One aspect of a company’s supply chain that often receives less operational scrutiny is reverse logistics. Reverse logistics is commonly thought of as “the cost of doing business”, and when left unchecked, could become severely inefficient, eating into company profits and causing headaches within the supply chain system. As market competition increases and margins get squeezed, it’s more important than ever to perform a thorough evaluation of your company’s reverse logistics system.
Companies who successfully optimize their reverse logistics systems enjoy a supply chain that’s not only more efficient and easier to manage, but one that carries a lower-cost burden, offering an advantage over competitors.
The main take away from this blog post is that now is the best time to re-evaluate your reverse logistics operations and grow your company’s profit margin. Below are five key benefits an organization receives from an optimized reverse logistics system.
5 Benefits of an Optimized Reverse Logistics System
1. Increased Asset Utilization
In business operations, it should always be a goal to do more with less. This is one direct benefit from an optimized reverse logistics system. The key here is to utilize your forward logistics assets to support your reverse logistics system. Whether you rent or own your logistics assets, finding ways for these assets to do double duty will reduce your asset spend. This makes your company’s operations more efficient on a per-asset basis.
For instance, Anheuser-Busch collects and holds specific volumes of returnable material (kegs, pallets, etc.) at primary distribution locations, allowing transportation assets completing forward deliveries to pick up returnable materials when they would traditionally leave the delivery point empty and underutilized.
2. Happier Customers
Happy customers are loyal customers, it’s really that simple. In the current digital age, ordering goods online and having them delivered is becoming ubiquitous. As more and more purchases are made in this new model, customers are demanding “no-hassle” returns that are convenient and painless. Efficiently processing return orders could be the difference between a one-time customer and a returning one. Under this mindset it’s clear that being successful in reverse logistics not only helps control costs, but also impacts revenue. Therefore, it’s prudent to invest in IT systems and order return processes that reduce cycle time and keep customer satisfaction levels high.
3. Better ROI
It’s no secret, inventory costs money. The more inventory you have in the system, the more of your investment it’s locked up in. Taking steps to increase the speed of returns, and goods replacement, will reduce the system’s inventory requirements. This will reduce the amount of capital tied up in inventory, which increases your ROI.
4. Improved Environmental Sustainability
From a corporate responsibility and environmental standpoint, it has never been more important to implement supply chain solutions that are environmentally sustainable. Every industry-leading company takes steps to reduce, and tracks, their environmental footprint. One major area of an organization with ample opportunity is reverse logistics. By making this system more efficient, it reduces the burden on the logistical assets and the environmental resources necessary to keep them running.
5. Promotes a Culture of Industry Leadership
The fifth and final benefit (one often overlooked) is that taking steps to optimize something that many companies don’t focus on promotes a culture of leadership. It says, “we go the extra mile.” This not only unites your company to work toward a common goal and says to your competitors that you’re in it to win it, but it also attracts elite workforce talent that would otherwise go to your competitors. The latter will pay dividends for years to come and will develop a positive, self-reinforcing culture that will continue to attract the best talent around.
No organization is ever above reviewing its processes and operations, and the best ones evaluate themselves on a regular basis. These types of companies are run by leadership teams who never stop thinking about ways to do things better, constantly asking themselves what they can do to improve.
That being said, reviewing your reverse logistics system, and looking for ways to optimize it, is especially important at this point in time. Maximizing your assets, returning customers, better cashflow, reducing your environmental impact, and attracting more forward-thinking talent; the benefits are clear. Make your supply chain more efficient and maximize its capacity by re-evaluating your reverse logistics system, creating some distance between your organization and the competition in doing so.