Are You Tracking the Right Metrics for Your Reverse Logistics?
As executives in virtually every industry know, one of the most important things you have in your business is information. Gathering and using data related to your business operations can provide you with important insights to improve and grow in the future; ignoring it can put you at a disadvantage compared to your competitors. However, it’s not enough just to collect data — you have to track the right metrics that are really going to make a difference.
Reverse Logistics Metrics to Track and Analyze
As you analyze your company’s reverse logistics system, here are some important metrics to review:
- Returned items inventory – which items are returned and at what rates? For items that are more likely to be returned, are there common reasons for the returns?
- Disposition cycle time – how quickly can you get products from the return stage to the proper disposition (resale, recycling, return to vendor, or other disposal)?
- Per-item handling costs – what is the total cost to process returned items (facility costs, labor costs, shipping costs, etc.)? Generally you can determine this by dividing total costs by items returned each month. If you have multiple facilities that process returns, this can also be a comparison tool to find inefficiencies.
- Returned merchandise resale percentage – how much of your returned product can be resold?
- Recapture revenue – of the products you can resell, how much of the initial sales price can you recapture? How does that compare to the cost of goods sold?
- Recycled product vs waste – how much of the material that cannot be resold is recycled appropriately? How much of it must be thrown away in some other manner, including incineration and landfill waste?
- Distance traveled per returned item – how far does a product have to travel in the course of a returns process? Does it require processing at multiple facilities? Are the costs for disposition travel high (i.e., do you have to send items on costly trips to dispose of them in specific ways)? If possible, break this into distance traveled based on disposition type, such as resale, recycling, return to vendor, and landfill waste.
How to Use Returns Data for Improvement
What you do with the information you gather as you are tracking these metrics is also critical to your success. Managing all aspects of the reverse logistics process, and using that data for process improvements, has a positive impact on your bottom line. Changes you might make from data you gather include:
- Streamlining the returns process for customers
- Eliminating bottlenecks in your facilities that slow down reverse logistics
- Reducing manual tasks by automating parts of the process that don’t require a human touch point
- Improving communication between team members across multiple departments and facilities to move items quickly from return to disposition
- Creating financial incentives for process improvement
One of the best ways to improve your process is with reverse logistics software. ReverseLogix offers software solutions that can track your reverse logistics, provide you with the insights you need, and automate the process to make it easier for your team to improve the entire process. Find out more by scheduling a demo with our team today.