Are You Tracking the Right Metrics for Your Reverse Logistics?

3PL, Ecommerce, Manufacturing, Retail
Tracking the right metrics is essential for streamlining and improving reverse logistics.

One of the most important things you have in your business is information. Gathering and leveraging operational data will provide you with important insights to improve and grow; ignoring it can put you at a disadvantage compared to your competitors.

Why are Reverse Logistics Metrics Important?

Metrics and reporting are two areas that distinguish returns management systems (RMSs) from each other. While many RMSs offer similar functionality, the best ones will have business intelligence (BI) ubiquitous throughout the platform.

Users should never have to hunt and peck for metrics, and they definitely shouldn’t have to copy and paste data together from different systems to get what they need! To adapt quickly to changes, drive productivity and catch problems early, reverse logistics data must be easy to access and give you the right data at the right time.

“We have really robust reporting that’s relevant to many teams throughout the company. The credit team uses ReverseLogix for reporting; the customer service team relies on it to see whether returns have been processed; even our manager who oversees our 3PL partner uses ReverseLogix for insight.”

Director of Distribution Operations for Global Retailer

Which Reverse Logistics Metrics should I Measure?

Ever feel like you’re swimming in data? When numbers are coming in from everywhere, it’s hard to know which to focus on and which can give you the most helpful, actionable information about your reverse logistics.

At a minimum, RMS users should be able to view every module, queue and order. Every screen should offer the data and BI you need. Reporting should be automated when possible and customizable when needed, so you get immediate insight to make sure your goals are on track and that you’re catching potential problems early.  

Based on our diverse customers’ use and feedback about ReverseLogix BI, we’ve gathered the top metrics that retailers, 3PLs, manufacturers and eCommerce companies should be tracking to improve processes, reach sustainability goals, and improve productivity and cost.

Key Metrics for Process Improvements

  • Average time to process RMAs/average time by RMA task: Discover exactly how long it takes to process are a return, task by task. Track the item the moment it leaves a customer’s hand until the final step (exchange, resale, RTV, recycling, repair or disposal), and get visibility into areas that are lagging behind or ways to improve efficiency.
  • Per-item handling costs:What is the total cost to process returned items, taking into account facility costs, labor costs, shipping costs, etc.? If you have multiple facilities that process returns, this can be a comparison tool to eliminate bottlenecks and automate parts of the process that don’t need a human touch point.
  • Disposition cycle time: How quickly can you get products from the return stage to the proper disposition (resale, recycling, return to vendor, or disposal)? Track this metric separately for items that can be resold, returned to vendor, recycled, or thrown away so you can figure out how long each one takes.

Key Metrics for Sustainability Initiatives

  • Recycled product vs waste: How much of the material that cannot be resold is recycled appropriately? How much of it must be thrown away? These are important metrics for sustainability efforts that prioritize reselling or recycling rather than landfilling.
  • Returned merchandise resale percentage: Like the recycling versus waste metric above, this reveals how much of your returned product can be resold, which is important both for recuperating costs and for sustainability goals. You’ll also be able to see how much of the initial sales price you could recapture.
  • Distance traveled per returned item: Consumers love online shopping, but the back-and-forth delivery eats up packaging materials and increases delivery vehicle emissions. Know how far a product has to travel in the course of a returns process. Distance traveled can be broken down by disposition type, such as resale, recycling, return to vendor, and landfill waste.

Key Metrics for Productivity and Cost

  • Total product costs:You’re likely already tracking the cost of goods sold, but in order to get a true sense of the cost to your business you need to have a “total cost of ownership” metric that includes COGS, initial shipping, returns processing, return shipping, and disposition costs minus any money you can get for resale or disposal (such as RTV).
  • RMAs by channel: ReverseLogix is one of the few returns management systems that serve B2C, B2B and hybrid environments. Track returns from retail, eCommerce, wholesale, and more to gain better visibility into costs, speed and productivity by channel. 
  • Returned items inventory: Which items are being returned and at what rates? Uncover the items that are more likely to be returned and common reason codes, so you can pinpoint root causes that can be addressed and make processing the return more efficient.

ReverseLogix returns management technology tracks reverse logistics, provides you with the metrics and insights you need, and automates processes to make it easier for your team to improve returns for your customers and your business.