The phrase Reverse Supply Chain hasn’t been nearly as popular as the familiar business phrase, Supply Chain. A Supply Chain is the process of getting a product from the manufacturer to the customer. For years companies have perfected this process of making, transporting, and selling products to make a profit. In the last 15-20 years, companies started to realize that their profit wasn’t in fact revenue. The loss of items that are returned needs to be taken into consideration. Reverse Supply Chain is the process of selling a product to a consumer, and then taking the product back.
Customers return items for a variety of reasons: the item didn’t work, didn’t fit right, they just didn’t like it, it didn’t meet their expectations, was the wrong choice/item, etc. However, as suggested in this Reverse Supply Chain article, due to the increase of online shopping, the amount of returns has also increased. This increase has occurred for many reasons. Some of the reasons are: the options of free shipping, free returns, free shipping with a minimum amount spent, and the fact that the customer doesn’t see or feel the product in their hands to be able to make a final decision.
There are many other reasons for online returns. Perhaps it doesn’t fit right, the product isn’t the same as pictured, it is the incorrect piece. Or the item is no longer needed/wanted, there is a better deal elsewhere, and the list goes on and on. Each year, Reverse Supply Chain seems to get worse and worse, as the amount of returns is constantly increasing.
The big problem with Reverse Supply Chain is that companies (retailers, manufacturers, warehouses, logistics) are not prepared for this fairly new and increasing difficulty. For years, items were returned to the store. Then put on a shelf or thrown away in the trash! When that happens, customers are getting their money back. But that item that the retailer or manufacturer has put money into is now a loss. A big loss! There is no profit to even take into consideration. Some major retailers are catching on, and creating a Reverse Supply Chain process. But some are still finding difficulties with it. This is because of the yearly increase and their lack of direction and Reverse Supply Chain management.
There are other alternatives to be remembered in the Reverse Supply Chain, to keep products that are returned off a warehouse shelf or in a landfill. Items that are returned and are still usable can be restocked and sold. Even if they get sold at a lower price, at least this is some profit, as opposed to a loss. Items that may be returned because they didn’t work or are broken, can be refurbished or sold for parts. Again, better to have some money in the pocket, than none.
The last resort to an item would be to have it recycled or given away. It should never be dumped at a landfill – since this is terrible for our environment. Hopefully, companies will soon catch on, and be just as efficient with their Reverse Supply Chain, as they’ve been with their Supply Chain.