10 Best Practices in Parcel Reverse Logistics

Parcel reverse logistics and returns management can be strenuous tasks for any company. Consumers expect a stress-free, easy process with easy-to-follow return policies. However, as more people focus solely on online shopping and having everything delivered, it can be stressful to keep up. Global parcel volume has increased 27% year-over-year, and revenue has surpassed 428.5 billion annually, reports Supply & Demand Chain Executive. With such a steady growth in parcel volume and revenue, shippers need to ensure they have the proper tools and practices for parcel reverse logistics.

What Is Parcel Reverse Logistics?

Reverse logistics is when the product goes back through the supply chain to the manufacturer. Parcel shipping makes up the majority of reverse logistics throughout e-commerce. Customer returns, whether it's a defective product or other reason, involve reverse logistics. With most products' typical returns rate of 30%, the total estimated value of returned parcels is more than $128 billion annually going into 2022. That may be even higher with an above-average peak season for 2021 too. The manufacturer would then have to organize the shipping for the item, dismantling, repairing, recycling, or disposing of the product.

Re-integrating products that can be resold or liquidated is a significant challenge in managing parcels in reverse logistics. Returns may be coming in from virtually any venue, including customers shipping returns by parcel and stores, even though the store may have the opportunity to resell the product to consumers at the point of return.

1. Create Clear Processes for Returns Merchandise Authorization

Return Merchandise Authorization (RMA) is a returns management mechanism that manufacturers and vendors use to track return requests, expedite the return processes, and diagnose and solve products' problems before compensating them to the customer. The information gathered from RMA allows companies to compile statistics and use them to see return-related trends, improve the quality of their products, avoid inaccuracies in order fulfillment, and prevent further returns. How the company handles product returns also has a highly significant direct impact on the company's customer service satisfaction. Without RMA, managing parcel reverse logistics or product returns, the company will suffer from many issues.

2. Track Parcels Moving Throughout the Reverse Supply Chain

The importance of tracking parcel reverse logistics and returns are becoming more critical, especially with most companies offering zero charges to improve customer service. The capability to trace products can help a company anticipate and avert events that could disrupt the supply chain, including order shipping mistakes, bad weather, and accidents. Tracking individual products can be more complex than tracking product shipments by container, railcars, and trucks. Tracking not only helps the company but also has high importance with customers, especially with higher-valued products.

3. Streamline Data Aggregation to Know Your Total Parcel Reverse Logistics Costs

It is important to monitor reverse logistics movement for cost-effectiveness and opportunities to streamline the process. More and more businesses wonder how to manage parcel reverse logistics as an integral part of the supply chain, improve efficiency, and find ways to save on costs. Companies should seek out tracking metrics such as time spent moving through the reverse supply chain, the percentage of items sent through the reverse logistics stream, and the total cost of the product from the point of purchase through the returns process. Monitoring this data will provide valuable insights that can help companies seek out quicker ways to save costs.

4. Know When to Repair, Refurbish, Resell or Recycle Damaged Goods

The sooner a company can identify if a product needs repair, refurbishment, resold, or recycled can help eliminate waste. 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. Identify and Correct Anomalies in Labeling in Real-Time.

With parcel reverse logistics continuing to increase in popularity steadily and significantly, accidents may happen. However, companies can catch such mistakes before executing the order; this can help reduce delays and keep deliveries on time. With new digital tools and advancements continuing to evolve, companies must take advantage of these tools. Leveraging the advances in technology can provide shippers with automated anomaly detection. This will protect against mishaps and confusion with the labeling and routing while correcting such issues if they occur.

6. Evaluate Your Shipments to Ensure They Are Properly Packaged

An important tip for businesses, having durable packaging can save shipping costs in the long run if the customer decides to return the product. If the packaging seems cheap or flimsy, it most likely will not last through a return trip. If the packaging cannot last, this will result in product damages and the risk of losing even more money due to discarding the product. Quality packaging will also help prevent accidents, such as mishandling in the warehouse, if the package is dropped by a delivery driver, moving through areas with extreme differences in temperature, or if the package sits out in the rain.

7. Track Restocking Cycle Times and Costs

As online shopping and having packages delivered continue to grow in popularity, companies must have the correct data and visibility to keep up with inventory management. If the products come and go at an unacceptable pace, this can stall shipping and money the company could be making. Managers need to watch for demand, order lead time, and storage costs due to all of these having a direct impact on the goods on-hand and the ability to fulfill the order.

Demand has to do with the product itself, and if the company should increase sales and limit costs, incorrect data can cause a backlog and lead to losses quickly. Additionally, order lead time analyzes how long it takes from order placement to product arrival. Storage costs and surcharges can rise and fall based upon how long the product sits on the shelf and inventory levels.

8. Use Data to Optimize Your Contracts Based on Current Volume and Project Returns' Risk, and Needs in RFPs

A request for proposal (RFP) is a document that lists all of the requirements and needs of a project. This document can help companies prepare for upcoming projects and provide potential contractors and agencies with a proposal form. By outlining the company's needs and expectations, potential partners get a run-down of information before signing the actual contracts. Using data and gaining insights based on shipping activity in all modes allows shippers to better project and forecast future needs, leading to improved volume planning and better shipping rates for the company in addition to gaining insights that allow shippers to diversify carriers that best fits their customer base.

9. Leverage Technology to Rate Shop and Use Zone Skipping in Returns Where Possible

Technology can provide companies with the data needed to lower transportation spending through understanding which mode of transportation is the most cost-effective. Zone skipping allows shippers the opportunity to combine many individual packages or orders to meet a full truckload. By doing so, shippers can avoid the higher costs of parcel shipping by consolidating multiple parcels into a single move by ground. By taking advantage of regional rates and carriers, shippers can avoid higher costs and transit times. To fully reap the benefits of zone-skipping, shippers must stay up-to-date on package aggregation and the landing costs of ground shipping.

10. Track the Reason for Returns to Identify Defects and Know When to Implement Recalls or Work With Suppliers for Replacement Goods

Shippers need to understand why parcel reverse logistics is happening to know if there is a recurring issue with a product and/or if the return has to do with a late or damaged shipment. Using data it is easy to analyze exceptions and tie those shipments back to a return. Shippers can then follow those issues back through the supply chain asking the right questions to uncover any root issues that are causing more returns, such as:

  • ”Is a hub consistently causing more exceptions than others?”
  • ”Can you bypass certain locations to reduce damaged or lost packages?”

A product will have a recall when there is a great awareness of consumer safety concerns. A product recall is a request to return, exchange, or replace a product after a manufacturer or consumer watch group discovers defects that could hinder performance, harm consumers, or produce legal issues for the producers. Recalls can be a stressful process that requires a systematic and thoughtful approach.

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

As online shopping and delivery continue to be the thing of the future, shippers need to take the proper steps to stay ahead of parcel reverse logistics. Return management is another vital part of the supply chain; therefore, shippers need to accommodate and prepare accordingly. Working with a shipping partner can help alleviate the stress of returns and provide the necessary tools to improve the process. Connect with Intelligent Audit to get started today.

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