March 23, 2022

How Reverse Logistics Help Organizations Reduce Costs and Optimize Supply Chains

Nazim Foufa
Marketing Content Specialist
How Reverse Logistics Help Organizations Reduce Costs and Optimize Supply Chains

What Is Reverse Logistics?

Reverse logistics refers to anything traveling inwards through the supply chain. The process involves moving goods from their final destination in order to secure value, or for safe disposal. Reverse logistics can include remanufacturing, returns, refurbishing, and much more.

Traditional Logistics vs Reverse Logistics

Unlike reverse logistics, traditional logistics focuses on the management of the product flow from the manufacturer to the consumer. This includes multiple options such as shipping, packing, hub services, and order fulfillment.

An example of traditional logistics is when you purchase anything online or if something has to be shipped to the customer.

Examples of reverse logistics are when you return a product to Amazon or any online retailer. That product has to go back up the supply chain until it gets back to the vendor.

How Does Reverse Logistics Work?

The reverse logistics process includes managing returns and buying extra goods and materials.  Reverse logistics also deal with any rentals or refurbishments. The process is different across industries, and there are multiple economic advantages for improving the process.

Different Types Of Reverse Logistics

Examples of reverse logistics include returns, managing leases or refurbishments, packaging, shipping, recycling, disposing of goods, repairing goods, and refunding defective items. It is always recommended to improve the process to make everything more efficient.

Benefits Of Analytics For Reverse Logistics With Examples

Valuable Product Data
Organization's that have great reverse logistics processes can get important product data. This can help shed light on why certain products have higher return rates than others and why some products are performing better.
Example: Stakeholders love asking questions about why products perform better or worse than one another. By collecting product data you can explore and answer these questions and create data-driven strategies to increase profits.

Additional Revenue
If managed properly, reverse logistics can help you gain visibility of all items moving back up the supply chain resulting in important information that could be crucial to reducing costs associated with reverse logistics.
Example: Companies can have disorganized data or no data on their reverse logistics process, leading to increased costs as items are being returned. With the right data you can optimize and take control of your reverse logistics process and gain insights to resolve inefficiencies.

Reduced Costs
The supply chain is comprised of multiple sections making it difficult to manage all of them. With an optimized reverse logistics strategy, companies can accurately track and analyze their entire supply chain, revealing areas where costs can be reduced.
Example: Having the insight and ability to track why and how long a product is in transit can be extremely valuable in reducing costs associated with reverse logistics. Enabling businesses to target the problems directly within their supply chain.

Brand Image
Companies with optimized reverse logistics are more likely to see reduced negative publicity which will enhance their brand image. Companies that recycle and actively reduce waste are more likely to see stronger brand awareness and recognition from their customers.
Example: Often times you will hear about unhappy online customer reviews because their return process was frustrating or took longer than promised. These reviews can impact a business's reputation and bottom line. With a well optimized reverse logistics process companies can drastically increase customer satisfaction, especially with high-quality customer service.

Customer Retention
It’s critical to have an efficient reverse logistics strategy in place since it allows for a better customer relationship which can increase retention. Customers love when returns are quick and easy and are more likely to remain loyal to your brand. Nobody wants to deal with poor customer service and a long return process.

A Top Athletics Brand Used Sigma For Reverse Logistics Analytics

Sigma allows organizations of any size to use analytics to ensure the production, inventory, and distribution of products. Resulting in maximized revenue, improved efficiencies, and cost reductions throughout the supply chain.

Through Sigma, a top athletics brand was able to analyze their reverse logistics data to ensure that when a products are shipped, they do not sit longer than a certain amount of days in one location ultimately reducing the overall time spent in transit.

Sigma was able to assist in optimizing their reverse logistics process and ultimately reduce costs.

Why Use Sigma For Reverse Logistics Analytics

Sigma's uniquely scalable spreadsheet interface enables anyone to explore, analyze, and visualize up to billions of records of live data across their entire supply chain. “How can we reduce freight or shipping costs?; How can we improve inventory management?; How can we identify logistics inefficiencies and mitigate them quickly?;” get answers to questions like these and more – without traditional BI bottlenecks – with Sigma.

Additionally Sigma enables external clients who understand their data to capitalize on it – via spreadsheet granularity and scale from embedded view without sacrificing security. We empower customers to seamlessly expose inventory, product/shipment data to their clients so they can do things like: analyze every shipment, scenario model where they can reduce costs & proactively plan for capacity.

Sigma can help you identify inefficiencies within your reverse logistics processes and use data to create new strategies or solve problems within your supply chain.

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