17 October 2021 Efficiency in reverse logistics reduces costs and can mean a competitive advantage for your company. Reverse logistics, as the term itself suggests, is the inversion of the standard flow of a warehouse or distribution center, meaning that instead of preparing the product for dispatch, it is returning to the warehouse due to a customer return. This return can be caused by various reasons, such as an exchange, change of mind, discrepancies in the order, or damage to the sold product. Nowadays, especially with the expansion of e-commerce, reverse logistics plays a fundamental role in business, as exchanges are common due to the nature of the purchase (online – without seeing and trying the product). And, during high sales periods, such as Black Friday and Christmas, this reality is heightened. If companies are not prepared for this process, the impacts can be negative, such as: loss of goods, damage, stock depletion, rework, and warehouse disorganization (product in the wrong place, mixed items, more time spent searching for the product, etc.). That’s why companies must face this process head-on, treating reverse logistics as an important part of the workflow. It’s crucial to have clear processes, a well-trained team, and a perfect evaluation of the results. Therefore, having a management tool is of utmost importance. A WMS system must be able to manage traditional warehouse processes, but also efficiently support reverse logistics. 30% of online purchases are returned According to research, at least 30% of products purchased online are returned. However, 92% of surveyed consumers stated that they would not give up shopping again if the return process was simple. According to the survey, among the reasons for return, 20% are related to damaged items, 22% are justified by differences between the product in the virtual store and the physical product, 23% are due to receiving incorrect merchandise, and 35% refer to other reasons. It should be noted that the Consumer Code provides the right of withdrawal for purchases made through e-commerce, whereby the consumer has up to 7 days from receipt to request the return or replacement of the product. According to the regulation, the costs related to this operation are exclusively the seller’s responsibility. In this scenario, it is crucial to efficiently carry out reverse logistics to ensure customer satisfaction and loyalty, considering that this process must be optimized not to imply an even higher cost for the company. How does your warehouse manage reverse logistics? Thousands of packages are returned daily to company stocks nationwide. Many of these warehouses face several challenges to cope with the high volume of returns, difficulties mainly caused by the lack or poor definition of processes and the absence of a management tool, such as WMS, to support internal work. The reverse logistics process is not trivial; however, contrary to receiving due attention, it ends up being relegated and seen more as a “necessary evil” than as part of the business routine. Often, we see warehouse return areas and distribution centers as “small corners” filled with open boxes with various mixed SKUs waiting to be sorted and restocked. Moreover, the commercial part involved in the return is also very delicate, as it directly impacts customer service. If the logistics process is not adequately aligned with the company’s management and sales systems (ERP), the customer will feel insecure, as they will not have information about their credit and will not be able to track the entire process. You may have already noticed that the lack of management in reverse logistics creates a series of problems. But the consequences do not stop there. We can also mention: • Loss of sales, as stock is held in return areas • Inventory losses, when the product is out of stock or at the expiration of its shelf life • Financial losses, when the merchandise is not well sorted and factory defects or customer misuse are not identified, preventing the responsible parties from being held accountable • Lot sequencing (FEFO), as the lack of control does not guarantee the shipping order • Drop in productivity, as more time will be needed to search for these products • Increased operational costs if these products do not have appropriate positions for storage and picking • Excess stock if the returned product is not accounted for as soon as it arrives at the company In this sense, merchandise returns can be a headache if not managed correctly. And to achieve the best results, it is important to have the support of technology. A WMS system helps manage all the steps involved in the return process, not only allowing for an agile exchange (benefiting the customer) but also ensuring that the returned product is correctly sorted, classified, and, when in perfect condition, returned to stock as soon as possible. WMS: managing reverse logistics efficiently The automation of processes provided by the WMS is a fundamental basis for logistical operations to gain efficiency, and this also includes reverse logistics. When investing in technology, many activities are no longer performed manually (relying solely on user experience), thereby reducing errors, losses, and rework. With the use of a WMS system, returned goods should initially be treated in the same way as a product received from the supplier, meaning: – It must be verified if it is indeed the product that was sold – The quantity and condition of the product must be checked – Its location at the dock must be identified – It must be stored Depending on the evaluation, the product will be directed as soon as possible to the storage area. If it is in good condition, it will usually go directly to the picking area, and if not, it will be sent to the segregated sector. A good strategy widely used by Deagor customers is to have a dynamic picking line (without fixed positions) exclusively for returned items and close to the picking lines, which favors storage times and eliminates the need to reorganize the product in the original picking position. Among the main advantages of WMS for reverse logistics are: – Rapid identification of reusable inventory so it can be reallocated for order picking. – Complete traceability of the entire process that allows monitoring of return levels and types. – Immediate integration with ERP systems to ensure credits and promptly make replacements, maintaining customer satisfaction levels. – Automatic guidance of the entire process performed by the system, seeking safety, quality, and, of course, maximum employee performance and the best use of company resources. Using the right technology, which can be an obstacle for your company, will become an opportunity and better: a competitive advantage. Currently, with high levels of consumer demand, omnichannel sales, and strong competition among companies to offer the best service, leaving aside an important process like reverse logistics can be fatal. On the contrary, investing in a WMS software that ensures excellence and agility in process execution increases customer trust in your company and allows you to increase profits by not spending more than necessary on merchandise returns. Reverse logistics: how to optimize this process? Deagor WMS per ecommerce può aiutarti!