What is reverse logistics ?

Reverse logistics includes all methods of returning products to the manufacturer's warehouse. This can be done for product disposal, recycling or repair, with the obvious goal of minimizing costs and maintaining company productivity.

As buyer behavior shifts more and more to online ordering, even after the reopening of physical stores in this time of global pandemic, e-commerce orders are only increasing and it is logical to see, in the same proportions, the number of returns to the warehouse get multiplied as well. 

Products are returned because : 

• The customer is not satisfied: what he ordered does not correspond to what he expected and does not meet his expectations, 
• The product is defective: the customer asks for an exchange or repair, 
• The product has become obsolete: the customer returns it directly to the company instead of throwing it away (this is the case for many technological objects for example),
• The point of sale wishes to put products back in stock in the warehouse: for example when the end of year celebrations end and the company is free of Christmas toys, 
• Etc. 

It is therefore the opposite process of the one followed by the supply chain: we want to reach the manufacturer and not to the customer. 

Once back at the starting point, companies are faced with several choices when it comes to managing returned items.

• Repackaging

It is for the company to put back on sale a product returned by the customer. In order to efficiently manage the re-sale process, company must be perfectly organized. Indeed, it is necessary to be able to manage the product's conformity before putting it back on sale. 

• Outlet 

The company still wants to guarantee a financial profitability on the product. If once returned it cannot be resold via the usual distribution channels (end of the collection in the clothing sector or small defect on the product), it can however be distributed in an outlet store. 

•  Repair

Damaged products can be returned and repaired if they contain a component at the end of life.

• Cannibalization or recovery of components

Cannibalization consists in recovering components from the product at the end of its life. These components must remain in compliance with standards in order to be potentially reintegrated into new processes and thus reused in other products. 

• Reduction of returns : acting upstream

Because some companies cannot spend so much time and money to identify and analyse each return to upgrade, disassemble, or store them. For this, the use of a warehouse management system is essential. Company must arm itself with digital technology and automation to limit errors during order preparation and thus increase customer satisfaction. 

Putting the product back on sale after return or disposing of it in the right way is a benefit for the company. That's why it must think about the best way to manage its returns, according to its sector of activity, and seize the right opportunities.