ACU June 5th DRAFT

FEATURE
Reverse Logistics Process
Retrieve Transport Receive Inspect Sort
to first quality for resale at full retail
value. This provides the best-cost
r e c o v e r y f o r m e r c h a n t s a n d
minimizes the problems created
when returns are liquidated through
aftermarket solutions, which can put
price pressure on first-quality items.
Purchasers of second-hand items
expect manufacturers to honor
original warranties even though
manufacturers do not get the revenue
on those sales.
Returns can be used to support
warranty operations and parts
recovery or sold on secondary
marketplaces,” said Ballato.
Disposition activities could include
return to inventory, light repair or
touch up for resale, major repair or
rework, dismantle and harvest parts
or useable components, recycle, scrap
and send to landfill, or donate,
according to UPS.
Tracking system notifies merchant
a n d c o n s u m e r a b o u t e v e r y
scan/tracking event as the parcel
moves through the transportation
network. Product catalog integration
along with a business rules engine
allows merchants to specify how each
product should be dispositioned, i.e.
refurbish, recycle, donate, RTV, etc.
APIs facilitate fast transfer of
information to and from the 3PL to
the merchant and consumer.
Value of goods
Reverse Logistics is the process of
moving goods backwards and then
determining what to do with them;
the RL process itself is not what
reduces the value of goods. Rather it's
the erosion of product value due to
time, the disposition activities,
condition of returned goods, and the
amount of re-work involved to get the
goods back to saleable condition that
ultimately reduces value.
The cost of returns should be
forecasted along with product sales. A
good reverse logistics program will
improve the bottom line by reducing
the cost of returns, according to
Newgistics.
Relogistics utilizes its online,
proprietary application, Velocity that
provides online visibility to all data
anytime, anywhere.
Hachtman said, “We also
present a customized,
comprehensive, monthly
statement of all activity that
includes a summary and
various detailed reports
depending on the services
provided. By tracking all
movements within the
system, we can ensure that
all assets are properly cared
for, compensation is fair,
and costs are as low as
possible”.
UPS provides a variety of technology
platforms to help merchants of all
sizes provide return capabilities to
their customer for a friction free
experience. (front-end returns)
UPS and its alliance with Optoro help
m e r c h a n t s t h e n w i t h t h e
dispositioning process of the
returned goods and materials (back
end processing).
Ecommerce freight logistics
Reverse logistics presents one of the
biggest operational challenges in the
world of eCommerce freight logistics
due to the sheer volume and cost of
processing returns.
Effective reverse logistics is believed
to result in direct benefits, including
improved customer satisfaction,
decreased resource investment levels,
and reductions in storage and
distribution costs.
The amount of returned goods going
backwards along the supply chain
from the end point (customers) is
usually much more than people
normally think.
For example, the sheer volume of
r e t u r n s g e n e r a t e d i n m a n y
companies, ranges from 3% to as high
as 50% of total shipments across all
industries. Many other studies
indicated the real costs of the returns
take up roughly 3%-5% of total
revenue.
Surprisingly, for the traditional bricksand-mortar
retail operations, returns
are 3 to 4 times more expensive than
forward (outbound) shipments.
“More merchants are now looking for
ways to outsource all or part of their
returns operations. Facing increasing
pressure from: Amazon influence on
speed to refund, trying to grow
outbound while containing return
rates, delay new capital investments
needed for returns, avoid dealing with
increasing labor costs,” says Ballato.
Return costs are a drag on product
margins and a disproportionate
percentage of distribution center
expenses. In a drop-ship environment
the return of goods to OEMs
presents a huge challenge, according
to Newgistics.
Future of reverse logistics
Supply chains are becoming more
complex — and competitive — every
day. Product is moving faster than
ever before and more of it is being
moved in reusable packaging.
Because no two-supply chains are
identical, customized solutions to
handle the return of this reusable
packaging will grow in importance
according to the experts.
“Reverse logistics will continue to
grow in the coming years as
ecommerce continues to grow, as well
as new and exciting sales and service
models are developed in all industry
segments. There will always be the
need for goods or materials to move
in reverse and these needs will
continue to grow along side of the
growth of commerce,” concludes UPS'
Jim Brill.