Effective Reverse Supply Chain Management
In recent years, reverse supply chain logistics has become very important in managing the supply chain. If a company does not have reverse logistics, then in such cases any item that has been returned by the customer will be received in the warehouse and stored until examined by the quality control department or it could be scrapped. This could take time ranging from days to months. In such cases not only the storage space which is scarce, will remain blocked, but also it does not take up the issue of the benefits of repairing the items or undertake restoration work and return the same for resale. Under such circumstances the company suffers losses as it could not use both the options which can turn losses from disposal cost into a profit for the business and improve customer satisfaction as well.
The value added of the processes at work on the returns made by the client, and the entire return process, has been described as "reverse logistics" and its management is known as the “reverse supply chain management”. This process includes the method by which the objects returned by the clients, or those used and disposed as waste, are again treated for repairs, restoration, refurbished or remade and then again put back to the stock for resale or reuse. The process of return has become an important element of in the management of the financial gains of the company or the firm.
When a customer buys a product of your company but is not satisfied with its quality or performance, he becomes unhappy and returns the item. Their impression of your company also becomes low. Under such circumstances if your company has low returns process and there are obstacles in returning back the item, and also if there are delays in repayment of the costs, payment for shipping or freight restrictions, delays in issuing a refund, your customers will have poor impression of your company’s performance and you may lose their goodwill.
The first step in this regard would be the practical application of a reverse logistics solution, providing the customer a return label, when he gives back the item. The label should include the serial number of the customer as a bar code so that it can inform the client as to when the item is received in the warehouse. The receipt could also lead to a replacement or credit note to be treated. Effective communication with the customers is also the key to keep them happy.
There may be instances when the customer go to the warehouse without the knowledge or consent and may start demanding their items back. This can cause problems with the management of the warehouse or the storehouse. When the customers arrive, they can take a long time to process the information and trying to retrieve the items from the store. Therefore having a barcode affixed in the package or items and arranged serially will help in easy retrieval of the item.
The duty of the quality control department is to inspect and examine the item that has been returned. They should determine whether the item can be suitably repaired and given back to the customer, or if not, whether the customer should be refunded. By a proper inspection, the quality control inspector can identify whether the item is actually eligible and covered by the returns policy, and whether the refund should be processed or not. There are many companies that immediately refund their customers.
However, if it is determined that the item can be repaired and resold, and then under such circumstances this can create revenue for the company. Therefore all the items should not be scrapped immediately, only because they have been returned. There are cases when some items are returned because the packaging is damaged. These items can be repacked and placed back into the stock. Some items may have some cosmetic damages or imperfection which may not be able to be corrected. Under such circumstances such items can be sold at a discount. There are many customers who are willing to buy products having minor defects.
For proper reverse supply chain management , a company should invariably offer end of life recycling for items they sell. For example if a customer purchases a washing machine and it reaches the end of its service life, the customer may not know what to do with it or how to deal with it. Your company, in such cases should review such cases and know how to deal with such situations.
Sometimes there are some items that contain certain toxic components such as heavy metals and the customers are not sure how to dispose of the same after the end of its life. Taking advantage of this there are many companies that are now offering a recycling program where the customers can send back the items and get a discount on the purchase of a new item. The companies can remake, recycle or produce another item out of the materials. This will be beneficial for the company in terms of the expenses incurred on the cost of materials. Also the customers will remain happy because they have got a discount for the item, which is unexpected.
Questions and Answers
Article Tags:
asset recovery
,electronic components and semiconductors
,reverse supply chain management
The first and foremost step for setting up a successful reverse supply chain management system of a company would be to define the rules of the reverse supply system and to understand the areas where the reverse supply chain will make and contribute profits.
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