BY DAVID MALONEY, CHIEF EDITOR
REVERSE LOGISTICS
strategicinsight
LET’S FACE IT—RETURNS ARE MESSY. NO ONE REALly wants to deal with them. They take away from what we
really want to do in supply chain—move products forward.
No one really wants to back up.
Returns also cost money. Reducing that cost and making
the most of a difficult situation is the goal of every well-per-forming reverse logistics operation.
“With returns, you’re working against the clock. The
longer a product sits in storage and the more touchpoints
it receives, the less value you may recover,” explains Ryan
Kelly, senior vice president of sales, strategy, and commu-
nications for Genco, a FedEx company. “It’s imperative to
have clear and efficient disposition logic in your returns
processes and easy access to secondary markets.”
What has historically made returns such a messy propo-
sition has only been intensified by the omnichannel revolu-
tion. In the past, returns typically came from one source. If
you were a retailer, most products were sold in a store, and
items were returned to the same store. Similarly, a catalog
operation would ship products to a customer, and returns
would be shipped back to the seller’s distribution center.
Those once-delineated lines are blurry now. Products
can originate from a number of different sales channels—
online, a store, a catalog operation, a third party, and so on.
Some of these items can be ordered through one channel—
for instance, online—and returned through another chan-
nel, such as a retail store. Managing this kind of diversity
makes reverse logistics more complicated than ever.
The percentage of returns has also grown with the advent
of e-commerce. “In the Internet age, returns have been
driven to a much higher rate—two to three times higher
than with a brick-and-mortar store,” says Tony Sciarrotta,
executive director of the Reverse Logistics Association
(RLA), an organization of companies and other players
involved in returns management.
Sciarrotta says that products sold in a brick-and-mortar
store are returned 8 to 12 percent of the time. With e-com-
merce purchases, the returns rate jumps to 18 to 25 percent.
Returns tend to run particularly high for online clothing
and shoes purchases, where a customer might order several
Returns are never easy to
handle. That’s why having a
good strategy and maybe even
a partner can help bring order
to one of the supply chain’s
most chaotic processes.
Many
happier
returns?
