Reverse Logistics Moves Forward

Companies are beginning to measure the effectiveness and efficiencies of their returns operations with the same level of attention they employ for forward logistics.


The data portal also allows retailers to manage, identify, and track store crediting information and handling fee transactions at the UPC and/or at the store level for remuneration for returns.

As of 2008, the food and grocery industry rate of returns as a percentage of sales was between 1.2 percent and 1.8 percent. Although this rate has been fairly constant over the last few years, manufacturers and retailers continue to manage unsaleables, notes Marcellino. “Returns-related information captured through the reclamation process provides trading partners a basis for collaboration focused on root-cause identification and mitigation,” he says.

In addition to return authorization management, C.H. Robinson offers its clients the ability to track a number of metrics, depending on just how much data clients wish to monitor. Data can include returns and refusals by shipment, by SKU, by business unit, by receiver, and by shipper.

“We also conduct reason code analysis and product disposition summaries for our clients,” says O’Brien.

A faulty returns process can be costly and cause unnecessary inefficiencies. “Centralized reclamation provides the industry an efficient means for removing unsaleables product from stores and DCs, and is an excellent infrastructure to support product recalls and withdrawals,” says Marcellino.

Furthermore, with the increase in the number of private label products, retailers need to start thinking more like manufacturers and they need to study what is causing damages. “They can make better process and packaging decisions for their private label products by collecting and acting on the data,” Marcellino says.

Management Through Data Centralization

Supply chain visibility is critically important for process efficiencies, no matter what the industry. “We are a veritable clearing house of data informing our clients’ process improvement decisions,” says O’Brien at C.H. Robinson. In addition to data relating to product, the company can also advise clients whether there was a customer service error or warehouse error.

The primary best practice is to offer clients the ability to customize their reason codes because each client has a different set of circumstances that result in returns or refusals, notes O’Brien.

“We have consulted with our clients on packaging changes and different ways to load trailers, and our people conduct root-cause analyses with shippers to identify some of the trends driving damage. But it is not just about damages anymore. We are looking more closely at code date issues, discontinued products, and operational practices at both the shipper and receiver levels to create order exceptions and influence returns policy,” says O’Brien.

Inmar’s analysts use data management programs that provide clients with focused visibility. “Clients can view their information online through our Web-based application portal,” Marcellino says. “Our centralized returns facilities enhance visibility so clients can reduce damaged and unsaleable merchandise.”

With its network of 33 returns facilities, Inmar helps clients minimize the distance, time, and expense associated with transporting returned merchandise. Inmar’s holistic approach can affect other areas of the supply chain, including distribution, storage, packaging, palletizing and transportation.

The food industry works within very low margins, reminds Vick at RLA. “So if companies can resurrect even just 1 percent to the bottom line, the CEO would be considered a hero. Unfortunately for some companies, return logistics is not a big enough problem for the CEO because he is worried about saving a nickel on forward logistics simply because, in many cases, reverse logistics doesn’t bubble up. The reason is because CEOs don’t have anyone high enough in their management teams who are managing reverse logistics.”

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