Streamlining Reverse Logistics
Efficiently managing damaged goods, expired products, and inventory returns can be challenging for shippers. Brian Crow, global marketing manager at chemical management services provider Rinchem Company Inc., offers the following recommendations for proactively and efficiently managing reverse logistics material flows, while significantly reducing costs.
1. Use tech tools to track returned inventory. Many warehouse management systems can track products that are expired, need to be returned, are on hold, or are out of specification. Electronically track every product within the reverse logistics flow to ensure timely processing.
2. Establish specific processes for returned materials. Map out procedures, contingencies, and triggers addressing how to handle, store, and transport returned product. Securing key decision-maker buy-in on these plans is essential to efficient reverse logistics network management.
3. Seek expert help. Evaluate your entire logistics process, and determine whether your company can effectively manage reverse logistics operations. If the answer is no, seek help. Consider a consultant or a third-party provider to evaluate your operations and develop an improvement plan or take over managing the process.
4. Use backhauls to send returns back to the manufacturer. Using the same carrier or truck that delivers new products to return damaged or expired product back to the manufacturer can reduce transportation costs.
5. Identify goods at risk for expiration. Using available information about a product's number of days in inventory, as well as any major changes in consumption, can help inventory planners identify materials that are at risk of expiring before they are shipped.
6. Use triggers to notify stakeholders of changes in reverse logistics inventory levels. Sending automated emails or other notifications when consolidated shipments meet volume thresholds, or when a product is returned or placed on hold, helps decision-makers act quickly and decisively to manage the returned products.
7. Spot-check to ensure all trading partners adhere to FIFO rules. Performing audits to confirm that all parties within the distribution network follow First In/First Out (FIFO) rules helps ensure material at greater risk of obsolescence is being pulled first for delivery to customers.
8. Rigorously test and inspect products for damage. The sooner you can identify damage or quality defects within the supply chain, the less costly it will be to determine the root cause of the issue, resolve it, and reduce the incidence of returns.
9. Establish on-site capabilities to fix returned products. Learn to analyze, identify, and repair product issues within your distribution network. This capability can reduce product returns and subsequent reverse logistics costs.
10. Identify secondary markets for expired product or material. Selling raw materials or finished products on the secondary markets can help recover costs. Seek a consultant or third-party logistics provider to facilitate such opportunities.