A logistics operation wouldn't be complete without reverse logistics. This is the fine art and science of saving money in the process of handling returned products, fixing them, and hopefully pleasing customers with a speedy service. While it sounds easy, it's actually a hard task to accomplish.
If you do sell a product, always have a plan for reverse logistics. Even if you think you can get by with a simple mail and fix system, over time this will only count against you. Devise a plan on how you can simplify the process of returning products either to the manufacturer or to your own warehouse for fixing or scrapping. Often times, a manufacturer will reimburse fees associated with a defective product if guidelines are followed.
Shipping items back to the manufacturer for fixing or refunds doesn't always mean you will be reimbursed for the shipping charges. This is a good example of why you should consolidate returns when you can, as it cuts down on shipping costs. Consolidating returns may also mean that you should have some extra refurbished products handy, so consumers won't wait for the original item to ship back.
Even major businesses such as Apple and Microsoft work in the business of refurbished products. Refurbished products are simply products that are defective, but have been fixed and resold or returned to the consumer. Refurbished products can be a pain, since you must pay for the freight and labor necessary to fix the product before getting it back to the original consumer.
The most important part of the reverse logistics business is analyzing what you have repaired, received, and sent on a monthly basis. That way you can decide how to order spare parts in order to fix the products sent back. Since you often get discounts for ordering in bulk, after a month or two you should have a good enough idea to make a large purchase on spare parts for the distant future.
A broker or third party logistics service will be able to further help you consolidate your efforts, save time, and ultimately save money in the process. A third party logistics service already has experience building a business and maximizing efficiency. Even if you are already doing well, a reverse logistics service could save time by allowing you to outsource the entire operation. You may even find they charge less of a price than the costs you incurred.
Closing Comments
Reverse logistics is a science. You won't be able to tackle the problem in as little as a few months- it's an ongoing operation that will take much testing and patience. Ask for help when you need it, for there are many businesses out there ready to lend a hand.
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