Reverse logistics a profit generation technique

Reverse logistics forms a significant part of the supply chain for a retailer. If a little more attention is paid to this aspect, retailers can increase their share of profits. Let us find out how
Logistics in reverse gear

Reverse logistics refers to the return of goods or information from the retailer back to the manufacturers and producers. The need for reverse logistics arises in light of offering a higher level of customer service that includes accuracy and timeliness. Product recalls; business to business commercial returns; stock adjustments, and functional returns are the reasons for getting a reverse logistics strategy into play. Also with the growing significance of online shopping and lack of demonstration or trying merchandise before buying it is also leading to an increase in the percentage of returns. Furthermore, it has been realised that returns in offline retailing are lesser than that with online retailing.



Reverse logistics has in the past not been given due diligence as it was considered to be a nuisance rather than a business opportunity with a relatively higher cost. But with time, the realisation has grown among retailers and they are working towards its integration. With its application, you will be able to tackle operational and consumer withholding problem associated with merchandise returns. Returns management can play a considerable role in positioning a brand among competition by means of providing a vital tie between logistics and marketing.By closely working on the merchandise returns, retailers can be in a better spot to track trends in returns or recurrent problems with products, and address these concerns to dwindle the percentage of returns.


Elements of RL

There are certain elements of reverse logistics that make the system a success. The application of these can swing profits in your direction. These are:


Gate keeping

Gate keeping is the key to manage the reverse logistics process. It is the entry spot for the returned merchandise and where the returns are also screened.


Disposition time

Certain products have a certain life period and need to be acted upon quickly. Identification and categorisation of returned merchandise into them being either defective, suitable for reuse, needing refurbishment or need to be disposed off is a necessity. The quicker the process of disposition, higher is the probability of profits for a retailer.


Technological systems

Technology and having specified information systems enhances efficiencies as it becomes an easier task to track returns, measure cycle times and vendor performance.



Reverse logistics can be worked upon so it may bring the desired results for a business. To start with retailers along with manufacturers and producers must review the reverse logistic processes that are already in place. Collaboration is the way forward, so they must demand greater information sharing and integrate the decision making procedure. Constant communication and implementing the enterprise resource planning technology are the key elements here. Greater emphasis must be laid on reusing and recycling the product to reduce costs. Also rather than investing in new technologies and systems, retailers should work with existing systems to find the best suited processes.


End note

A retailer cannot opt out of the numbers of returns and if he does not act upon then effectively, reverse logistics can bear out to be a costly affair. So, if you want to further streamline your business, work with your manufacturers proactively to manage reverse logistics to create an efficient supply chain.

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