Reverse logistics management is a multi-step process that helps tackle multiple challenges that arise in target market segmentation, logistics routing, and supplier management. Target market analysis for any reverse logistics process has become even more challenging due to the increasing number of customers and their rapidly changing behavior.
Without a robust strategy to conduct target market analysis, business tends to fail at offering complete customer satisfaction. Also, it increases distribution costs and resource investment levels. Therefore, it is very essential for businesses, especially e-commerce, to redesign their reverse logistics system.
At Quantzig, we understand that reverse logistics management enables companies to design and maintain cost-efficient supply chain networks. Additionally, a better reverse logistics system can help companies to improve profit margin and operations. In this article, our team of experts has highlighted a few important benefits and metrics that can help businesses to redesign their reverse logistics strategies and boost supply chain efficiency.
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Table of Contents
Benefits of Reverse Logistics Management
Customer Satisfaction
In today’s digital era, customers are more empowered and informed than ever. Therefore, it is important for businesses to maintain good customer relationships in order to retain customers. With the increasing number of purchases made online, customers expect faster, hassle-free and convenient returns. A good reverse logistics management system can help you enhance customer satisfaction and drive loyalty. Additionally, it helps in controlling costs and improving revenue. Therefore, it is imperative that businesses invest more in reverse logistics analytics solutions that reduce cycle times and improve customer satisfaction levels.
Better ROI
For any business, tracking and maintaining adequate inventory levels is quite an uphill task. Reverse logistics management helps in improving the speed of return and replacement, thereby, reducing the burden on inventory. As a result, the amount of capital hooked up in the inventory will reduce leading to significant improvements in ROI.
Improved Environmental Sustainability
Today every company focuses on tracking their environmental footprint. Advanced supply chain analytics solutions like reverse logistics management help companies to implement strategies that are environmentally sustainable. It promises to help companies to reduce the burden on the assets and the resources that are crucial to keep them running.
Metrics to Track Reverse Logistics Management
Companies across industries require metrics to evaluate the progress against its reverse logistics management plan. Such metrics help businesses to measure the impact of returns on the supply chain. Also, they guide companies to analyze the root causes behind low return rates. Today reverse logistics management is fraught with challenges that can curtail your ability to improve logistics processes. If you’re finding it difficult to quantify the performance of your reverse logistics system, then you must consider the following metrics.
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Cycle Time: Cycle time is considered to be an important metric for measuring the performance of your reverse logistics system. If the return processes are standardized and streamlined, the return cycle should be short and “hassle-free”.
Amount of Product Reclaimed and Resold: For a better reverse logistics system, it is important for companies to track the percentage of the reclaimed and resold product. Also, this metric helps in estimating the total recaptured value.
Percentage of Material Recycled: This metric in reverse logistics management helps in tracking the percentage of recycled products in the stream of reverse logistics. Furthermore, this helps in inventory optimization and better supply chain management.
Waste: For any reverse logistics system, it is important to track the products that get disposed of as waste. This helps in adopting an approach that can help with waste management.
Percentage of Cost Recovered: Another important metric in reverse logistics management is the percentage of cost recovered from the items returned by customers. This can help in analyzing the profitability of a product that did not sell well and therefore companies can take preventive measures to avoid such loses.
Total Cost of Ownership: This is one of the most significant metrics in reverse logistics management. It not only helps to estimate the total cost of ownership in acquiring the product but also helps to measure the total cost incurred in reselling the product.
