These days it is very common to discuss product returns and to see the growth that this work brings to companies in practice. However, achieving efficient management that reaches the desired results is more complex than it seems and requires effective planning.
Dealing with the supply chain effectively requires attention and a close look at all its phases. Ensuring the speed of the returns processing, managing transportation and warehousing costs, and optimizing the timing of all these actions is complicated yet fundamental.
Paying attention to Product Returns and investing in well-structured reverse logistics processes is the starting point to guarantee supply chain efficiency.
But this work goes much further than only worrying about the product itself and its journey within the reverse chain. Many other factors that affect the business also depend indirectly on the success of Product Returns.
In interviews with consumers in 15 countries conducted in 2019, the UPS Pulse of the Online Shopper study found that 73% of people who purchase products online take return experiences into consideration before making new purchases or continuing their relationship with the company.
This data shows that companies that possess good Product Returns policies also end up profiting from good returns on brand image and from client satisfaction.
How does Product Returns happen?
The Product Returns process is comprised of a few steps that make up a part of most types of businesses and are fundamental for everything to run smoothly, without rework, and without barriers to the end client.
After the return requests are processed, the receipt of the products takes place centrally and is allocated to a conventional Distribution Center (DC) or a specific warehouse.
The products then start to be identified and the way they are received and allocated can influence the methodology used in their classification and preparation for the next management step.
At this stage, having good strategies and automated processes for stock management and tracking optimizes the timing in which the product will travel the reverse path of the supply chain and decreases the logistics expense as a whole.
The next step is the classification for its preparation, which can be based on different criteria according to the type of business or product (such as the type of item, its size, or even the way it will be transported).
The products are then classified again, but into subcategories. This new classification facilitates the work according to the demand of each item and separates them into processing lines. After all, the organization or handling of several items with different characteristics could end up getting confusing.
In the analysis, important decisions are made about the product and its future within the supply chain. Products can be repackaged, recycled, reused, or even manufactured.
It is important to pay attention to quality control and it must be meticulous, since it directly impacts the value of the product and the revenue generated for the company after it returns to the supply chain.
Once the commercial destination of the product has been defined, i.e. how, under what conditions, where, and what value it will be marketed at, the support phase begins. Here the items are finally distributed.
It is important to remember that this path can have deviations, and it also depends on the type of product in question, but the costs can be drastically minimized with solutions that streamline and automate the classification, evaluation, and transportation of the item.
Value to the client and business within the reverse supply chain
Within the reverse supply chain flow the final value of the product and the value generated to the business and the client are linked to several variables.
Returning products can be stressful, but when the process is well managed the alleged disruption can be converted into new business opportunities and value creation.
To the company, the distribution and sale of products must be re-imagined within the reverse chain flow and this can become a good opportunity to put the brand ahead within the market, to clients, and society in general.
The reverse flow makes it possible to reuse or market an input or product that may otherwise have simply been discarded.
A company that has efficient environmental planning and that demonstrates care about its impacts on nature strengthens its market positioning, becoming more competitive and having its image valued more highly.
To the clients the value is defined within the ease of being served, of having their demands processed, and even the possibility of buying recovered products within secondary markets.
Therefore, with good management, the entire supply chain gains value in the form of information. This means that all participants in the supply chain will benefit and the flow can remain constant.
All these factors still result in social value for the company, which is very important for the development of the business, regardless of the stage it is at.
So at the end of the process, when you have optimized Product Returns, the product gains value, the client also gains value, the stakeholders benefit, and the environment is valued.
Relationship with the customer in Product Returns
The way that Product Returns is done influences the company's relationship with the customer. It is important to consider that products can be returned for a variety of reasons, ranging from inadequacies in the sale to breakdowns or dissatisfaction. Regardless of the reason, the level of customer service must always be satisfactory.
When there is a return, possibly the customer has had some kind of negative experience. From then on, new business with the same client becomes more difficult, and there is a high probability that the client discourages others to purchase the product being sold.
If Product Returns processes are well executed, future business development becomes easier.
Client satisfaction increases, the possibility for new business with other customers takes off, and waste is minimized. All these possible developments contribute to increased company profitability and business agility.
With so many possibilities to connect with the client intimately and in large numbers, the concept of direct-to-consumer (D2C) emerges.
The D2C strategy mainly impacted e-commerce, but also the relationships between companies and consumers in many other cases. This strategy made it possible to sell products directly from the industry to the customer, without the presence of a retail intermediary.
The buying process becomes part of the product experience, the brand is strengthened by the proximity to the consumer, which leads to increased profitability.
This concept has a very strong connection with the Recurrence Economy. Within this model the consumer no longer pays for products or services, but rather for the experience and access to these goods.
The Dollar Shave Club, for example, is a company that adopted this model of service, in which the client does not pay to have, but to use (through a periodic renewal). The company delivers razors and many other personal hygiene care items via post. The client chooses a product plan and pays a monthly fee, receiving the items once a month at home and can cancel whenever they want.
This strong relationship with experience also involves the Circular Economy. Within this concept, the end of the useful life of a product is replaced by new circular flows of reuse, recycling or remanufacturing.
These three global trends have many points in common and depend on integrated Product Returns. Product returns are becoming an increasingly strong reality and solutions that optimize the reverse logistics process are proving to be more and more profitable.
What is Return Management and reverse logistics?
Product Returns is the set of processes used for tracking returnable packaging or for returned products for some specific reason at some point within the supply chain.
In these processes, quality control and product traceability are important factors so that inconsistencies are solved in order for the supply chain flow to continue uninterrupted.
Product Returns involves the creation of preventive measures for product returns and the integration of information with the use of specific software.
Reverse Logistics, on the other hand, is a fundamental part of Product Returns that ensures the recovery of returned products, the return of reusable packaging, and its proper disposal or delivery.
3 pillars of Product Returns
For Product Returns to achieve good processing results there are three points that need attention:
It is essential for efficient and cost-effective returns;
Products and their information must be recognized even before the return is processed by the company;
The control of inputs and outputs in the supply chain must be meticulous so that the processes are speedy and the information is circulated.
A good way to better control these three points in Product Returns is to work with solutions that optimize traceability, integrate the supply chain, and enable large-scale product tracking.
Metrics say a lot about Product Returns
As in any other line of work, metrics have the important role of telling results. In Product Returns their analysis can show much more.
They measure the financial impact of returns on the company itself and on other participants within the supply chain, as well as acting as a gauge for other important data.
On this subject, the Logistics Management magazine pointed out some metrics that companies should keep an eye on to improve their reverse logistics processes and identify the main gaps in the supply chain:
- Disposal cycle time;
- Amount of products recovered and resold;
- Percentage of recycled material;
- Percentage of cost recovered;
- Handling cost per item;
- Distance traveled;
- Energy invested in returns;
- Total cost of ownership (costs that involve the reverse flow of the product).
How to optimize Product Returns through traceability?
When dealing with a complex supply chain and a very large product distribution area, improving Product Returns processes is a big challenge and many factors must be considered. Management of internal processes, the relationship with the customer, the relationship between investment and cost, and the efficiency of returns are just a few points that need constant attention and responses.
How do I track returns?
Keeping track of returns is not an easy task, even more so when you work with a wide variety of products, which travel throughout a long chain with many potential interferences.
The ideal situation for large flows is the implementation of software that helps to register products efficiently and track them at different levels of the supply chain.
TrackTraceRX software facilitates this follow-up tracking with state-of-the-art technology solutions. Functional and easy to use, it allows the user detailed control of the supply chain flow. This makes it possible to obtain answers faster and identify potential problems with ease.
How do I control my information flow?
In Product Returns, information means money. With the right information, your strategies can be reconsidered and your efforts reallocated.
TrackTraceRX software helps to improve the organization of the data collected and to monitor the flow of information. This makes it possible to identify when costs can be optimized and also to provide more information to stakeholders. All agents involved end up benefitting.
How to integrate management systems?
In large chains, many companies are connected. The TrackTraceRX system is an open and configurable platform that facilitates integration and communication by connecting to the Management System / ERP / WMS that the company owns or uses, thus expanding managerial vision and favoring the exchange of information between the links within the chain.
So far we have seen that tracking returns throughout the chain, controlling information and integrating management systems requires technology. With this in mind, TrackTraceRX combines technological innovation and security to develop serialization and traceability solutions that optimize your logistic processes and improve your results.
The TrackTraceRX system was developed in IoT (facilitated data exchange), which makes all your data perfectly accessible for when you need it.
Dessa forma as devoluções acontecem mais rápido, a confiança do cliente aumenta e a gestão de qualidade tem informações de forma integrada.
Therefore returns are processed quicker, client confidence increases, and quality management has access to the information in an integrated manner.
Visit the TrackTraceRX website and request a demo now.