Using Insights for Reverse Logistics Cost Management: How Retailers Protect Their Bottom Line

Ahead of the looming peak season and holiday shipping crunch, the majority of the focus within the industry is seemingly on sales and the forward movement of shipments and products. However, one must also consider the opposite side of the coin as retail reverse logistics are likely to come into play more than ever. According to a piece from Patriot-News. "This year, major retailers are encouraging people to shop early and shop frequently given the supply chain issues. Between now and then, many people might change their minds on the things they bought. As a result, we should anticipate an abnormally large amount of returns that can overwhelm the already overcrowded warehouse space." When an average of 30% of all e-commerce purchases is returned, a rate nearly three times higher than brick-and-mortar stores, reverse logistics cost management will prove critical for an industry facing a record-breaking peak season.

What Is Reverse Logistics Cost Management?

Reverse logistics essentially refers to the inevitable event that a customer changes their mind about a purchase, makes a return, and seeks a refund. Additional costs associated with these return shipments can significantly impact bottom lines. Proper management of this aspect of retail shipping and transportation relies upon accurate collection of historical data and past trends. Retail reverse logistics form the basis for the predictive analytical process. Reverse logistics cost management might not be able to unclog ports and thin out bottlenecks in time for a smooth holiday season. Still, it will help soften the blow of uncertainty and reduce the overall impact.

How Insights Help Retailers Protect Their Profitability

During market instability and economic uncertainty, reverse logistics cost management can even more significantly impact the supply chain industry. Protecting profits and reducing expenses whenever and however possible constitutes the primary goal of retail reverse logistics and management practices. By tapping into critical insights and data, retailers can benefit in the following ways ahead of the peak season:

  • Achieve increased visibility into total reverse logistics costs. The more precise vision retailers have, the easier it becomes to plan and prepare for future returns and expenses. Knowing what to expect and what to anticipate allows for increased budgeting and tighter monitoring when and where needed.
  • Data-driven insights provide for better reverse logistics cost management. Basing predictions and plans ahead of peak season crunches on accurate data has proven effective in the past and is more critical than ever before. Retail reverse logistics depends on clear and precise data to guide decision-making, such as what carriers should be utilized, which service levels, and more.
  • Avoid sending all returns back through parcel, consolidating where possible. Returns are inevitable, and they will happen, so knowing how to handle those returns can help manage costs. Reverse logistics cost management should account for return shipment modes and lanes too.
  • Track reasons for returns to avoid future issues. While it is impossible to avoid returns, there are lessons to be learned when they do occur. Knowing the reason behind a return can help retailers avoid future returns of the same nature. For example, ws a late delivery a factor in the return or was it a damaged shipment? More analytical insight into these factors can help you scorecard carriers and analyze where and how the problem may have occurred to work towards proactively resolving the issues identified.
  • Understanding how reverse costs compare to total transportation spend. Retailers need to compare data of current movements with past return rates. The percentage of overall cost returns can highlight problem areas within shipping cost allocations. For example, automated audit and reporting systems provide benefits specifically to stakeholders on the finance and accounting team, helping to improve the accuracy of accruals and coding of reverse logistics charges with real-time, accurate data.
  • Work with an adviser to eliminate returns caused by delays, late or damaged deliveries. Retailers need to accurately measure overall carrier performance to avoid returns resulting from damaged goods, poor service, or late delivery. It helps maintain good customer relations and profits.

Boost Revenue by Focusing on Both Forward and Reverse Logistics That Rely on Intuitive Systems and Data

Intelligent Audit offers reverse logistics cost management services that make it easier to derive actionable insights within the modern supply chain network. With the right tools, data analysis, and forward focus, retailers can more easily compare apples to apples, normalize data, and make a marked improvement in transportation costs and spending. Retail reverse logistics depends on clear and accurate data, just as forward logistics. Contact Intelligent Audit today to boost revenue this holiday season and better prepare for peak season returns and reverse logistic concerns.

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