Any business selling physical products needs to have good logistics and reverse logistics management. In simple language, logistics are a type of product flow. They determine how goods and services end up at their ideal final destination: the consumer. In reality, the final destination may very well end up being back at your warehouse, which is where reverse logistics come in.
With reverse logistics, you’re dealing with goods and materials coming back from the consumer. Situations such as product returns, recalls, and exchanges do happen, and having a good reverse logistics plan is essential to keeping your business up and running.
Understanding Logistics
Logistics management is an absolute must in any business plan providing physical goods. However, be aware that logistics are much more than simply getting from point A to point B. There are many stops a product will go through along the way, and you’ll have to ensure that each step closer to the consumer is running smoothly and without delay.
Key Components of Logistics
There are four key components when it comes to logistics management to be aware of when you’re looking to uplevel your logistics.
Transportation
Transportation is what gets your physical goods from point A to point B. In terms of logistics, there are several options for moving goods toward the final destination including air travel, road, railroad, and by boat. No matter what combination of transportation methods you end up using, you’ll want to ensure that the partner you choose is properly staffed and has enough vehicles and company assets to keep up with the needs and demands of your company.
Warehousing
Warehousing is especially important during high sales months. You may need to store physical goods for a time while you wait for orders to come in. Busy months can have you selling products faster than your company can produce them, so you’ve got to have some product on hand as a backup.
Storing these products involves a great deal of care, and not just any old storage unit will do. You’ll want to ensure that you have a safe, climate-controlled storage space that is frequently monitored to avoid any of your stored products becoming lost, stolen, or otherwise damaged before they ever end up in circulation.
Inventory Management
Adequate storage and warehousing is just the first step. You’ll also want to ensure that your inventory is accounted for regularly so you can see in real time what you have, what you need, and how much is selling. If you’re simply throwing product into a warehouse and have no idea where anything is or how much you have of a particular item, you’ll never be able to fully understand the metrics.
Plus, a lack of organization can negatively impact shipping speed if your crew has to trudge through item upon item in search of something specific, especially if no one is even sure that the product is currently in stock or how many are left.
Order Fulfillment
Everything mentioned above all fits into the category of order fulfillment in one way or another. Never consider a sale complete until the order ends up in the customer’s hand. Customers have more ways than ever to buy products online, and you’ll want to be on par with competitors in terms of speed, customer service, and efficiency in the process.
Importance of Efficient Logistics
Efficient logistics can help your organization thrive and have a distinct advantage over any competitors. When customers are happy, they are more likely to make a purchase from you again or even recommend your services to their friends and family members.
Plus, having efficient logistics management can help you cut costs on other business needs such as customer service care and fielding questions related to ordering. All of this can mean the difference between whether your services are chosen over your competitors or not.
Understanding Reverse Logistics
As you know, logistics is the movement from business to consumer. On the other hand, reverse logistics is the movement of products from the consumer back to the business.
For various reasons, there will be times in any business where items end up back at the warehouse. Maybe the product was faulty, the wrong item was sent, or the customer changed their mind and returned the item.
While these situations are unfortunate and hopefully less common than the alternative, there still needs to be a plan in place to deal with these situations quickly and efficiently, all while providing exceptional customer service along the way.
Key Components of Reverse Logistics
To reduce the inevitable costs associated with reverse logistics, it’s good for you to understand the process and the options that you have to save money or give old products new life.
Returns Management: While customer returns can be a drain on time and money for any company, having a good system set in place can help mitigate it. For example, while some companies offer free returns, depending on the products you sell, you might want to charge a restocking fee to reduce chances of return in the first place or to help recuperate some of the costs incurred.
While it may be tempting to avoid offering returns, especially when not required to, many customers will be wary, and it can seriously cause harm to your business if your customer base is not 100% satisfied with their purchase with no way to remedy the situation.
Refurbishment and Recycling: Sometimes it may be possible to repair a damaged item and resell it refurbished. Doing this allows you to recuperate some of the costs as well as reducing waste. If it isn’t possible to refurbish the product, working with third-party recycling businesses or recycling in house is an ethical and effective way to give unusable products new life as well.
Disposal and Waste Management: Unfortunately, sometimes you may determine that returned products have reached the end of their lifespan and there is no way to recycle or repair them. If this is the case, it’s worth working closely with a waste management company to help you dispose of the unusable product as efficiently as possible.
Asset Recovery: Don’t let returns get you down. Working with reverse logistics experts can help save you time and money by doing everything in their power to salvage products that are still usable and disposing of unusable materials in the most ethical and cost-effective ways.
The Growing Importance of Reverse Logistics
It’s so easy to buy things online with just the press of a button these days. Unfortunately, with such an easy process for purchasing, eCommerce returns are simply just a fact of life. However, that doesn’t mean that you should accept wasting valuable products or your money. Instead, you should find ways to use returned procuts if at all possible. If not possible, it’s best to dispose of the products in the most ethical and sustainable way possible.
Challenges in Logistics and Reverse Logistics
Logistics and reverse logistics management are not without their struggles, especially if you’re new to the world of eCommerce.
Common Challenges in Logistics
One problem that many come across, especially early on in their career, is that it can be difficult to predict and adapt to fluctuating demand. While you don’t necessarily want a huge amount of inventory of certain items that may not ever get off the shelf, you also don’t want to leave customers waiting for their order longer than they should because you don’t have the supplies you need on hand, which can be a delicate balance to strike.
In addition, a common problem in logistics is not maintaining supply chain visibility. If you don’t know what the numbers are in your warehouse, with your suppliers, or how many orders need to go out, you could have some very unhappy customers in the end.
Customers want their products delivered on or before the expected delivery date, and if even a single aspect of your logistics falls short of expectations, this can be nearly impossible to manage.
Common Challenges in Reverse Logistics
January is often the season of returns. People from all over return gifts received during the holiday season and if your business operation is not prepared for the occasional influx of returns, serious problems can occur, making it hard to manage the inventory of returns and deal with them appropriately.
Also, since some products will need to be disposed of, it’s important that you understand the laws of the area you live in and ensure you’re disposing of your products appropriately.
Best Practices for Optimizing Logistics and Reverse Logistics
It’s not all doom and gloom with logistics and reverse logistics, because there are always avenues in which you can improve.
Leveraging Technology
Use technology to your advantage! Software exists that can help optimize your logistics and reverse logistics by keeping track of inventory, taking into account any fluctuations that are likely to occur, and providing data that can aid in decision making. Plus, these systems can help reduce some of the costs of labor.
Collaboration Across the Supply Chain
There are many moving parts in logistics and reverse logistics, and having a good relationship and open communication with everyone in the process including your team, the suppliers, carriers, and waste management companies can help everything run smoothly
Sustainable Practices
Believe it or not, using sustainable and eco-friendly options in your logistics and reverse logistics actually can help your wallet in the long run. Try using only as much packaging as the product needs or recycling or using as much unused product as possible and see what happens.
Continuous Improvement
The only way to know for sure what works in your business is to try it out. Frequently evaluate how your logistics and reverse logistics management is going, and don’t be afraid to change your approach if you find that something isn’t working along the way.
Wrapping Up: Logistics and Reverse Logistics
Both logistics and reverse logistics are essential aspects of any business. Logistics help bring your product to the consumer as swiftly and efficiently as possible, and reverse logistics are essential to reducing the costs incurred with returns and exchanges.
While it may be easy to go all in on logistics and set reverse logistics to the side, you need both operations running smoothly in order to maximize your profits, keep your customers satisfied and coming back, and to reduce any negative impact on the environment.
We know that managing all of this at once can be quite difficult, especially if your business is on the larger side or growing faster than anticipated. We encourage you to seek help from logistics and reverse logistics experts that can help you manage some of the day to day operations so you can focus more on running your business in the best way you possibly can.
Need Help With Logistics and Reverse Logistics?
If you’re struggling to manage logistics and reverse logistics, contact us at AMS Fulfillment today! We are experts in shipping logistics, able to ship tens of thousands of packages on an average day, and over 100,000 during peak periods.
We aim to help reduce the cost associated with shipping and reduce the amount of time your clients are spent waiting on packages to arrive. Though returns can be disheartening, our returns management services are here for you to make the process as painless as possible.
Contact us today and find out how we can help your business manage logistics and reverse logistics!
