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26th Jul 2022

Assessing the Role of Analytics in Reverse Logistics

The role of data analytics in the business realm is quite evident. From operational cost reduction to opportunity exploitation, risk mitigation, and designing as well delivering customer-centric offerings, data analytics contributes significantly to business growth today. If we filter the business landscape further, the supply chain benefits majorly from innovative solutions produced by analytics, enhancing the efficiency of advanced supply chains.  

However, the core areas of supply chains that benefit the most from analytics are warehousing and forward logistics operations. Furthermore, here is another supply chain domain on which organizations are profoundly relying today – reverse logistics. You can make the most out of reverse logistics operations by leveraging the transformative capabilities of data analytics.  

The focus on reverse logistics is relatively lower than other supply chain competencies, yet the potential of this competency is immense, and analytics can amplify its productivity, if used effectively.  

Forward vs Reverse Logistics 

When it comes to forward logistics, the process is the same and it’s basically at the fingertips of any supply chain professional; a traditional product flows to the suppliers and is then moved on to the production facility or directly to the distributor. From there on, the products are further supplied to the retailers and ultimately, to the customers. But the dynamics of reverse logistics are the opposite of this.  

The reverse logistics supply chain starts with the customer rather than the supplier and the process reverses from the customer to the retailer, then the distributor, and eventually the returned products end up with the manufacturer. There is one more channel that can be included in reverse logistics, the recycling, refurbishing, or resale channels offered to the customers. The inclusion of such channels authorizes the customers for the final disposal of the products.  

How does Reverse Logistics Work? 

The objective of the reverse logistics process is to salvage the value of the returned product or dispose of it off. Every year, there is almost a trillion-dollar worth of returned products across the globe. Hence, supply chains have established reverse logistics operations to recover as much value as possible from the returned goods.  

Whether an organization has in-house or outsourced reverse logistics facility, the process is more or less the same. The process starts with: 

  • Return Processing 

For instance, the customer is not satisfied with the end product upon delivery and wants to send it back. The customer will probably visit the online portal of the seller or call the support center to report discontent. The support teams will direct the customer to fill in the return form.  Upon the authorization of the return form, the return process kicks in.  

The product will be retrieved from the customer, then sent to the retailer, and then distributor or directly to the manufacturer if there are lesser channels involved. The product’s condition will be evaluated and then actions like refunding, return shipment, or replacement are conducted based on product evaluation. 

  • Dealing with the Returned Goods 

Once the returned product arrives at the manufacturing facility, the product must go through the entire quality assurance process to get a real-time assessment of its condition. Subsequently, its category should be determined, which is generally specified at every supply chain and manufacturing facility. Then you can figure out if the product has to be resold as new, returned or just recycled, scraped and refurbished.  

  • Dispose of Returned Products Promptly 

Ensure the returned products are dealt with on a daily basis to prevent the depository from piling up.  

  • Identify Products to be Repaired 

Assess if the returned products can be repaired and send them to the repair department to resell them as new or used products.  

  • Recycling 

For any of the products which cannot be fixed, reused, or resold, make sure such products are sent directly to the recycling facilities.  

The reverse logistics process is not just confined to any particular field, its nature varies from industry to industry, but its existence within businesses proves to be pivotal and convenient to save costs and reduce risks. 

Simplifying Reverse Logistics with Advanced Data Analytics 

The inclusion of analytics in reverse logistics is a mere overthought up till now.  Organizations indeed face difficulties in the rise of associated costs during the return management process and the processes are often complex and need simplification to be quick and efficient, which will ultimately record higher customer satisfaction. The implementation of a disruptive solution like data analytics can help in the said areas.  

Analytics provides an overview of the possible outcomes by extracting and viewing the historical data. The possible outcomes display remarkable accuracy based on the results concluded on the events that occurred in the past. It helps the competencies to anticipate what should be done to avoid poor outcomes while highlighting the areas beneficial for the business. It is indeed a complicated process, but with the integration of cloud computing technology, a next-gen variant of analytics can be used for reverse logistics. 

If supply chains are optimistic about boosting the performance of their warehouse operations, they need to focus on the betterment of reverse logistics operations, and data analytics is one way of achieving such feats and building sustainable supply chain operations.   

Conclusion 

The concept of analytics in reverse logistics management is revolutionary; it can transform the way supply chains operate while delivering greater customer satisfaction with less inflicted costs and higher profits. Without a doubt, implementation and integration can be tricky. We, at Techvista, have a dedicated team of experts and have successfully repurposed our clients’ supply chain operations with advanced analytics. We can curate a pertinent solution for your reverse logistics operations and needs. Visit our solutions page to learn more.