International retailers have long seen the benefits of outsourcing returns management. South Africa is closely following the trend with a specialist reverse logistics solution provider, Revlogs. MD Craig Plowden explains how international experience and understanding are benefiting local retailers.
FACT: Returned items depreciate in value by 1% each day, so with up to 8% of goods being returned, retailers that fail to deal with returns quickly and efficiently can seriously chew into their profits like termites destroying a building.
In the 1980s and ’90s (when pop music was still pallateable) most retailers that had reverse logistics systems in place were enormous US firms with annual sales of over $1 billion. Automotive parts retailers were among the first to appreciate the value of reverse logistics: not only were they dealing with expensive product, but it was product which could often be easily repaired and resold. Other businesses, such as magazine publishers and mail-order retailers, also began to see the value of reverse logistics in dealing with their very high returns rates. Now, contracting the services of a third party reverse logistics company is par for the course in the US.
Western Europe did not lag far behind the Americans, and with its high premium on space and the European Union’s insistence that product disposal must comply with best environmental practice, reverse logistics soon took off. Japan was the other major player to embrace reverse logistics in its infancy.
At the start of the new millennium, emerging markets followed suit, with Eastern Europe and Brazil leading the way, and India and China not far behind.
In South Africa the penny has finally started to drop. Reverse logistics is a fabulous means for manufacturers to offset costs while managing to improve their bottom line. Just by implementing some intelligent reverse logistics structures and strategies, manufacturers and retailers are able to turn what used to be a logistical nightmare, into a profitable and efficiently run division..
A 2013 Blumberg survey found that companies in the US are viewing reverse logistics more strategically than ever before. A staggering 32% of respondents viewed reverse logistics as a revenue or profit centre (clearly some intelligent stuff going on here), while a further 42% of those surveyed saw it as a strategic line of business. Only 26% of businesses considered it to be a cost centre – but they still recognised its importance.
The importance of using a third party
Global manufacturers and retailers have realised that the best way to manage returns is to engage the services of a specialist reverse logistics company. In South Africa Revlogs is a pioneer in returns management – as the only company who specialises in the service and offers intelligent, customised and collaborative solutions to our clients.,
We have vast experience in reverse logistics, and all our systems and structures are geared towards moving product backwards swiftly through the supply chain. We have our own software which allows us to use manufacturers’ barcodes to track product as it makes its way backwards.
We deliver weekly reports to our clients which are extremely valuable in future decision-making processes as they allow clients to pinpoint areas of weakness and strength. Some of your divisions, for example, may not be enforcing returns policy strictly enough. Or some suppliers may regularly be supplying you with defective product. Whatever the fault, our weekly reports will allow manufacturers and retailers to hone in and rectify the issues. Now we all know that rectified issues translate into good business and good business is good for the soul! And by the way; on request, we are able to provide further detail on any aspect of these reports.
5 Benefits of employing a professional reverse logistics provider:
- free up valuable retail and warehouse space
- maximise profit from returned products
- keep track of returns abuse
- monitor pilferage through collusion
- understand product faults and implement intelligent solutions.
Businesses in The States and Europe have long known that reverse logistics is just as important as forward logistics, but here in South Africa we’re only just beginning to understand this.
Some of the major players in South Africa have already contracted our services and are reaping the rewards.
Contact me for a personal consultation on how you can improve your bottom line by managing your returns – Craig Plowden, Revlogs MD.
Revlogs offers a specialist returns management service which takes care of the entire process, from retrieving product from the retailer, through to repairing it or returning it to the OEM, and ensuring the new or repaired product is back in the retailer’s hands timeously to ensure the best possible customer service.