Reverse Supply Chain

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reverse supply chain

Adding ‘reverse’ next to ‘supply chain’ seems contradictory at first. 

Why would a business need to implement a supply chain, and then reverse it? Strange, right? 

It’s easy to focus 100% of your effort on the forward supply chain, but the ‘backward’ process is actually essential for many businesses. From organizing returns of faulty goods to picking up empty packaging, or even collecting old household appliances and other used products – these are all activities that demand a streamlined and efficient reverse supply chain.  

Let’s dive right into the details. 

What is a Reverse Supply Chain?

The reverse supply chain is a process that is almost opposite of a traditional supply chain, meaning the product moves from a customer back to a vendor/supplier/retailer. Reverse supply chain management includes pickups, disposing or cleaning, sorting, repackaging, restoring, and finally reshipping. By focusing on reverse logistics processes, a business is more robust to the complete customer lifecycle – which comes with serious benefits.

What are the Benefits of a Robust Reverse Supply Chain System?

If you have identified that your business needs to introduce or improve an existing reverse supply chain, it’s worth looking into software that will make the whole process smoother – and smarter. 

The right addition, like advanced route optimization and scheduling software, can turn otherwise static and inflexible reverse supply chain processes into one that is robust and can be adapted to all of your unique business needs. These are just some of the benefits:

Less resource waste

Your reverse supply chain can be used in the same operations as your regular supply chain, meaning you can do multiple tasks with the same resources you had before. 

Having both pickups and deliveries on the same route will reduce mileage, and mean that you are fitting in more work into the regular workday. And, incorporating returns of reusable packaging (such as crates, if you deliver milk/beer) is great for your business in a number of ways. 

You spend less money on packaging, less time and manpower is spent on ordering packaging, and the environmentally friendly approach will score you brownie points with customers and help build loyalty. 

Forward and Reverse Supply Chain Route Map

Better customer service

According to Supply Chain Quarterly, 1 in 5 of all items purchased are returned to the manufacturer. That means there’s a good chance that your customer will request a refund or exchange. 

How fast can you receive the original product and give the customer what they’ve asked for: an easy returns process? The faster that you can make this happen, the more likely a customer will have a positive experience. 

Dynamic Replanning means you can take a customer request for an exchange, see where your drivers are, and quickly organize product returns to your depot or store – and get to the customer on the same day!

Being able to offer this sort of service will give you an edge over competitors too.    

New avenues of revenue

By having the capability to run an efficient supply chain at the same time as a reverse supply chain – or swap between the two based on the season – you’re empowering your business to be incredibly flexible, and ultimately profitable all year long. 

Like the icecream delivery company King of Pops that, come winter, introduces a Christmas tree delivery and pick up service

How to incentivize customers to work in tandem with your Reverse Supply Chain?

There’s no point in having an optimized and efficient reverse logistics process if your customers can’t experience the convenience that it offers. And, increasing the amount of high-quality face-to-face interactions with your customers gives you more opportunity to impress!

Here are some ways of encouraging customers to be a part of the reverse supply chain:   

1. Instead of mail-in returns/exchanges – offer to pick up goods

When customers want to return or exchange a product, offer free pickup instead of paying for mail service. 

This expedited asset recovery allows your team to find an optimal time to come and pick up an order along their way, and route optimization software slots these jobs without compromising the efficiency of the entire route. Not to mention that customers will LOVE not having to head off to the post office/courier service to return their items! 

2. Go for reusable/refillable products

Many services, such as food delivery and water bottle refills can use reusable/refillable packaging. 

Why not integrate the pick-up process into your overall supply chain? It’s one more touchpoint with a customer to drive loyalty through great service. 

Scheduling is simple because it’s easy to indicate whether a job is a delivery or pickup. If the items you are collecting are large or heavy, the route optimization software also lets you plan in accordance with the capacity of each vehicle. 

3. Offer a collection service of old and bulky items

If you are already delivering new products such as appliances, furniture, mattresses, or any other bulky items, offer to take the item that the customer is replacing. The added customer service could be your differentiator in a competitive market. 

And the potential is there – just consider the fact that in 2007 only 18% of all computers were recycled, but thanks to reverse supply chains the amount went up to 40% within six years. However, trying to control this process with manual planning would give you a confusing mess.

Above are a few to mention and there are many more possible applications and benefits of Reverse Supply Chain are there. Further, it adds value to the “Sustainable” component in your Supply Chain which is the most important factor to be considered in the current scenario.

PS: This article is originally published on optimoroute.comWe are happy to announce that Sourcing and Supply Chain has extended Content Partnership along with optimoroute.com. OptimoRoute is an online Route Planner for Delivery and Field Service.

Author: Chirag Kalaria

Procurement professional working at AMUL with a decade of versatile experience in Materials Procurement, Supply Chain, Contracts Management, Warehousing, Logistics and Project Management. Business Development and Financial Operations were also fields of expertise. Started “Sourcing and Supply Chain” to share knowledge and business expertise for strengthening the procurement process and agile supply chain.

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