5 Tips for a Cost-effective Reverse Logistics Strategy
As one shopping season or holiday comes to a close and retailers prepare for another, businesses must address a major challenge: Where will all the overstock and returns go? The answer certainly isn’t simple; developing an effective reverse logistics program can be overwhelming to many businesses. Reverse logistics is the movement of freight from its typical final destination such as a customer’s home or retail location, back up the supply chain to be resold, reconditioned, refurbished, remanufactured, or recycled/disposed. There are three basic types of commodities destined for the reverse logistics chain:
- Product returns
- Damaged items
- Excess inventory
Companies that integrate a reverse logistics strategy as a part of the overall supply chain can eliminate waste, find opportunities for efficiency, and even gain back some revenue that may have otherwise been lost. These five tips for supply chain excellence will help guide your business in creating a cost-effective and streamlined reverse logistics strategy:
1. Consolidate commodities into a full truckload to minimize shipping costs.
Managing inventory is essential throughout the supply chain – even in reverse. Rather than sending one-off shipments of individual pallets via less than truckload (LTL), businesses should consider consolidation options for items. Shipping reverse logistics freight via full truckload or intermodal versus LTL or expedited can produce major cost savings.
2. Create a plan and act fast to get the most value out of items moving back up the supply chain.
Businesses that delay decision-making risk losing profits as items grow closer to the end of their useful life. Speedy handling and disposition of returned and unsold commodities is critical to a successful reverse logistics strategy.
3. Follow regulations to protect brand identity and avoid non-compliance fees.
Many states have regulations in place for product resale and disposal. Adherence to these laws is a must, not only for achieving a sustainable supply chain, but also for maintaining positive brand sentiment. Strategic planning also helps keep products that could be refurbished or remanufactured out of landfills, which is not only responsible from a sustainability perspective but can also benefit a company’s bottom line.
4. Analyze shipping data to find and drive out inefficiencies.
Reverse freight movement should be monitored for cost-effectiveness and opportunities to streamline processes. Companies should opt to track metrics such as time spent moving through the reverse supply chain; percentage of items sent through the reverse logistics stream; and total cost of the product from initial acquisition through its journey back up the supply chain. Monitoring this data will provide valuable insights that shine a light on areas for improvement.
5. Collaborate with industry experts from third-party supply chain solutions companies.
The forward logistics market is complicated enough. Developing a reverse logistics strategy requires an advanced understanding of the transportation, logistics, and manufacturing sectors. And, a poorly executed or inefficient reverse logistics strategy can lead to wasted time and unnecessary costs. These mistakes are easily avoided by working with a supply chain solutions provider that focuses on creating a streamlined process for moving returned and extra inventory. Such providers have access to available capacity, offer advanced technology for monitoring data, and are dedicated to using best practices to eliminate inefficiencies.
The final delivery location for commodities may not always be the last leg of a product’s journey. Having a reverse logistics strategy is essential for businesses in today’s economy. Network and mode optimization, consolidation efforts, and data management are just a few of the services companies like J.B. Hunt can provide to help minimize waste and reduce costs . As the new year begins, start creating your strategy today. J.B. Hunt provides solutions that help drive supply chain success and offer value-added services to optimize not just your reverse logistics strategy, but your entire supply chain.
Ready to move forward with an improved reverse logistics strategy? Contact J.B. Hunt for a consultation today: Managed.Logistics@jbhunt.com.