chandise, he explains. “The way product
is coming back from consumers is chang-
ing. I don’t know if anyone knows what
