Understanding The Importance of Reverse Logistics

Reverse logistics has occupied a very low place on the logistics priority list as the companies were not as diligent in reverse logistics as they were in conventional areas of logistics. It was once an almost forgotten part of the supply chain, but now reverse logistics is gaining increasing importance in the current market scenario. It is being seen as an important 'value add' to the growth strategy of the companies. Reverse logistics can be defined as 'Reverse logistics is the process of moving products from their typical final destination to another point, in an attempt to recapture some of the value of the product through resale, reverse auction or for the purpose of disposal of the item if not resalable or reusable. The returns policies of most retailers in the name of customer service have caused reverse logistics to become a very visible process.'

As far as managing the returns are concerned companies re-use them, re-sell them, leave them to a third party or destroy them. However, companies are more likely to benefit if they can also make use of the information that comes back with returned merchandise.Reverse Logistics can deliver a high degree of functionality through interaction with a Connectivity Platform. The main feature in reverse logistics is the source and reasons for returns. Exchanging information for return orders, authorizations and acknowledgements, stock updates, inventory specifications and sales orders, transport, pick list and repair orders, direct to/from transport providers, warehouse and repair centers and exemption handling can help understand the reason for returns. Reverse Logistics can be a strategic asset that can reduce costs. By understanding the reason for the occurrence of returns, it is possible to identify the various prospects for enhancing the decision-making.

With appropriate policies, Reverse Logistics Management can automate returns across multiple channels to ensure you know what is being returned, from where it is being returned and the actual reason for the return. Having such policies in place can also improve your firm's profitability, and also help companies improve relationships with key customers.

Understanding the importance of reverse logistics management, many companies these days have chosen to either apply new solutions to better manage their reverse logistics process or, alternatively, to outsource their reverse logistics operations to service providers. A third party service provider will be able to take advantage of economies of scale and specialized expertise in planning reverse logistics operations.