How you Design and Manage your Return in Supply Chain – challenging | importance | design
How you Design and Manage your Return in Supply Chain
People are sometimes surprised when they discover that supply chains don’t end when your products get delivered to a customer. There are lots of situations where you need to take a product back because your customer doesn’t want or need it, anymore. How you design and manage your reverse supply chain can have a big impact on your relationship with your customers and on the profitability of your business.
Let’s look at those return processes and exactly what makes them so challenging, and so important for your supply chain. Let me set the stage for talking about reverse supply chains by sharing a personal story. I love doing projects around the house and I hate being in the middle of a project, and running out of paint or hardware. So, when I go to the store, I buy all of the materials I think I need and then I get a little bit extra. When the project is done, I end up with perfectly good materials left over, and I take those back to the store for a refund. So, let’s talk about why it’s important for the hardware store to manage their reverse supply chain efficiently and effectively.
The reason my hardware store offers hassle-free returns is because they know it makes me more likely to shop there and I’ll probably spend more money but processing the returns isn’t free. First, there’s a cost for a customer service representative to inspect the products and then issue me a refund. Then, there’s the cost for them to restock the items. If I were returning a product to an online store, I might need to call and get a return material authorization or RMA number, and in that case, there’s an additional cost for shipping and handling. Sometimes, the products that get returned are totally fine but in other cases, they may be broken, expired, or defective, and unfortunately, customers sometimes return fake products or products that were bought from another store.
So, your reverse supply chain needs to have an efficient process for inspecting products. Then, you can determine the best disposition for each item. Should it go back to the shelf? Does it need to be repackaged, repaired, or recycled? Or does the product need to be disposed of? It’s important to minimize the cost of inspection in your reverse supply chain.
A good process can help you capture the most value from returned products while also building loyalty with your customers. Best of all, your reverse supply chain can keep useful products from ending up in a landfill. Reverse supply chains can help you cut costs, improve service, increase revenues, and be more sustainable, and that’s why your return processes are critical for implementing supply chain management correctly.