4 January 2024 The increase in online shopping in recent years has led to a series of changes in corporate culture, including a focus on developing strategies to offer better consumer experiences to customers and ensure survival and competitiveness in a fierce market. Faced with this scenario, there is a challenge: finding optimization points for reverse logistics in retail. With the change in consumer behavior, it has become essential to identify the different reasons for returning products to distribution centers, verify any anomalies in delivery attempts, monitor the sending and receiving of orders, and ensure the efficiency and agility of processes, maintaining a good relationship with the customer in case of exchanges and returns. To help you with the essential strategies for reverse logistics in your supply chain, in this article we will share everything you need to know to master reverse logistics, develop effective order management strategies, and outperform the competition in terms of quality and productivity. Shall we go? The importance of reverse logistics for retail In an omnichannel universe, where companies increasingly seek to diversify the sales points of their products, expand their visibility, and offer new consumer experiences, customers develop high expectations of the brand, such as greater security, timely monitoring of the actual number of orders, agility, and trust in exchanges and returns. Therefore, one of the main objectives of reverse logistics is to ensure the integrity of items at the time of return or exchange, provide the necessary support to customers to carry out this action, and, above all, minimize losses related to products. All this allows for efficient product recovery, mitigating losses and returning it to the distribution center safely, as well as ensuring customer satisfaction and loyalty. Although reverse logistics is considered one of the processes with the highest expenses and headaches in supply chains, providing a simple and agile flow can increase the volume of recurring purchases, as consumers feel more secure doing business with companies that respect deadlines and bureaucracy in a simple way. Reverse logistics in practice Reverse logistics strategies can vary depending on the market sector. For example, companies operating in the food and beverage distribution deal directly with the quality of inputs, meaning delays in deliveries can compromise the integrity of the food and cause losses in the return and exchange of orders. Fashion and clothing companies, on the other hand, face fewer issues related to defects. In this case, exchanges and returns are generally made due to small errors such as size or color, for example, or due to errors in order separation. Managing reverse logistics is challenging, but its optimal implementation brings great benefits to both the company and customers. With it, you can: Save financial and human resources.Create brand value through safety and reliability.Promote sustainable actions.Achieve greater consumer satisfaction and security.Offer a positive shopping experience.Increase customer retention rate.Gain insights and promote improvements in internal processes.Increase brand recognition. Regardless of the complexity of reverse logistics, it is essential to have an efficient and simple action plan, which is why there are fundamental steps that companies must follow in their routine, starting with the correct processing of returns and planning the next steps for the returned products. 1- Return processing In practice, return processing occurs when the product reaches the sender and the customer informs the company of the desire to exchange or return the product. This is where your company must play a crucial role in after-sales and problem resolution, offering the best options for this customer. The company must identify the reasons for the exchange or return, direct the steps the customer must follow to carry out the activity, and promote fast and efficient service. 2- Plan the next steps Once the product returns to the distribution center, it is necessary to pay attention and initiate the inspection process of the merchandise. This step is essential to understand the integrity of the product and determine the next steps for the received item. Some questions are fundamental to conclude what will be done: “Will the item return to stock?”, “Does it need to be repaired before being sold?”, “Will it be recycled or discarded?”. These are some examples of questions that can optimize the workflow and direct the product’s path. It is important to remember that a management software, such as the OMS system, can facilitate the entire reverse logistics process, evaluating the product’s condition, identifying any issues, authorizing and monitoring the product’s return to the distribution center, and making routines more dynamic and productive. 5 steps to manage reverse logistics in retail It is common for some companies to associate reverse logistics only with return management, but that’s not all. A company’s success is also linked to strategies to mitigate expenses, reduce losses, and avoid headaches in all supply chain processes, so there are some ways to manage and make the most of reverse logistics. Look: Step 1: managing returns and exchanges Even before thinking about the flow of exchanges and returns, it is necessary to ensure that they do not occur. To this end, it is essential that storage is secure and maintains the integrity of products, that picking processes are efficient and accurate, that sales channels are aligned and have products with all necessary descriptions, and, above all, that the products offered are of good quality. Once these concerns exist and there are still requests for exchanges and returns, it is important to offer the customer a return and exchange policy in addition to guidance for carrying out the process. It is also advisable to develop a plan for receiving, inspecting, and testing products arriving at the distribution center, as well as monitoring the entire return journey to the warehouse. Step 2: reselling returned items Once the product returns to the distribution center, some paths can be followed, such as reselling. After inspection, an item can be labeled, updated in the system, and placed back in stock. Step 3: performing repairs Reverse logistics also aims to reduce return costs and offer profit opportunities. One of these is through repairs. When it is identified that a product has some repairable damage, there is the possibility of carrying out the repair and subsequently placing it back in stock to be sold, either traditionally or through promotions or kit assembly, for example. Some customers do not mind purchasing repaired products at a discount, as long as this information is clear in their sales channels. Step 4: replacing products A product is not always returned due to errors or damage. Often the customer simply wants to replace the product with a different version. Therefore, a service channel to explain the possibilities to the consumer is essential for managing reverse logistics. This simple concern increases the retention rate and ensures an excellent shopping experience. Management systems like OMS speed up this type of process, as they provide automatic service, manage the return process from the first notification, track warehouse availability, and send a new product, saving resources and avoiding losses. Step 5: disposal and recycling In some cases, it is impossible to use a product, and it must be discarded. However, this step also requires attention. There is growing concern among consumers who choose environmentally conscious brands. Therefore, one way to dispose of products is through recycling, using recyclable packaging, and making sustainable choices. Additional tips: how to apply efficiency to reverse logistics in retail So far, we have identified the importance of reverse logistics for companies and how it occurs in the daily lives of distribution centers. We also discussed how to best manage exchanges and returns and presented grounded strategies that help optimize the process, increase market competitiveness, and retain customers. But beware: nothing we have presented will happen desirably if your company’s processes are not aligned. To ensure a productive and agile workflow, saving financial resources and human labor to the maximum, we must look beyond. Therefore, it is not enough to simply improve communication with the customer or carefully check the product when it returns to the DC. It is crucial to have a cohesive and precise strategy that considers costs and efficiency. Faced with this challenge, we have put together 6 extra tips to apply to your business: 1- Review return policies Improvements require consistency, so make sure to frequently review and analyze your company’s exchange and return policy. Pay attention to the issues generated, identify them, and propose solutions, ensuring that the entire process is clear and objective, offering competitive speed to the company. 2- Monitor products from end to end The most effective solution to a problem is to prevent it from occurring. To achieve this, it is essential to monitor products from arrival at the dock to shipment to the customer. Ensuring that a product is checked and stored according to its specific characteristics prevents it from losing quality over time. Additionally, monitoring the packaging and transportation of an order ensures the identification of subsequent damages, often resolved before they even reach the end customer. It is also crucial to monitor picking and ensure no errors are made during order picking. 360° visualization and tracking of products and orders throughout the purchase journey is possible with advanced management systems, which contribute to real-time monitoring, stock organization, task distribution, and notifications in case of errors and failures. (Learn more about WMS). 3- Understand the supply chain Which products return the most to the distribution center? What are the main reasons that lead customers to return merchandise? Are there periods of higher and lower requests? These are some essential questions to understand the supply chain. Accurate data from reverse logistics helps understand which products have the highest incidence of returns, why this happens, and when. This information is valuable for designing better strategies, preparing for certain periods, or even considering reviewing suppliers and product quality. 4- Centralize exchanges and returns One way to optimize reverse logistics in retail is the centralization of exchange and return stations, creating specific spaces, if possible, separate from the distribution center, especially in cases of high demand. This strategy allows for better reception, identification, classification, and monitoring of products, as well as providing a suitable environment for the subsequent stages of the product, whether it is returning to warehouses or recycling and disposal. If it is not possible to invest in dedicated centers, reserving a part of the warehouse to manage exchanges and returns helps organize and optimize the process. Keep in mind that reverse logistics requires attention and is an independent entity within the supply chain. 5- Organize transport logistics One of the main ways to optimize time and money in retail reverse logistics is to understand how transport logistics works. Once the best routes, available spaces in vehicles, and delivery times are known, it is possible to reorganize delivery routes and return pickups, making the most of each route. In this case, relying on the OMS system, which allows complete order tracking and integrated work with carriers, can help a lot. 6- Invest in automation Automation is the soul of new businesses, a key element for growth, profitability, and competitiveness in the market. As we highlighted in previous topics, it is possible to simplify processes with the use of specialized systems, tracking orders, identifying problems and failures in both inbound and outbound logistics, as well as accessing a range of information for new insights and improvements in the workflow. Therefore, do not neglect investments in technology. To achieve the desired efficiency in retail reverse logistics, having software like WMS and OMS makes a significant difference in the results obtained. OMS: the secret to mastering reverse logistics in retail There is much talk about the automation of logistics processes because it can increase productivity, expand business opportunities, and increase profitability and visibility in the market. Technology proves to be a great ally as it reduces repetitive efforts, mitigates errors, and speeds up task execution. But what happens in the context of reverse logistics in retail? How are specialized software able to provide all this? With the Order Management System (OMS) acting in reverse logistics, it is possible to offer greater autonomy to customers, as they control the exchange and return experience. In other words, the volume of orders and calls to the customer service center is reduced, providing consumers with mechanisms to autonomously initiate returns. Furthermore, with the OMS system, it is possible to offer alternatives beyond simply returning the item for a refund. The software assists in full refunds via gift card and immediate unlocking of store credit. This avoids long waiting times, such as in the case of credit card refunds or sending new merchandise to the customer at the time of exchange. Another advantage of the OMS system is the ease of integration with e-commerce platforms, marketplaces, and carriers. In practice, this happens by creating a centralized order management hub, accelerating the exchange of information and favoring the execution of exchanges and returns on a large scale. For example, with the support of OMS, a purchase made online can be returned or even exchanged in physical stores, reducing consumer waiting times and improving the shopping experience, as there are new possibilities to resolve the issue. Finally, with the OMS system, order management in logistics gains more speed and assertiveness as it is possible to fulfill about 98% of orders without human intervention, optimizing time and eliminating errors. The OMS system can automatically activate shipping labels that customers can print at home or send automated emails to notify customers when the item has been returned and processed. The secret to mastering reverse logistics in retail lies in good process management, frequent optimizations, and, above all, investment in technological resources capable of adding efficiency and precision in all stages of the supply chain. Everything You Need to Know to Master Reverse Logistics in Your Retail Business Deagor WMS per ecommerce può aiutarti!