Reversing the challenge in reverse logistics: making profitable choices

Consumer attitudes are changing towards returns. Since the Covid-19 pandemic, consumers, especially older generations have become more comfortable with returning purchased goods. A recent report by logistics company Whistl found that 71% of UK online shoppers return items ‘at least some of the time’. Just as shoppers appreciate various options for their order fulfilment, they also seek flexibility when it comes to sending their purchases back and have come to expect a quick and easy returns process. Put simply, return policies drive purchase decisions.

The pressure and challenges this creates for the supply chain are weighty. Retailers and logistics companies alike are faced with the dilemma of managing the cost of returns for healthy profit margins, against the risk of losing customers and brand loyalty if the returns process is not streamlined and hassle-free.

Forward planning for a returns workflow is crucial. With peak seasons of goods flowing in and out, comes the need to plan for returns. As well as to ensure processes are tweaked and updated. With a plethora of new technologies to choose from, organisations need to constantly verify their status. Ensuring they are well equipped to deal with the busy returns period from the end of December through to mid-January.

Here are the top five considerations for a successful reverse logistics strategy.

Visibility of returns

Many retailers today, only know about the return when it lands in their operation. Research shows that as little as 6% of companies report full visibility on their supply chain. 69% do not have total visibility.

Staying on top of the various stages of the returns process is no easy task. From the validation and inspection of items to inventory management, storage, and reshipment, there are many moving parts. The inspection and grading of products can vary dramatically from one operator to another and throughout the supply chain. Standardising the visibility and inventory management process across the supply chain is paramount, and those smart businesses that invest in intelligent automation solutions will be ahead of the curve in managing reverse logistics. Enhanced data visibility and analytics allow for dynamic responses to returns demand or challenges, mitigating any disruptions in the supply chain or across the warehouse.

Targeted use of Radio Frequency Identification Devices (RFID) and wearable scanners are a favourable way to optimise visibility across the distribution process of returns. With capabilities such as identifying materials as they arrive and catching any wrong deliveries immediately – making a warehouse receiving process error-free. Maintaining speed and accuracy during assembly, while documenting every step of the process–hands-free–affording the worker a safer and more ergonomic working experience. Lastly, being able to rely on an error-free recording of product data – improves the quality and reliability of tracking and tracing goods during transportation.

Switching to a paid returns model

The business impacts of a free returns policy can be hard-hitting to operations. Businesses are having to re-evaluate their approach to move away from a process that allows a return rate of anything up to 60%.

Customers still expect a seamless service but are becoming more tolerant of paid returns or a subscription-based model. This allows businesses to invest more in the returns process to provide faster and more detailed processing of the return.

Major retail brands such as Boohoo, Zara and New Look are leading by example by charging for returns, making it easier for smaller, less well-known brands to follow suit. Another option is to tighten restrictions or offer the consumer greener alternatives for returns with a longer lead time. Sustainable options are especially appealing to the eco-conscious Gen Z and Millennial generation consumers.

Returns in store

Offering the ability to return items in-store is a way for retailers with a brick-and-mortar presence to differentiate themselves from online-only competitors and may drive incremental sales from customers who would be hesitant to buy online without an easy return option.

To ease the returns process, many retailers have moved dedicated order pickup and return areas to more centralised locations – next to the store entrance or exit – to serve shoppers better. Barcode or QR code scanners help in-store associates quickly access order information and initiate the return process.

Planning for peak seasons

Planning for peak seasons is critical, and understanding the expected return rate is a key part of this process. Any warehouse operation must ensure they have enough space and equipment available to process the returns quickly and efficiently during peak seasons. It sounds like an obvious point but is one that is often overlooked.

From reviewing pack benches to ensuring materials are in the best place, and evaluating how AI and Automation can be integrated to streamline the process. Preparing to be more efficient and accommodate higher volumes should always be top of mind.

Using an enhanced packing bench solution is the forward-thinking choice for any business that wants to be flexible and resilient to the influx of returns in peak times. The centralised workspace can reduce human errors and packing time and leverage improved order accuracy. And will scale up to meet new fulfilment requirements during peak times without disrupting existing workflow.

Making the most of AI and automation for returns

Technological advances in AI-based analytics and inventory management systems are becoming crucial for directing returned products back through the supply chain in an efficient, cost-saving way.

AI predictive analytics can forecast the time taken to complete the return process and Increase visibility into potential returns, aiding and streaming the overall effectiveness of the process.

Forward-thinking warehouses are using automation and robots to move, store, and sort returns to increase the speed of processing them; which is highly valuable in managing the increase in volume of e-commerce returns.

Another breakthrough technological advancement that further upgrades the efficiency performance of reverse logistics and is complimented by AI is machine vision (MV)

Machine vision refers to the technology and processes used to enable robots and computers to visually perceive and interpret their surroundings. They use advanced imaging techniques such as cameras, sensors, and imaging processing algorithms to mimic the capabilities of human vision. Thus, allowing them to be used to enhance business processes.

Machine vision is a true asset when it comes to reverse logistics, making it easier to identify, sort, and inspect returned products. Additionally, it ensures the conditions of items are properly assessed, sorted, and processed, without the need for human input.

Software is most effective when using an integrated approach, with various software tools and technologies used in tandem to complement one other. For example, a well-designed returns module app alongside machine vision software can allow the return to be processed quickly and accurately. A fixed industrial scanner with machine vision can be used to quickly scan an order or returns note number to identify the return and can then scan the product.