10 Best Practices in Parcel Reverse Logistics

Returns have a way of exposing weaknesses in a supply chain.

It's easy to focus on outbound shipping. That's where the revenue is. Bigger revenue leads to more attention. But parcel shipping itself keeps getting bigger. According to Supply & Demand Chain Executive, global parcel volume has increased 27% year-over-year, while annual revenue has climbed past $428.5 billion.

That growth doesn't just mean more packages moving to customers. It also means more packages coming back.

Inventory has to be accounted for. Transportation costs start piling up. Customer expectations don't suddenly disappear just because an order is moving in the opposite direction.

For companies shipping at scale, reverse logistics has become its own operation. And like any operation, it works best when there's a plan behind it.

1. Start With a Clear Returns Process

Returns have a way of exposing weaknesses in a supply chain.

It's easy to focus on outbound shipping. But parcel shipping itself keeps getting bigger. According to Supply & Demand Chain Executive, global parcel volume has increased 27% year-over-year, while annual revenue has climbed past $428.5 billion.

Parcel shipping now makes up the majority of reverse logistics throughout e-commerce. The more packages move through the network, the higher the chance of them inevitably finding their way back.

Re-integrating products that can be resold or liquidated is one of the biggest challenges in managing parcel returns. Inventory has to be accounted for. Transportation costs start piling up. Customer expectations don't suddenly disappear just because an order is moving in the opposite direction.

For companies shipping at scale, reverse logistics has become its own operation. And like any operation, it works best when there's a plan behind it.

2. Track Returns Like You Track Outbound Shipments

Visibility shouldn't stop after delivery. Customers expect tracking information whether a package is coming to them or heading back to a warehouse.

The same goes for internal teams. When a returned product disappears into the network, inventory planning gets harder. Customer service gets harder. Financial forecasting gets harder.

The more visibility you have, the fewer surprises you deal with later.

3. Figure Out What Returns Are Actually Costing You

Most companies know what they spend to ship a package out.

The return trip is usually a little murkier. Transportation is only part of the equation. There are inspection costs. Handling costs. Storage costs. Refurbishment costs.

A returned item still has to be processed before it’s back into inventory to be sold again.

Understanding costs gives companies a better chance of finding costly inefficiencies.

4. Make Decisions Faster Once Products Come Back

Returned inventory loses value when it sits.

The sooner a company can identify if a product needs, the sooner it is to eliminate wastes To understand what to do with the returned products and how to handle them, shippers must understand the differences between the following:

• Remanufacturing or refurbishment: The product will receive refurbishment and reconditioning to rework the product for selling again.
• Unsold goods: This return is due to poor sales from retailers, manufacturers, or distributors.
• End-of-life (EOL): When a product no longer has a use, does not work correctly, and often manufacturers will recycle or dispose of EOL products.
• Repairs and maintenance: Some products come with an agreement to maintain equipment or repairs. If they occur, these products will go back to the customer.

5. Catch Labeling Problems Before They Become Shipping Problems

Small mistakes travel surprisingly far.

Mislabeled packages trigger delays and unnecessary headaches before anyone realizes what happened.

With automated anomaly detection, shippers have a better chance of catching stray issues early. Discovering the problem before the package moves through the network helps teams solve them before they turn into bigger disruptions.

Fixing an issue before a package moves is always easier than untangling it later.

6. Don't Overlook Packaging

Returns put packaging through another round of handling.

Sometimes several more.

If packaging barely survives the first trip, there's a good chance it won't survive the second one.

When products arrive damaged during the return process, companies often lose the opportunity to resell them. What could have been recovered becomes a write-off, while additional shipping costs, replacement costs, and processing costs continue to add up.

7. Pay Attention to Restocking Speed

Returned products don't generate revenue sitting in a staging area. They generate revenue when they're available for sale again.

That's why restocking cycle time deserves attention.

Slow processing creates inventory distortions. Products appear unavailable when they're physically sitting in a building. Teams order more inventory than they need. Storage costs climb, and inventory-related surcharges can start eating into margins.

What starts as a returns issue quickly turns into an inventory issue.

8. Use Returns Data During Contract Negotiations

Carrier contracts shouldn't be based on assumptions.

Returns data proposal (RFPs) provides a more complete picture of transportation activity and customer behavior. That document becomes useful for companies preparing for upcoming projects and provides potential contractors and agencies with a proposal form. 

The better you understand your network, the easier it becomes. Using backed data allows shippers to improve planning and improve shipping rates to diversify carriers that best fit their customer base.

9. Look for Smarter Ways to Move Returned Freight

Not every return needs to move through the network the same way.

In some situations, strategies like zone skipping and shipment consolidation can reduce transportation spend significantly. The opportunity depends on volume, geography, and network design.

By taking advantage of regional rates and carriers, shippers can avoid higher costs and transit times. Transportation costs have a habit of hiding in processes that haven't been questioned in years. To fully reap the benefits of zone-skipping, shippers must stay up-to-date on package aggregation and the landing costs of ground shipping. 

By taking advantage of regional rates and carriers, shippers can avoid higher costs and transit times. 

10. Pay Attention to Why Products Are Coming Back

Shippers need to realize that a recurring return issue itself is symptom.

Using data makes it easy to analyze and follow those issues back through the supply chain. Asking the right questions exposes it:

• Are certain products driving more returns than others?
• Are specific facilities generating more shipping exceptions?
• Do certain lanes experience more damage claims?
• Are supplier quality issues creating avoidable returns?

Findings point to operational inefficiencies. Other times, they expose product defects that require a much bigger response. Potentially, issues lead to a product recall. A recall requires products to be returned, exchanged, or replaced after defects are discovered that could affect the manufacturer.

Put the Power of Improved Parcel Reverse Logistics to Work by Partnering With Intelligent Audit

Returns aren't going away. As parcel volumes continue to grow, shippers need better visibility, stronger processes, and data they can actually use to manage reverse logistics effectively.

The companies that get the most out of their returns programs are learning from them.

Working with a shipping partner can help reduce the stress of returns and provide the tools for the process. Connect with Intelligent Audit to get started today.