How Well Does Your Supply Chain Handle Returned Products?

According to one source, at least 30% of all merchandise bought online is eventually returned. For products bought in a physical store, that same figure is about 9%. As eCommerce continues its rapid growth—Statista pegs the rate at 23% for 2018—efficiently handling product returns will continue to be more important for eCommerce companies and omnichannel merchants. From this data, it’s clear that eCommerce is further driving the need for efficient reverse logistics.

More returns mean more returned material will need to be processed through reverse logistics. If done well, reverse logistics can provide multiple benefits for both manufacturers and retailers.

For example, depending on the condition of the returned product, it can have much residual value. Clothing that is returned before it’s even worn can be inspected and restocked with minimal processing. Mechanical and electronic products that come back can still contain parts which are still in great condition and can be reclaimed for repairing or refurbishing other items.

Questions to Ask Yourself:

Whether or not your company succeeds at enjoying this and many other benefits of reverse logistics depends on how well your supply chain handles returned products. Here are some questions that should help your company evaluate that:

Do you have a plan for cross-channel returns?

In other words, when someone buys one of your products online, and then returns it to a physical store, do you have the workflows in place to cost-effectively disposition and if necessary transport that merchandise to the most suitable location?

How smooth and consumer-friendly is your RMA process?

RMAs can be a great tool for efficiently processing returned products. They can provide information about the condition of the item and the reason for the return, giving your supply chain a head start in determining the best way to inspect, restock, or refurbish the merchandise. Providing a smooth return experience for the customer is also an effective way to win their repeat business.

Do you provide clear grading criteria and training to your supply chain personnel involved in reverse logistics?

In order to recapture the most value out of a returned product, the costs required to determine that residual value must be minimized. That includes the time spent determining what condition that returned merchandise is in. Unambiguous grading standards and adequate training on them goes a long way toward reducing that time.

Are you properly staffed and equipped to efficiently handle refurbishment?

Not only can refurbished products entice customers to your online or physical store with their deeply discounted prices, but in some cases, the refurbishment itself may not require any rework, only re-inspection and re-testing. Do you have the necessary number of skilled technicians and inspectors to quickly refurbish returned product?

Do you track all returned items, at each stage of the process, and at every location?

Searching for lost merchandise throughout a supply chain is costly and time-consuming. Those costs can bite deeply into any residual value left in the item. There shouldn’t be any “black holes” in your inventory.

By asking themselves these questions, businesses can ascertain just how well they handle returned products—and shine light on ways to improve.